Bank Guarantee Encashment-interim restraint refused where no fraud, irretrievable injury, or contractual breach beyond the guarantee terms was shown.

A bank guarantee must ordinarily be honoured according to its terms, and court interference is justified only in exceptional cases of prima facie fraud or irretrievable injustice. Here, the plaintiff accepted the contract, sought repeated extensions, and its own communications showed inability to perform within the extended period. The record did not establish fraudulent or discriminatory invocation of the guarantee, and no irretrievable injury was shown. As the guarantee expressly permitted payment on the seller's failure to perform, the defendant's demand was consistent with its terms and interim restraint on encashment was not warranted.

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Issues: Whether the plaintiff was entitled to an ad interim injunction restraining encashment of the performance bank guarantee on the grounds of fraud, discriminatory conduct, or irretrievable injustice.

Analysis: The governing principle applied was that a bank guarantee must ordinarily be honoured according to its terms and judicial interference is warranted only in exceptional cases such as a prima facie case of fraud or irretrievable injustice. On the facts, the plaintiff had accepted the contract, sought repeated extensions, and by its own communication showed inability to perform within the extended period. The record did not establish that the buyer's demand on the guarantee was fraudulent or discriminatory, nor was any irretrievable injury shown. The guarantee terms authorised payment on the seller's failure to perform, and the defendant's invocation of the guarantee was consistent with those terms.

Conclusion: The plaintiff was not entitled to interim injunction against encashment of the bank guarantee.

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