Case Note & Summary
The plaintiff, M/s. Arad Metering Technologies Ltd., filed a suit seeking a restraint order against Defendant No.1, Axelia Utility Management Pvt. Ltd., from receiving payments under a bank guarantee dated 13th November 2013. The plaintiff also sought an interim injunction against Defendant No.2, the bank, from making any payment under the guarantee. The dispute arose from a Purchase Order dated 18th May 2010 for the supply of AMR water meters to Defendant No.1, who was engaged by the Municipal Corporation of Greater Mumbai for an infrastructure project. The plaintiff alleged that Defendant No.1 had committed fraud by invoking the bank guarantee despite the plaintiff having fulfilled its obligations. The court, after hearing both sides, found that the plaintiff had made out a prima facie case of fraud and that the balance of convenience was in favor of granting an injunction to prevent irreparable injury. The court restrained Defendant No.1 from receiving payment and Defendant No.2 from making payment under the bank guarantee until further orders.
Headnote
A) Bank Guarantee - Injunction Against Invocation - Fraud and Irretrievable Injustice - The court considered whether an injunction can be granted to restrain invocation of a bank guarantee where the beneficiary has allegedly committed fraud and where the plaintiff would suffer irreparable injury. Held that a prima facie case of fraud and irretrievable injustice was made out, warranting an interim injunction (Paras 1-34).
Issue of Consideration
Whether the plaintiff is entitled to an interim injunction restraining the invocation and payment of a bank guarantee on grounds of fraud and irretrievable injustice.
Final Decision
The court granted an interim injunction restraining Defendant No.1 from receiving payment and Defendant No.2 from making payment under the bank guarantee until further orders.
Law Points
- Bank Guarantee
- Injunction
- Fraud
- Irreparable Injury
- Prima Facie Case
- Balance of Convenience
