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      REPORTABLE

IN THE SUPREME COURT OF INDIA       CIVIL APPELLATE JURISDICTION  CIVIL   APPEAL No.14015 OF 2015

(Arising out of SLP(C)No.9506 of 2014)

M/S ADANI AGRI FRESH LTD                           .......APPELLANT

VERSUS

MAHABOOB SHARIF & ORS                             ......RESPONDENTS                                                     

J U D G M E N T

JAGDISH SINGH KHEHAR, J.

1. Leave granted. 2 The appellant – M/s Adani Agri Fresh Ltd. (hereinafter referred to as `M/s AAFL')  is a supplier of fruit and vegetables. It entered into a contractual agreement with M/s RMS Fruits and Company  (hereinafter  referred  to  as  `M/s  RMSFC'),  a  wholesale dealer  in  fruits,  whose  proprietor  is  one  Mahaboob  Sharif (respondent No.1 herein).  For securing payment in lieu of the products supplied by the appellant to respondent No.1 - M/s RMSFC, the appellant required respondent No.1 to furnish bank guarantees, whereby the appellant would be entitled to recover the proceeds of the products, transported by it to M/s RMSFC. Three such registered bank guarantees constitute the basis of the controversy in hand.

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The said bank guarantees were executed by the State Bank of Mysore on 24.12.2010, 09.02.2011 and 10.02.2011. The terms of the bank guarantees being identical, reference to one will be sufficient for all  intents  and  purposes.  Relevant  clauses  of  the  first  bank guarantee are being extracted hereunder:

“NOW  THE  GUARANTOR  HEREBY  IRREVOCABLY  AND UNCONDIOTIONALLY  GUARANTEES  as  follows,  irrespective  of the validity and legal effects of the agreement, if any entered  between  the  parties  and  waiving  all  rights  of objection  and  defense  arising  there  from,  that  the Guarantor shall pay any amount up to the maximum amount of guarantee  mentioned  herein  below,  upon  the  AAFL  first demand to the AAFL in the event that the whole seller fails to perform its understanding under any agreement or terms and conditions contained in the consignment order and/or sale invoice, or by any reason of whole seller failure to make the reimbursement thereof to the AAFL, in time. 1. The Guarantee shall come into effect upon offer of delivery by the transport agent of AAFL to whole seller at the  invoiced  address,  to  the  whole  seller  account  any consignment and/or sale order after the date of execution of this guarantee deed. 2. The  Guarantor  shall  immediately  pay at  Gurgaon, Haryana(India) favouring M/s.Adani Agri Fresh Limited at the request of AAFL,  without any demur and without any recourse  merely  on  demand  standing  that  the  amount demanded is due and payable by the whole seller to AAFL. 3. Notwithstanding any dispute or difference at any time subsisting between whole seller and yourself concerning the  supply  of  product  mentioned  above  or  otherwise, however and notwithstanding any suit or other proceedings that may have been instituted by either party, a sum of Rs.15,00,000/- or such lower sums or sums as may demand in writing if the said whole seller fails to pay to you the amounts due as per your record.  We irrevocably agree that a certificate issued by AAFL that the said sum or any part thereof if payable to you shall be accepted by us as a conclusive  evidence  and  binding  on  us  by  such  amount having become payable to you and that immediately, such a certificate is furnished by you duly signed by any of your official of Senior Manager or above grade payment of such demand shall be made to you by us. 4. The guarantee shall not be impaired or discharged by any  changes  that  may  hereafter  take  place  in  your

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constitution or in the constitution of whole seller. This guarantees shall be in addition to and without prejudice to any other securities or remedies, which AAFL may now have  or  hereafter  possess  and  you  shall  be  under  no obligation to marshal in our favour any such security or any funds or assets that you may be entitled. 5. We, the guarantor hereby waive the necessity of the AAFL demanding the said debt from the whole seller before presenting us with the demand. 6. AAFL  shall  have  the  fullest  liberty  under  the guarantee  deed  to  extend,  from  time  to  time  of  the performance by the whole seller and that the guarantor also waives any right of notice etc., in this regard. 7. Notwithstanding anything contained herein:

a) Our liability under this bank guarantee shall not  exceed  Rs.15,00,000/-  (Rupees  Fifteen  Lakhs only); b) This bank guarantee shall be in full force until 23.12.2011. c) We are liable to pay the guaranteed amount or any part thereof under this bank guarantee only and  only  if  the  AAFL  seves  upon  us  a  written claim, either by way registered letter, courier, fax  copy  of  delivered  by  hand  by  an  authorized agent of the AAFL and make demand there under on or before 23.12.2011. d) We  further  undertake  and  agree  that  this guarantee shall not be revoked during its currency except with your previous consent in writing. Signature and seal of the guarantor”

  (Emphasis is ours) A perusal of the terms of the bank guarantee reveals, that the same was an unconditional guarantee, and that, the guarantor expressly waived off rights of any objection and defence, irrespective of the disputed positions adopted by the contracting parties, or even, the validity and legal effects of the contractual agreement.  Under the bank  guarantees,  the  appellant  –  M/s  AAFL  would  first  make  a

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demand/claim  for  the  payment  in  lieu  of  fruits  transported  to respondent No.1, and in case respondent No.1 failed to reimburse the consideration, the appellant had the right to make a demand from  the  guarantor,  for  the  above  payment.  Actually  the  above stated claim of consideration from M/s RMSFC in the first instance, was also unnecessary, in view of paragraph 5 of the bank guarantee extracted  above,  which  clearly  provides  that  it  would  not  be necessary for M/s AAFL for demanding the consideration from the wholesaler  –  M/s  RMSFC,  before  presenting  the  demand  to  the guarantor – State Bank of Mysore. The aforesaid demand in terms of the bank guarantee was to be made on the basis of a demand/claim at the hands of M/s AAFL indicating the despatch of goods, and the amount payable in lieu thereof. Thereupon, the guarantor was to make the payment of the amount claimed, immediately without any demur,  and  without  any  recourse.   On  the  receipt  of  such  a certificate  of  the  outstanding  amount(s),  the  bank  guarantee(s) would  stand  invoked  forthwith,  notwithstanding  any  suit  or proceedings, that may have been instituted by one or the other party, with reference to the contractual obligations.  3. It  is  the  case  of  the  appellant,  that  the  appellant issued an “Outstanding Certificate” seeking payment, on account of despatch  of  fruit  to  M/s  RMSFC.  The  outstanding  debt  indicated therein was, for a sum of Rs.62,32,328/- (Rupees sixty two lakhs thirty  two  thousand  three  hundred  and  twenty  eight  only). Consequent  upon  the  aforesaid  demand  being  not  honoured  by respondent  No.1,  the  bank  guarantee  was  sought  to  be  invoked, through the aforesaid “Outstanding Certificate” dated 31.05.2011,

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which is being extracted hereunder:    “Outstanding Certificate   

This is to certify that M/s. R.M.S. Fruit & Co., Mysore has the outstanding debit balance of Rs.62,32,328/- (Sixty Two Lakhs Thirty Two Thousand Three  Hundred  Twenty  Eight  Only)  in  our  books towards supply of Fruit to them during last year.

Thanking you, Yours truly, For Adani Agrifresh Limited

Sd/- Authorized Signatory”     

4. In order to wriggle out the aforesaid bank guarantee(s), respondent No.1 – M/s RMSFC, filed O.S.No.991 of 2011 before the Civil Judge (Junior Division), Mysore with inter alia the following prayer:

“Wherefore  the  plaintiff  humbly  prays  this Hon’ble Court be pleased to pass a judgment and decree in favour of the plaintiff and against the defendants for permanent injunction, restraining 1st and  2nd defendant’s  bank  for  paying  any schedule  guarantee  amount  to  the  3rd defendant, until and unless the claim of plaintiff and 3rd defendant is settled amicably or through court of law.  Or in the alternative restraining the 3rd defendant from receiving the said amount from the 1st and 2nd defendant  bank  until  and  unless  the matter has been settled amicably or through court between  plaintiff  and  3rd defendant  with  court cost and such other appropriate reliefs as the Hon’ble  Court  deems  fit  to  grant  in  the circumstances  of  the  case  in  the  interest  of justice and equity.

SCHEDULE Guarantee amount available in State Bank

of Mysore, Shivarampet Branch, Vinoba Road, Mysore guarantee no.3/10-11 date of issue 24.12.2010 and date of expiry 23.12.2011 and extension guarantee No.04/2010-2011 (Original guarantee No.04/2009-10) and renewed period from 10.02.2011 to 09.02.2012

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and another guarantee No.05/2010-11 and date of issue 09.02.2011 and date of expiry 08.12.2011.”

5. The  trial  court  passed  the  following  interim  order  after entertaining the above-said suit, on 10.08.2011:

“ORDER IA  No.2  filed  by  the  applicant/plaintiff

under Order XXXIX Rule 1 and 2 r/w Section 151 of the CPC, is hereby allowed, conditionally.

The  defendants  1  and  2  banks  are  hereby restrained from making payment of schedule amount to the 3rd defendant till the disposal of the suit either  amicably  or  judiciously  between  the plaintiff  and  the  3rd defendant  subject  to following conditions:

(1) The  Plaintiff  shall  extend  the  Bank guarantee executed through the defendants 1 and  2  in  favour  of  the  3rd defendant  for every six months, till disposal of the suit; after  expiry  of  the  period  under  the Guarantee  No.5/10-11  from  the  period 10.2.2011 to 9.2.2012. (2) In case, the plaintiff fails in this suit,  the  plaintiff  shall  compensate  the defendant  No.3  by  paying  interest  at  the rate of 18% p.a. on the total value of goods to the 3rd defendant from the date of suit till the disposal of the suit. No order as to costs.”

6. The  aforesaid  order  was  affirmed,  by  the  Additional Senior Civil Judge, Mysore, on a challenge raised thereto, on 13.09.2011. Even the High Court of Karnataka, where the appellant preferred W.P.No.4654 of 2012, did not interfere with the interim order.  The  order  passed  by  the  High  Court  on  16.12.2013, dismissing the above-mentioned writ petition, is subject matter of challenge at the hands of the appellant before this Court. 7. As  a  proposition  of  law,  learned  counsel  for  the appellant has placed vehement reliance on a number of judgments of

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this  Court,  we  would  refer  to  only  two  of  them,  which  would suffice the purpose. In this behalf, reference may first be made to   U.P.Cooperative  Federation  Ltd.  vs.  Singh  Consultants  and Engineers (P) Ltd., (1988) 1 SCC 174, where-from our attention was invited to the following observations :

“27.  Our  attention   was  also  drawn  to  the judgment  of the learned Single Judge of  the Madras  High  Court  in Arul  Murugan  Traders  v. Rashtriya Chemicals and Fertilizers Ltd.Bombay and another, A.I.R. 1986 Madras 161 where the learned Single Judge  expressed  the   opinion that there  was  no absolute  rule      prohibiting  grant of        interim   injunction  relating  to   Bank guarantees  and in exceptional case courts would interfere   with          the        machinery  of irrevocable  obligations  assumed  by banks,  and that  the plaintiff must establish a prima  facie case, meaning thereby that there is a bona fide contention between the parties or serious question to  be  tried,  and  further  the  balance  of convenience was also a relevant  factor. If     the element  of fraud  exists,        then courts step in to prevent one of the parties to the contract from deriving   unjust  enrichment  by  invoking  bank guarantee. In that case the learned Single Judge came to the conclusion  that  the   suit  involved serious questions  to be  tried and particularly relating  to the  plea of  fraud,  which   was   a significant factor  to  be   taken into  account and  claim  for  interdicting  the   enforcement  of bank guarantee should have been allowed. 28.     I am,  however, of        the  opinion   that these observations must be         strictly considered in the  light of the principle enunciated. It is not      the decision  that there should be a prima facie  case.  In  order  to  restrain  the  operation either  of   irrevocable  letter  of  credit  or  of confirmed  letter   of  credit   or  of   bank guarantee,  there should be  serious dispute  and there  should be  good prima facie case  of fraud and special  equities in     the  form  of  preventing irretrievable  injustice  between  the  parties. Otherwise the  very purpose  of bank  guarantees would  be negatived and  the fabric  of  trading operation  will  get jeopardised.

xxx xxx xxx

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43. The  argument  for  the   respondent  is attractive but it seems to  overlook the basic nature  of the case. The basic nature of the case relates  to  the  obligations  assumed  by  the  bank under  the guarantees given to UPCOF Ltd. If under law, the bank  cannot be  prevented by  SCE(P) Ltd from  honouring  the   credit   guarantees,   the UPCOF  Ltd.  also  cannot  be restrained from invoking the guarantees. What applies to the bank must  equally  apply  to UPCOF Ltd. Therefore, the frame  of  the  suit  by  not  impleading  the  bank cannot make any difference in  the position  of law.  Equally, it  would  he futile to  contend that  the  court  was  justified  in  granting  the injunction since it  has found  a prima  facie case  in favour of  the SCE(P)  Ltd. The  question of  examining the prima facie case or balance of convenience  does  not  arise  if  the  court  cannot interfere with the unconditional commitment made by the bank in the guarantees in question.

xxx xxx xxx 54.  The  Court,  however,  should   not  lightly interfere  with  the  operation   of  irrevocable documentary  credit.   I   agree  with  my  learned brother        that        in  order   to  restrain   the operation  of the irrevocable letter of credit, performance  bond  or  guarantee,  there  should  be serious dispute to be tried and there should be a good  prima   facie  acts  of  fraud. As  Sir  John Donaldson M.R. said  in Bolivinter  oil SA  v. Chase  Manhattan Bank & ors. [1984] 1 All E.R.351 at 352:

"The  wholly   exceptional  case    where an injunction may  be granted  is where it is proved that the  bank knows that any  demand for payment already made or which  may  thereafter  be  made  will clearly  be   fraudulent.  But   the evidence  must be clear, both  as to the fact of fraud and as to the    bank's knowledge. It  would  certainly  not normally be   sufficient    that   this rests on the  uncorroborated  statement of  the   customer,  for  irreparable damage  can be done to a bank's credit in  the  relatively  brief   time  which must  elapse between the  granting of such an injunction and an application by the bank to have it discharged."

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55.    From the  above discussion, what appears to me is this: The sound  banking system may, however require  more  caution  in  the  issuance  of irrevocable   documentary   credits.   It    would be for        the  banks  to  safeguard  themselves  by other means and generally not  for the     court  to come to  their rescue with injunctions  unless there  is     established  fraud.  In the  result, this  appeal must be allowed. The judgment and order of the Allahabad  High  Court  dated February  20,  1987  must  be  set  aside   and  the order  of   learned  Civil   Judge,  Lucknow  dated August 8, 1986 restored.”

 (Emphasis is ours)

8. Reliance was also placed on Vinitec Electronics Private Ltd. vs. HCL Infosystems Ltd., (2008) 1 SCC 544. The following observations have been recorded in the above judgment:

“11. The  law  relating  to  invocation  of  bank guarantees is by now well settled by a catena of decisions of this Court. The bank guarantees which provided that they are payable by the guarantor on demand is considered to be an un-conditional bank guarantee.  When  in  the  course  of  commercial dealings, unconditional guarantees have been given or accepted  the beneficiary is entitled to realize such a bank guarantee in terms thereof irrespective of  any  pending  disputes. In  U.P.  State  Sugar Corporation   vs.  Sumac  International  Ltd.,  this Court observed that :         

12. The  law  relating  to  invocation  of such  bank  guarantees  is  by  now  well settled.  When in the course of commercial dealings an unconditional bank guarantee is given  or  accepted,  the  beneficiary  is entitled to realize such a bank guarantee in  terms  thereof  irrespective  of  any pending  disputes.   The bank giving such a guarantee is bound to honour it as per its terms irrespective of any dispute raised by its  customer.  The  very  purpose  of  giving such  a  bank  guarantee  would  otherwise  be defeated.  The courts should, therefore, be slow in granting an injunction to restrain the realization of such a bank guarantee. The  courts  have  carved  out  only  two exceptions. A fraud in connection with such

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a  bank  guarantee  would  vitiate the very foundation of such a bank guarantee.  Hence if  there  is  such  a  fraud  of  which  the beneficiary seeks to take advantage, he can be  restrained  from  doing  so.  The  second exception relates to cases where allowing the  encashment  of  an  unconditional  bank guarantee  would  result  in  irretrievable harm  or  injustice  to  one  of  the  parties concerned.  Since  in  most  cases  payment of  money under such a bank guarantee would adversely affect the bank and its customer at whose instance the guarantee is given, the  harm  or  injustice  contemplated  under this head must be of such an exceptional and irretrievable nature as would override the terms of the guarantee and the adverse effect of such an injunction on commercial dealings in the country.  The two grounds are not necessarily connected, though both may coexist in some cases.         

12. It is equally well settled in law that bank guarantee is an independent contract between bank and  the  beneficiary  thereof.  The  bank  is  always obliged to honour its guarantee as long as it is an unconditional  and  irrevocable  one.  The  dispute between  the  beneficiary  and  the  party  at  whose instance  the  bank  has  given  the  guarantee  is immaterial and of no consequence.  In BSES Limited vs. Fenner India Ltd. this Court held :        

10.  There are, however, two exceptions to this rule.  The first is when there is a clear fraud of which the Bank has notice and a  fraud of the beneficiary from which it seeks to benefit. The fraud must be of an  egregious  nature  as  to  vitiate  the entire underlying transaction.  The second exception  to  the  general  rule  of non-intervention  is  when  there  are `special  equities'  in  favour  of injunction,  such  as  when  `irretrievable injury' or `irretrievable injustice' would occur  if  such  an  injunction  were  not granted. The  general  rule  and  its exceptions has been reiterated in so many judgments  of  this  Court,  that  in  U.P. State Sugar Corpn. V. Sumac International Ltd.(1997)  1  SCC  568  (hereinafter  `U.P. State  Sugar   Corpn')  this  Court, correctly  declare  that  the  law  was `settled'.

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        13. In Himadri  Chemicals Industries Ltd. V.  Coal Tar  Refining  Company,  this  court  summarized  the principles  for  grant  of  refusal  to  grant  of injunction to restrain the enforcement of a bank guarantee or a letter of credit in the following manner :        

“14...(i) While  dealing  with  an application for injunction in  the course of commercial dealings, and when an unconditional bank guarantee or letter of credit  is  given  or  accepted,  the Beneficiary is entitled to realize such a bank guarantee or a letter of credit in terms thereof irrespective of any pending disputes  relating  to  the  terms  of  the contract.        (ii) The  bank  giving  such  guarantee  is bound  to  honour  it  as  per  its  terms irrespective of any dispute raised by its customer. (iii) The courts should be slow in granting an  order  of  injunction  to  restrain  the realization  of  a  bank  guarantee  or  a letter of credit. (iv) Since a bank guarantee or a letter of credit  is  an  independent  and  a  separate contract  and  is  absolute  in  nature,  the existence  of  any  dispute  between  the parties to the contract is not a ground for  issuing  an  order  of  injunction  to restrain enforcement of bank guarantees or letters of credit.  (v) Fraud  of  an  egregious  nature  which would vitiate the very foundation of such a bank guarantee or letter of credit and the beneficiary seeks to take advantage of the situation.   (vi) Allowing  encashment  of  an unconditional bank Guarantee or a Letter of  Credit  would  result  in  irretrievable harm or injustice to one of the parties concerned.         

14. In  Mahatama  Gandhi  Sahakra  Sakkare  Karkhane vs. National Heavy Engg. Coop. Ltd and anr., this

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Court observed :        

 “If  the  bank guarantee furnished is an unconditional and irrevocable one, it is not  open  to  the  bank  to  raise  any objection  whatsoever  to  pay  the  amounts under the guarantee.  The person in whose favour  the  guarantee is furnished by the bank  cannot  be  prevented  by  way  of  an injunction from enforcing the guarantee on the  pretext  that  the  condition  for enforcing the bank guarantee in terms of the  agreement  entered  into  between  the parties has  not been fulfilled.  Such a course is impermissible. The seller cannot raise the dispute of whatsoever nature and prevent the purchaser from enforcing the bank guarantee by way of injunction except on the ground of fraud and irretrievable injury.

What  is  relevant  are  the  terms incorporated in the guarantee executed by the bank. On careful analysis of the terms and  conditions  of  the  guarantee  in  the present  case,  it  is  found  that  the guarantee  is  an  unconditional  one.   The respondent,  therefore,  cannot  be  allowed to  raise  any  dispute  and  prevent  the appellant  from  encashing  the  bank guarantee. The  mere  fact  that  the  bank guarantee  refers  to  the  principle agreement  without  referring  to  any specific  clause  in  the  preamble  of  the deed  of  guarantee  does  not  make  the guarantee  furnished  by  the bank to be a conditional one. xxx xxx xxx   

24. The  next  question  that  falls  for  our consideration  is  as  to  whether  the  present  case falls under any of or both the exceptions, namely, whether there is a clear fraud of which the bank has notice  and a fraud of the beneficiary from which  it  seeks  to  benefit  and  another  exception whether there are any “special equities” in favour of granting injunction.  25. This Court in more than one decision took the view that fraud, if any, must be of an egregious nature as to vitiate the underlying transaction. We have meticulously examined the pleadings in the

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present case in which no factual foundation is laid in support of the allegation of fraud.  There is not even a proper allegation of any fraud as such and in fact the whole case of the appellant centers around  the  allegation with regard to the alleged  breach of contract by the respondent.  The plea of fraud  in  the  appellants  own  words  is  to  the following effect:  

“That despite the respondent, HCL being in default of not making payment as stipulated in  the  bank  guarantee,  in  perpetration  of abject dishonesty and fraud, the respondent, HCL fraudulently invoked the bank guarantee furnished  by  the  applicant  and  sought remittance of the sums under the conditional bank  guarantee  from  the  Oriental  Bank  of Commerce  vide  letter  of  invocation  dated 16.12.2003.”

26. In  our  considered  opinion  such  vague  and indefinite  allegations  made  do  not  satisfy  the requirement  in  law  constituting   any  fraud  much less the fraud of an egregious nature as to vitiate the entire transaction.  The case,therefore does not fall within the first exception.         27. Whether encashment of the bank guarantee would cause any “irretrievable injury” or “irretrievable injustice”.  There  is  no  plea  of  any  special equities by the appellant in its favour. So far as the plea of “irretrievable injustice” is concerned the appellant in its petition merely stated:        

“That should the respondent be successful in implementing its evil design, the same would not only amount to fraud, cause irretrievable injustice  to  the  applicant,  and  render  the arbitration nugatory and infructuous but would permit  the  respondent  to  take  an  unfair advantage of their own wrong at the cost and extreme prejudice of the applicant.”

  (Emphasis is ours)

9. Based  on  the  judgments  rendered  by  this  Court  more particularly, the judgments referred to hereinabove, it was the vehement contention of the learned counsel for the appellant, that the terms and conditions of a “Deed of Guarantee” could not be

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injuncted  from  being  given  effect  to,  on  the  basis  of  the principle adopted in determining “prima facie case”, “balance of convenience”  and  “irreparable  loss”,  which  are  the  usual parameters on the basis whereof injunctions are granted. Insofar as the injunction of an unconditional bank guarantee is concerned, it was submitted, that the same could be granted only if the court was satisfied about the commission of a flagrant fraud, at the hands of one or the other contracting parties, or alternatively if the  Court  was  satisfied  that  an  irreparable  injury  or  some irretrievable injustice would be caused to the concerned party. 10. Insofar  as  the  present  controversy  is  concerned,  the defence of respondent No.1 is entirely based on a communication dated 14.01.2011, stated to have been addressed by the appellant to respondent No.1. The aforesaid communication, which constitutes the  basis  of  the  defence  of  respondent  No.1,  is  extracted hereunder:

“ADANI AGRIFRESH LIMITED 14th January, 2011

To Mr.Mahaboob Shariff, M/s R.M.S.Fruits & Co.,  # 1875, Anesarui Street,  Behind Deveraja Market,  Mysore 50 001 Sub : Settlement of amount Sir,  

We inform you that, our settlement talk held at Mysore, regarding destroyed and damage of 8(eight) Loads of Apples supplied to you, four firm agreed to receive 1/4th value of total value.  Hence, you are directed to send the amount in installments as agreed after we supplying Apple load as earlier.

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Sincerely Yours, Sd/-

Authorised Signatory Seal”

In  addition  to  the  relying  on  the  above  communication  (dated 14.01.2011), it was the vehement contention of the learned counsel representing respondent No.1 that respondent No.1 – M/s RMSFC had tendered  and  enclosed  photographs  depicting  rotten  and  damaged apples,  which  were  allegedly  despatched  by  the  appellant  to respondent No.1.  It was the submission of the learned counsel for respondent No.1, that the veracity of the aforesaid photographs, was not disputed by the appellant, before the trial court.   11. It is not possible for us to determine the veracity or truthfulness  of  the  defence  raised  by  respondent  No.1.  The aforesaid shall emerge only on the culmination of the proceedings initiated  by  respondent  No.1  before  the  Civil  Court.   At  the present juncture, we are only concerned with the injunction of the three  bank  guarantees,  referred  to  hereinabove,  the  invocation whereof was injuncted, not only by the trial court, but also by the appellate court, and the same was thereafter maintained even by the High Court. 12. During the course of hearing, learned counsel for the appellant  candidly  submitted,  that  the  communication  dated 14.01.2011 relied upon by respondent No.1 in its defence, is a fabricated and doctored document, which was never executed by the appellant. The position adopted by the rival parties lead us to record the following conclusions. Firstly, that the concerned bank

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guarantees, are clearly unconditional.  This is apparent from the extracts  thereof,  reproduced  above.  Secondly,  the  veracity  and truthfulness of defence of respondent No.1 – M/S RMSFC, based on the communication dated 14.01.2011, cannot be opined on at the present juncture, and will have to await the final outcome of the civil suit filed by M/s RMSFC at Mysore.  Thirdly, M/s RMSFC has not levelled any allegations of the commission of a flagrant fraud by M/s AAFL, for engineering the invocation of the bank guarantees executed by the State Bank of Mysore.  Fourthly, no submissions have been advanced on behalf of M/s RMSFC to establish, that the invocation of the bank guarantees would lead to an irreparable injury or some irretrievable injustice.  The instant eventuality is therefore ruled out.   13. In deciding the present controversy, we will therefore have  to  adopt  the  principles  laid  down  by  this  Court  in U.P.Cooperative  Federation  Ltd.  vs.  Singh  Consultants  and Engineers (P) Ltd. (supra), and in Vinitec Electronics Private Ltd. vs. HCL Infosystems  Ltd.(supra). Having given our thoughtful consideration to the law laid down by this Court, in respect of grant/refusal of an injunction of an unconditional bank guarantee, and keeping in mind the terms and conditions, more particularly of the contractual conditions extracted and narrated above, we are satisfied that the courts below were not justified in injuncting the invocation of the three bank guarantees, executed by the State Bank of Mysore, at the instance of M/s RMSFC.  We accordingly hereby direct respondent Nos.2 and 3 – the State Bank of Mysore to honour the same forthwith.

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14. While accepting the claim raised by the appellant as has been recorded by us in our conclusions hereinabove, it is also imperative for us to record, that we had required the learned counsel representing the appellant, to obtain instructions from the  appellant,  whether  or  not  the  appellant  was  truthful  in describing the communication dated 14.01.2011 as fabricated and doctored.  In case, the appellant had accepted it to be genuine, we would have permitted the bank guarantees to be invoked, for the reimbursement  of  1/4th  of  the  total  value  of  the  goods,  in consonance  with  the  communication  dated  14.01.2011.  Having obtained instructions, learned counsel for the appellant states, that the express and specific stance of the appellant, that the communication  dated  14.01.2011  (extracted  above)  is  actually fabricated and doctored, and was never sent or executed by the appellant – M/s AAFL to respondent No.1 – M/s RMSFC.  In view of the position adopted by the appellant on express instructions, we consider it just and appropriate to further record, that in case the statement made to this Court on behalf of the appellant is not found  to  be  correct,  on  the  culmination  of  the  proceedings initiated by respondent No.1, it shall be open to respondent No.1 – M/s RMSFC  to initiate civil and criminal proceedings against the appellant, as may be permissible in accordance with law. 15. We are satisfied in granting liberty to respondent No.1 - M/s RMSFC, to suitably amend the plaint, so as to mould the relief in order to claim whatsoever is due to respondent No.1, under the contractual  obligations  with  the  appellant,  in  consonance  with law.

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16. The appeal is disposed of in the above terms.                            

                   .........................J.            (JAGDISH SINGH KHEHAR)

                  .........................J.

          (R. BANUMATHI) NEW DELHI; DECEMBER 2, 2015.

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