In Brief
The Andhra Pradesh Pollution Control Board invoked three bank guarantees (totaling Rs. 25 lakhs) furnished by a coffee manufacturing company to secure environmental compliance with pollution control directions. The National Green Tribunal set aside the invocation, holding that natural justice required a hearing before invocation. The Supreme Court allowed the appeal, holding that bank guarantees are independent contracts separate from underlying obligations. Courts should not interfere with invocation absent fraud or special equity. Since the invocation complied with the guarantee terms and the respondent was aware of it, the invocation was valid and the refund was properly denied.
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