Bank guarantee can be stopped only on fraud

In a significant ruling, the Delhi High Court has held that the invocation of a bank guarantee can be stopped only if it is proved that there was fraud or irretrievable injury or injustice in the course of a commercial dealing.

Allowing an appeal against a Single Judge's order, a Division Bench said in a recent judgment that a bank guarantee has to be respected irrespective of the disputes pending between the parties. The existence of a dispute between the parties with regard to an underlying contract cannot be a ground for issuing an injunction to restrain the enforcement of the bank guarantee.

Article referred: http://www.thehindu.com/news/cities/Delhi/bank-guarantee-can-be-stopped-only-on-fraud-says-high-court/article7875157.ece

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