In Brief
An appellant (SEPCO) in an ongoing arbitration dispute was directed by the High Court to furnish a bank guarantee to secure an arbitral award. The appellant obtained a Rs. 30 crore bank guarantee from ICBC, a Scheduled Foreign Bank, incurring Rs. 30 lakhs in charges. The High Court later directed the appellant to replace it with a guarantee from a Scheduled Indian Bank. The Supreme Court allowed the appeal, holding the High Court erred. ICBC, though a foreign bank, is a Scheduled Bank under the RBI Act, and no statutory distinction between "Scheduled Indian Bank" and "Scheduled Bank located in India" exists. The Court noted ICBC's global standing and credibility, and held that once a party incurs expense complying with a court order, the court cannot arbitrarily modify that direction without good cause. The guarantee was valid and unconditional despite URDG reference.
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