Unconditional bank guarantees can be invoked absent proved fraud or irretrievable injury; underlying contract disputes do not bar encashment.

Irrevocable and unconditional bank guarantees payable on demand cannot be restrained merely because the underlying contractual dispute remains unresolved. Injunction against invocation is available only in exceptional cases where egregious fraud is specifically pleaded and established, or where encashment would cause irretrievable injustice. Here, the petitioner failed to plead concrete facts of fraud, and the grievance over escalation charges and running bills arose from the contract dispute itself. The record also did not show that the beneficiary was insolvent or financially incapable of restitution. The petitioner was therefore not entitled to restrain invocation of the guarantees.

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Issues: Whether the petitioner was entitled to restrain invocation of the three bank guarantees on the grounds that they were conditional, that fraud had been played in obtaining them, or that encashment would cause irretrievable injury.

Analysis: The bank guarantees were expressed in unequivocal terms as irrevocable and unconditional, and were payable on demand without inquiry into the underlying contractual dispute. A bank guarantee constitutes an independent contract, and injunction against its invocation is permissible only in exceptional cases of established egregious fraud or irretrievable injustice. The petitioner did not plead specific facts constituting fraud in the petition or rejoinder, and the grievance regarding non-payment of escalation charges or running bills arose from the underlying contractual dispute. The material on record also did not show that the respondent was a financially insolvent or sick company so as to make recovery impossible or cause irreversible harm.

Conclusion: The petitioner was not entitled to an injunction against invocation of the bank guarantees, as neither egregious fraud nor irretrievable injury was established.

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