In Brief
Standard Chartered Bank (formerly ANZ Grindlays) issued two bank guarantees totalling Rs. 91.67 lakhs to Heavy Engineering Corporation (HEC) as advance against plant and equipment supplies by Simon Carves India Ltd. (SCIL). When SCIL failed to perform its contractual obligations, HEC invoked both guarantees in late 1998. The bank refused payment, contending the invocation was unclear and fell outside the guarantee terms. The High Court Division Bench overturned the Single Judge's dismissal, holding the guarantees were properly invoked. The Supreme Court upheld this, confirming that bank guarantees are independent contracts: once the demand complies with guarantee terms, the bank must honour it regardless of underlying disputes—absent fraud or irretrievable harm.
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