M/S. ADANI AGRI FRESH LTD. versus MAHABOOB SHARIF & ORS.
[2015] 15 S.C.R. 1, Supreme Court of India, 2015
Outcome: Disposed off
Segment: Facts
[2015] 15 S.C.R. 1 
M/S ADANI AGRI FRESH LTD. 
MAHABOOB SHARIF & ORS. 
(Civil Appeal No.14015 of2015) 
DECEMBER 02, 2015 
[JAGDISH SINGH KHEHAR AND R. BANUMATHI, JJ.] 
A 
B 
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

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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 
c 
Case Law Reference 
1988 (1) SCR 1124 
2007 (11) SCR 897 
relied on 
Para 6 
relied on 
Para 8 
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, 
F 
Subeshchandra Sagar, B. K. Gautam, Advs., for the 
Respondents. 
The Judgment of the Court was delivered by 
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. 
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4 
A 
B 
c 
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SUPREME COURT REPORTS 
[2015] 15 S.C.R. 
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 
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 
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 
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 
G 
H 
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 
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:
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, 
H 
.. 
For Adani Agrifresh Limited 
Sci/-
Authorized Signatory"
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: 
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A 
B 
c 
D 
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SUPREME COURT REPORTS 
[2015] 15 S.C.R. 
"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. 
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: 
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 
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 
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 : 
"27. Our attention was also drawn to the judgment of 
the learned Single Judge of the Madras High Court 
B 
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 
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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. 
c 
D 
E 
F 
G 
xxx 
)()()( 
)()()( 
43. The argument for the respondent is attractive but it 
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 
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 
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 
not arise if the court cannot interfere with the 
unconditional commitment made by the bank in the 
guarantees in question. 
)()()( 
)()()( 
xxx 
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: 
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12 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2015) 15 S.C.R. 
"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 
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., 
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 
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 
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 
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 
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 
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 
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A 
B 
c 
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SUPREME COURT REPORTS 
[2015] 15S.C.R: 
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 
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. 
(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 
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 
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. 
)()()( 
)()()( 
)()()( 
24. The next question that falls for our consideration is 
G 
as to whether the present case falls under any of or both 
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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. 
H 
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
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." 
c 
(Emphasis is ours) 
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 
A 
B 
c 
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E 
SUPREME COURT REPORTS 
[2015] 15 S.C.R. 
To 
Mr.Mahaboob Shariff, 
M/s R.M.S.Fruits & Co., 
# 1875, Anesarui Street, 
Behind Deveraja Market, 
Mysore 50 001 
Sub: Settlement of amount 
Sir, 
"ADANI 
AGRIFRESH LIMITED 
14th January, 2011 
We inform you that, our settlement talk held at 
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 
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. 
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 
G 
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.