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Hindustan Steelworks Construction Ltd vs Tarapore & Co. & Anr on 9 July, 1996 cites

United Commercial Bank vs Bank Of India And Others on 26 March, 1981

In United Commercial Bank vs. Bank of India 1981 (3) SCR 300 this Court again emphasised that obligation of a Bank in such a case is absolute, as a letter of credit constitutes the sole contract with the banker and the bank issuing the letter of credit has no concern with any question that may arise between the seller and the purchaser of the goods. Therein the following passage from the judgment of Kerr.
Supreme Court of India Cites 4 - Cited by 288 - A P Sen - Full Document

U.P. Co-Operative Federation Ltd vs Singh Consultants & Engineers (P) Ltd on 19 November, 1987

(Emphasis supplied) On the basis of these observations the learned counsel submitted that the law laid down by this Court is that except in case of fraud and that too when it creates special equities in the form of irretrievable injustice, the courts should not interfere by restraining the beneficiary from encashing the bank guarantee. We have carefully gone through the judgments delivered by Mukherji and Shetty, JJ. and in our opinion that is not the ratio of the judgment. In that case the court was not called upon to decide whether apart from fraud there can by any other valid ground for interference. Morevover, the said observations cannot be read like a text of a statute or out of context. Observations made by Mukherji, J. in other parts of his judgment (See paragraphs 24 and 34) and his opinion stated in paragraph 21, with which Shetty, J. also agreed, do not support that submission. Mukherji, J. in paragraph has stated his opinion as under:
Supreme Court of India Cites 11 - Cited by 469 - G L Oza - Full Document

Tarapore & Co., Madras vs M/S. V/O Tractors Export, Moscow And Anr on 26 November, 1968

With respect to an irrevocable letter of credit this Court in the case of Tarapore & Co. vs. Tractors Export, Moscow 1969 (2) SCR 920 pointed out that such a contract between the banker and the beneficiary is independent of and unqualified by the contract of sale or other underlying transaction and quoted with approval the following observations made by Jenkins L.J. in Hamzeh Malas and Sons vs. British Imex Industries Ltd. 1958 (2) Q.B. 127:
Supreme Court of India Cites 5 - Cited by 76 - K S Hegde - Full Document

Larsen & Toubro Limited vs Maharashtra Stateelectricity Board & ... on 13 September, 1995

230) while dealing with a case of bank guarantee given for securing mobilisation advance it has been held that the right of a contractor to recover certain amounts under running bills would have no relevance to the liability of the bank under the guarantee given by In that case also the stipulations in the bank guarantee were that the bank had to pay on demand without a demur and that the beneficiary was to be the sole judge as regards the loss or damage caused to it. This Court held that notwithstanding the dispute between the contractor and the party giving the contract, the bank was under an obligation to discharge its liability as per the terms of the bank guarantee. Larsen and Toubro Limited vs. Maharashtra State Electricity Board (6) SCC 68 and Hindustan Steel Workers Construction Ltd. Vs. G.S. Atwal & Co (Engineers) Pvt. Ltd. 1995 (6) SCC 76 were also cases of work contracts wherein bank gurantees were given either towards advances or release of security deposits or for due, performance of the contract. In both those cases this Court held that the bank gurantees being irrevocable and unconditional and as the beneficiary was made the sole judge on the question of breach of perforamance of the contract and the extent of loss or damages an injunction restraining the beneficiary from invoking the bank guarantees could not have been granted. The above referred three subsequent decisions of this Court also go to show that the view taken by the High Court is clearly wrong.
Supreme Court of India Cites 4 - Cited by 76 - J S Verma - Full Document

Hindustan Steel Workersconstruction ... vs G.S. Atwal & Co. (Engineers)Pvt. Ltd on 13 September, 1995

230) while dealing with a case of bank guarantee given for securing mobilisation advance it has been held that the right of a contractor to recover certain amounts under running bills would have no relevance to the liability of the bank under the guarantee given by In that case also the stipulations in the bank guarantee were that the bank had to pay on demand without a demur and that the beneficiary was to be the sole judge as regards the loss or damage caused to it. This Court held that notwithstanding the dispute between the contractor and the party giving the contract, the bank was under an obligation to discharge its liability as per the terms of the bank guarantee. Larsen and Toubro Limited vs. Maharashtra State Electricity Board (6) SCC 68 and Hindustan Steel Workers Construction Ltd. Vs. G.S. Atwal & Co (Engineers) Pvt. Ltd. 1995 (6) SCC 76 were also cases of work contracts wherein bank gurantees were given either towards advances or release of security deposits or for due, performance of the contract. In both those cases this Court held that the bank gurantees being irrevocable and unconditional and as the beneficiary was made the sole judge on the question of breach of perforamance of the contract and the extent of loss or damages an injunction restraining the beneficiary from invoking the bank guarantees could not have been granted. The above referred three subsequent decisions of this Court also go to show that the view taken by the High Court is clearly wrong.
Supreme Court of India Cites 1 - Cited by 95 - J S Verma - Full Document

Union Of India vs Raman Iron Foundry on 12 March, 1974

Relying upon the decision of this Court in Union of India vs. Raman Iron Factory AIR 1974 SC 1265 the High Court held that any term in the agreement that one of the parties shall be the sole judge to quantify the same has to be held as invalid." According to the High Court liability to pay damages would arise only after it is established that there is a breach of the contract and it is for the court or the arbitrator to decide as to who has committed the breach. Till the liability is ascertained, it cannot be said that there is a "debt due or debt owing". On these grounds the High Court rejected the contention raised on behalf of HSCL that it was the sole judge to decide as to whether the contractor has committed a breach of the contract and what is the extent of damage caused to it, It also held that in absence of any determination by the Court or the arbitrator no amount can be said to be payable by the contractor to HSCL by way of damages and, therefore, it will be just and proper to restrain HSCL from enforcing the bank guarantees. It also held that no irretrievable injustice would be caused to HSCL as it can recover damages from the bank and the contractor in case it succeeds in the case and that the interest of HSCL can be safeguarded by directing the contractor to go on extending the bank guarantees till the matter is settled by the arbitrators. The High Court therefore allowed both the revision petitions and by on order of injunction has restrained HSCL from enforcing the bank guarantees, except bank guarantee no. 6/175, till the arbitrators pass an award in its favour. As regards bank guarantee no.6/175 also it has restrained HSCL from encashing the said guarantee till the balance of the amounts advanced together with interest and the value of the material supplied is ascertained. For ascertaining the amount due, the High Court has remanded O.P. 456/88 to the lower court.
Supreme Court of India Cites 10 - Cited by 380 - P N Bhagwati - Full Document
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