M/S. ADANI AGRI FRESH LTD.versusMAHABOOB SHARIF & ORS.

                      [2015] 15 S.C.R. 1


               M/S ADANI AGRI FRESH LTD.                           A



                MAHABOOB SHARIF & ORS.

               (Civil Appeal No.14015 of2015)                      B

                    DECEMBER 02, 2015

  [JAGDISH SINGH KHEHAR AND R. BANUMATHI, JJ.]

       Injunction - Of Bank Guarantee - Scope of -                 C
 Contractual agreement between the appellant (supplier) and
 the respondent (wholesale dealer) - Respondent furnished
 unconditional Bank Guarantee in favour of the appellant -
 Outstanding demand by appellant to the respondent - On
 failure to honour the demand, appellant invoked Bank              D
 Guarantees - Respondent filed suit seeking permanent
 injunction against the appellant and the Bank from paying
 the guaranteed amount - Trial Court by interim injunction
 restrained the Banks from makingpayment to the appellant-         E
 The Interim order was approved upto High Court - On appeal
 held: When in the course of commercial dealings
·unconditional Bank guarantees have been given, the
 beneficiary is entitled to realize such guarantee irrespective
 of any pending disputes - Injunction of unconditional Bank        F
 Guarantees can be granted only when the court is satisfied
 about the commission of a flagrant fraud, at the hands of
 one or the other contracting parties, or when the court is
 satisfied that an irreparable injury or irretrievable injustice
 would be caused to the concerned party- In the facts of the       G
 present case, courts below were not justified in injuncting the
 invocation· of the three Bank Guarantees - Therefore, the
 Bank directed to honour the Bank Guarantees - Bank
 Guarantee.
                                                                   H
                               1
2        SUPREME COURT REPORTS                [2015) 15 S.C.R.


A        U.P. Cooperative Federation Ltd. v. Singh
         Consultants and Engineers (P) Ltd. (1988) 1 SCC
         174 : 1988 (1) SCR 1124; Vinitec Electronics
         Private Ltd. v. HCL lnfosystems Ltd. (2008) 1 SCC
         544: 2007 (11) SCR 897 - relied on.
B
                        Case Law Reference

         1988 (1) SCR 1124            relied on     Para 6

         2007 (11) SCR 897            relied on     Para 8
c
        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    14015 of 2015.

         From the Judgment and Order dated 16.12.2013 of the
o High Court of Kamataka at Bangalore in Writ Petition No. 4654
    of2012.

         Akhil Sibal, Sr. Adv., Ashish Prasad, Ms. Mukta Dutta,
    Aditya Garg, Praveen Kumar, Advs., for the Appellant.

E       Praneet Ranjan, E. C. Vidya Sagar, Ms. Jennifer John,
    Subeshchandra Sagar, B. K. Gautam, Advs., for the
    Respondents.

         The Judgment of the Court was delivered by
F
         JAGDISH SINGH KHEHAR, J. 1. Leave granted;

        2. The appellant-M/sAdaniAgri Fresh Ltd. (hereinafter
  referred to as 'M/sAAFL') is a supplier offruit and vegetables.
G 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 -
H Mis RMSFC, the appellant required respondent No.1 to furnish
 M/SADANIAGRI FRESH LTD. v. MAHA800B SHARIF                        3
          [JAGDISH SINGH KHEHAR, J.]

bank guarantees, whereby the appellant would be entitled to A
recover the proceeds of the products, transported by it to Mis
RMSFC. Three such registered bank guarantees constitute
the basis of the controversy in hand. 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 B
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 C
       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 D
       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 E
       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    F
       at the invoiced address, to the whole seller account any
       co.nsignment and/or sale order after the date of
       execution of this guarantee deed.

       2. The Guarantor shall immediately pay at Gurgaon,         G
       Haryana(lndia)favouring M/s.AdaniAgri 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 toAAFL.                                             H
4   SUPREME COURT REPORTS                 [2015] 15 S.C.R.


A   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
B   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 byAAFL
    that the said sum or any part thereof if payable to you
c   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
D
    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
    constitution or in the constitution of whole seller. This
E   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.
F
    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
G   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:
H
M/S ADANI AGRI FRESH LTD. v. MAHABOOB SHARIF                      5
          [JAGDISH SINGH KHEHAR, J.]

        a) Our liability under this bank guarantee shall not     A
        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 B
        part thereof under this bank guarantee only and only if
        the AAFL seves upon us a written claim, either by way
        registered Jetter, 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.                      C
        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"                     D
                                          (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, E
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 demand/claim for
the payment in lieu of fruits transported to respondent No.1, · F
and in case respondent No.1 failed to reimburse the
consideration, the appellant ha~ 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 G
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 B;mk of H
6         SUPREME COURT REPORTS                       [2015] 15 S.C.R.


A   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/sAAFL 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
B   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.
c
           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
D   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, which is being extracted
E   hereunder:
                           "Outstanding Certificate

                   This is to certify that Mis. R.M.S. Fruit & Co., Mysore
F              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.

G              Thanking you,
               Yours truly,
               For Adani Agrifresh Limited
                   Sci/-
               Authorized Signatory"
H         ..
MIS ADANI AGRI FRESH LTD. v. MAHABOOB SHARIF                       7
          [JAGDISH SINGH KHEHAR, J.]

    4. In order to wriggle out the aforesaid bank                  A
guarantee(s), respondent No.1 - M/s RMSFC, filed
O.S.No.991of2011 before the Civil Judge (Junior Division),
Mysore with inter alia the following prayer:

          "Wherefore the plaintiff humbly prays this Hon'ble       s
       Court be pleased to pass a judgment and decree in
       favour of the plaintiff and against the defenaants 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 C
       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 D
       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.
                                                                   E
                      SCHEDULE

         Guarantee amount available in State Bank of
      Mysore, ShivarampetBranch, Vinoba Road, Mysore
      guarantee no.3/10-11 date of issue 24.12.2010 and F
      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 and
      another guarantee No.05/2010-11 and date of issue
      09.02.2011 anddateofexpiry08.12.2011."               G

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


                                                                   H
8         SUPREME COURT REPORTS                       [2015] 15 S.C.R.


A                                   "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.
B
             The defendants 1 and 2 banks are hereby restrained
          frem 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:
c
            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
D
            No.5/10-11 from the period 10.2.2011to9.2.2012.

            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
E           3rd defendant from the date of suit till the disposal of
            the suit.

            No order as to costs."

F       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
G 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
H appellant has placed vehement reliance on a number of
M/S ADANI AGRI FRESH LTD. v. MAHABOOB SHARIF                      9
           [JAGDISH SINGH KHEHAR, J.]

judgments of this Court, we would refer to only two of them, A
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 :
                                                                   B
        "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.LR. 1986 Madras
        161 where the learned Single Judge expressed the C
        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 D
        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 E
        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 F
         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 G
       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 irrevo~able letter of credit or of
                                                                  H
10   SUPREME COURT REPORTS                   [2015) 15S.C.R.


A    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
B    would be negatived and the fabric of trading operation
     will get jeopardised.

        xxx                )()()(                 )()()(


     43. The argument for the respondent is attractive but it
c    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
D    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
E    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
F    not arise if the court cannot interfere with the
     unconditional commitment made by the bank in the
     guarantees in question.

              )()()(                )()()(                 xxx
G
     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,
H    performance bond or guarantee, there should be serious
M/S ADANI AGRI FRESH LTD. v. MAHABOOB SHARIF                   11
          [JAGDISH SINGH KHEHAR, J.]

     dispute to be tried and there should be a good prima      A
     facie acts offraud. 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 B
       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 C
       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 D
       by the bank to have it discharged."

      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              E
      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    F
      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) G

      8. Reliance was also placed on Vinitec Electronics
Private Ltd. vs. HCL lnfosystems Ltd., (2008) 1SCC544. The
following observations have been recorded in the above
judgment:                                                      H
12   SUPREME COURT REPORTS                  [2015) 15 S.C.R.



A       "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
B    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.,
c    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
D      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
E      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
F
       connection with such a bank guarantee would vitiate
      ·the very foundation of such abank 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
G
       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
H      would adversely affect the bank and its customer at
M/S ADANI AGRI FRESH LTD. v. MAHABOOB SHARIF                       13
          [JAGDISH SINGH KHEHAR, J.)

     whose instance the guarantee is given, the harm or            A
     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              B
     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 C
    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 :      D

     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            E
     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   F
     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        G
     the law was 'settled'.

    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    H
14   SUPREME COURT REPORTS                   [2015] 15S.C.R:


A    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
B     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.
c     (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
D      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
E      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.

F      (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.

G      (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.

H
M/S ADANI AGRI FRESH LTD. v. MAHABOOB SHARIF                     15
          [JAGDISH SINGH KHEHAR, J.]

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

        "If the bank guarantee furnished is an unconditional
     and irrevocable one, it is not open to the bank to raise B
     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 C
     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 D
     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         E
     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            F
     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.                                                        G

     )()()(        )()()(         )()()(


    24. The next question that falls for our consideration is
    as to whether the present case falls under any of or both    H
16   SUPREME COURT REPORTS                     [2015] 15 S.C.R.


A    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.
B
     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 present case in which
C    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
D    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
E     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."
F
     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
G    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
H
M/S ADAN! AGRI FRESH LTD. v. MAHABOOB SHARIF                        17
          [JAGDISH SINGH KHEHAR, J.]

      in its favour. So far as the plea of "irretrievable injustice" A
      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       B
        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)
                                                                    c
      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, D
that the terms and conditions of a "Deed of Guarantee" could
not be 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. E
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 F
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 G
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:
                                                                    H
18       SUPREME COURT REPORTS               [2015] 15 S.C.R.


A                                     "ADANI
                                      AGRIFRESH LIMITED
                                      14th January, 2011
          To

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

          Sir,

              We inform you that, our settlement talk held at
D
          Mysore, regarding destroyed and damage of 8(eight)
          Loads of Apples supplied to you, four firm agreed to
          receive 1/41h value of total value. Hence, you are
          directed to send the amount in installments as agreed
E         after we supplying Apple load as earlier.

          Sincerely Yours,
           Sci/-
          Authorised Signatory
F          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
G 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
H by the appellant, before the trial court.
M/S ADANI AGRI FRESH LTD. v. MAHABOOB SHARIF                        19
           [JAGDISH SINGH KHEHAR, J.]

      11. It is not possible for us to determine the veracity or    A
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                B
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 forthe C
appellant candidly submitted, that the communication dated
14.01.2011 relieid 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 D
the concerned bank 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 E
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/sMFL,
for engineering the invocation of the bank guarantees executed F
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.
                                                                    G
     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
                                                                    H
20         SUPREME COURT REPORTS                  [2015] 15 S.C.R.


A    Ltd. vs. HCL lnfosystems 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
B    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 dir€ct respondent Nos.2
     and 3 - the State Bank of Mysore to honour the same forthwith.
c
          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
D 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
E 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
F communication dated 14.01.2011 (extracted above) is actually
    fabricated and doctored, and was never sent or executed by
    the appellant - M/sAAFL 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
G 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 - Mis RMSFC to initiate civil and
    criminal proceedings against the appellant, as may be
H permissible in accordance with law.
M/SADANI AGRI FRESH LTD. v. MAHABOOB SHARIF                            21
          [JAGDISH SINGH KHEHAR, J.)

       15. We are satisfied in granting liberty to respondent No.1     A
- 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.
                                                                       B
      16. The appeal is disposed of in the above terms.

Kalpana K. Tripathy                              Appeal disposed of.