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Court Can Interfere In Unconditional Bank Guarantee Only When There Isn’t A Slightest Possibility Of Amount’s Restitution: Bombay HC

The Bombay High Court observed that there can be no interference with an unconditional bank guarantee except when fraud is established or apprehension of irretrievable injustice is demonstrated. The Bench of Justice G. S. Patel observed that while a bank guarantee’s encashment or realization has a localized adverse effect on the bank, this must be set against, and weighed against, the larger adverse effect on country-wide commerce of the grant of an injunction itself. “Therefore, to successfully obtain an injunction, the localized injustice to the bank and its customer must be shown to be so grave, so monumental and so catastrophic, that the ill-effects or wider ramifications of an injunction would pale in comparison,” added the Court.

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