Bank guarantee invocation stands on its own terms absent fraud, irretrievable injustice, or special equities.

A bank guarantee is an independent contract between the bank and the beneficiary, so its invocation must be honoured according to its terms and cannot be restrained merely because a dispute exists in the underlying transaction. Judicial or tribunal interference is justified only if fraud, irretrievable injustice, or special equities is shown. On the facts, the demand under the guarantees was required to be honoured on invocation, and the bank was not concerned with the underlying compliance dispute. The Tribunal was therefore not justified in setting aside the invocation or directing refund, and the invocation was held valid.

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Issues: Whether the Tribunal was justified in interfering with the invocation of the bank guarantees and directing refund of the amounts to the respondent.

Analysis: A bank guarantee is an independent contract between the issuing bank and the beneficiary and must be construed on its own terms. Invocation or encashment cannot be restrained merely because a dispute exists between the parties to the underlying transaction. Interference is warranted only where fraud, irretrievable injustice, or special equities are made out. On the terms of the guarantees in question, the demand was required to be honoured on invocation, and the bank was not concerned with the underlying compliance dispute. The materials also showed that the respondent had notice of the invocation and had itself protested thereafter.

Conclusion: The Tribunal was not justified in setting aside the invocation of the bank guarantees or directing refund of the amount. The invocation was valid and in accordance with the terms of the guarantees.

Ratio Decidendi: A bank guarantee is enforceable according to its own terms, and courts will not interfere with its invocation in the absence of fraud, irretrievable injustice, or special equities.

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