Unconditional bank guarantees remain enforceable despite liquidation, and the guarantor's independent obligation is not displaced by winding-up proceedings.

An unconditional bank guarantee creates an independent and absolute obligation on the bank to pay on demand within the stipulated time, without proof of default by the company in liquidation. Liquidation of the principal debtor does not discharge the surety, because discharge by operation of law in liquidation does not affect the guarantor's liability. The creditor may enforce the guarantee notwithstanding winding-up proceedings, and the company court cannot restrain payment merely because the bank may later seek reimbursement from the company's securities, as that is a separate matter between the bank and the company.

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Issues: Whether the liquidation of the company prevented the Electricity Board from enforcing an unconditional bank guarantee against the bank.

Analysis: The bank guarantee created an independent and absolute obligation on the bank to pay on demand within the stipulated time, without proof of default by the company in liquidation. The winding up of the principal debtor did not discharge the surety, because a discharge by operation of law in liquidation does not affect the surety's liability. The company court could not restrain enforcement of the guarantee on the footing that the bank might later seek reimbursement from securities given by the company, since that was a separate matter between the bank and the company and did not make the guarantee claim a claim against the assets of the company in liquidation.

Conclusion: The Electricity Board was entitled to realise the amount under the bank guarantee notwithstanding the liquidation proceedings, and the restraint order was unsustainable.

Final Conclusion: Liquidation did not impair enforcement of the independent bank guarantee, and the Board's right to invoke it was upheld.

Ratio Decidendi: A surety remains liable on an unconditional contract of guarantee despite the principal debtor's liquidation, and the creditor may enforce the guarantee without first proving default or treating the claim as one against the debtor's assets.

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