Legal Reference Library

In  Finolex Cables Limited Vs. Mahanagar Telephone Nigam Ltd., the two companies had entered into a contract and MTNL had invoked BG because of non-delivery. The question before the Delhi High Court was whether the invocation of the BG by MTNL in terms of Clause 7.4 of the PO was justified. The High Court opined - 41. MTNL has no explanation whatsoever for suddenly springing on FCL the unilateral invocation of the BG which it made FCL renew from time to time. There was no loss suffered by MTNL on account of the failure of FCL to supply the cables. Merely because Clause 7.4 of the PO entitles MTNL to seek LD up to a maximum of 10% cannot justify the amount it sought to recover, namely, the entire sum of Rs.36,75,300, which according to the learned Arbitrator was approximately 10% of the contract value. 42. The law in relation to LD has been explained by the Supreme Court in its decision in Kailash Nath Associates v. Delhi Development Authority (supra). In para 43 of the s...

In FERNAS CONSTRUCTION COMPANY INC VS. GUJARAT STATE PETRONET LTD. , the Hon'ble Gujarat High Court held that any existence of dispute between the parties to the contract cannot be a ground to restrain from evoking the bank guarantee.

Appellate Tribunal for Electricity Kochi Salem Pipeline Pvt. Ltd. and Ors. v. Petroleum & Natural Gas Regulatory Board MANU/ET/0097/2016 02.09.2016 Commercial  Unless there is fraud of beneficiary or irretrievable harm or injury, Courts are not to interfere with encashment of Bank Guarantees Appellant No. 1 a Joint Venture Company formed for specific purpose of constituting, commissioning and operating Kochi-Coimbatore-Erode-Salem LPG Pipeline. A consortium of Appellant No. 2 ("Bharat Petroleum Corporation Ltd. - BPCL") and Appellant No. 3 ("Indian Oil Corporation Ltd.-IOCL") with Appellant No. 2 as lead partner has been selected by Respondent Board for grant of authorization for said Pipeline. Letter of Intent issued by Respondent-Board in term of which Appellant No. 2 was directed to submit Performance Bond/Bank. Pursuant thereto Respondent Board issued a Letter of Authorisation ("LOA"). One of conditions in said LOA was that, entity was...

One of the possible reasons for this extremely low ranking given to our country is the failure of all parties concerned in strictly adhering to the terms of documents such as the NIT and the GTC, the Bench observed. The Supreme Court in Central Coalfields Limited & Anr vs. SLL – SML (Joint Venture Consortium) & Ors. has held that, decision taken by the employer about essentiality of a term of the Notice Inviting Tender should be respected and lawfulness of that can be questioned on very limited grounds. The Bench comprising of Justices Madan B. Lokur and R.K. Agrawal set aside a Judgment by Jharkhand High Court wherein it had set aside the rejection of the bid of SLL-SML by Central Coalfields Limited. In this case, the bid given by JVC was cancelled as the bank guarantee submitted was not in the format given in the NIT read with the GTC. The Court observed: “whether a term of the NIT is essential or not is a decision taken by the employer which should be respected. Even if the ...

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. The Bench of Justice B.D. Ahmed and Justice Sanjeev Sachdeva said the purpose of giving bank guarantee would be defeated if an injunction was granted. In the case, Zillion Infra Projects Limited had issued a letter of intent to Fab-Tech Works & Constructions Private Limited for construction of an NTPC power project near Nagpur. While Fab-Tech gave a bank guarantee, differences cro...

1) UPC-600 (Uniform Customs and Practice for Documentary Credits, Sixth Edition) published by International Chambers of Commerce 2) Saleem Bhai v. State of Maharashtra, (2003) 1 SCC 557, Popat Kotecha Property v. State Bank of India Association, (2005) 7 SCC 510 3) Sopan Sukhdeo Sable v. Asst. Charity Commissioner, (2004) 3 SCC 137 4) R.D. Harbottle (Mercantile) Ltd. v. National Westminster Bank, (1977) 3 WLR 752 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 3103 OF 2015 (Arising out of SLP (C) No.9689 of 2014) M/S. MILLENIUM WIRES (P) LTD. ...APPELLANT  :versus: THE STATE TRADING CORPORATION OF INDIA LTD. AND ORS. ...RESPONDENTS “Banks must be allowed to honour their guarantees without interference except in clear cases of notice of fraud to the bank. The merchants take risk which are not to be imposed on the banks. Such interference will deter trust in international commerce.” (1) The Court must be slow in granting an order...