In Brief
Gujarat Maritime Board invited bids to develop a port and issued a Letter of Intent (LoI) to L&T Infrastructure requiring a Rs 5 crore bank guarantee. When L&T could not proceed with the project, GMB cancelled the LoI and invoked the bank guarantee. L&T challenged this before the High Court, which allowed the writ petition. The Supreme Court held that a bank guarantee is an independent contract separate from the underlying LoI. The Court cannot use writ jurisdiction under Article 226 to restrain invocation of an unconditional guarantee merely because the underlying contract's cancellation is disputed. An injunction against such a guarantee can only be granted in cases of egregious fraud or irretrievable harm. The appeal was allowed and the High Court's order was set aside.
The lawyer headnote and full judgment text are available to registered users.