- (1.) Heard Sri S.P. Singh, learned counsel for the petitioner and Sri Shiv P. Shukla, learned counsel for the respondents.
(2.) By means of the instant writ petition under Article 226 of the Constitution of India, the petitioner is praying for following reliefs : "(i) Issue a writ, order or direction in the nature of certiorari quashing the order dated 22.8.2019 passed by opposite party No.3, contained in Annexure No.18 to this petition. (ii) Issue a writ, order or direction in the nature of mandamus commanding the opposite party Nos. 3 and 4 not to allot the work of Level Crossing No. 16-C K/M at AM 24/7-8 and LC No. 38/C K/M 35/3-4 between Rawatganj Nautanwa Station, till the disposal of representation/appeal submitted by the petitioner before the opposite party No.2 on 24.8.2019 contained in Annexure No.15. (iii) Issue a writ, order or direction in the nature of mandamus commanding the opposite party No.2 to take decision upon the representation/appeal dated 24.8.2019 against the order dated 16.7.2019, contained in Annexure No.15 to this petition. (iv) Issue any other writ, order or direction which this Hon'ble Court may deem just and proper in the circumstances of the case. (v) to allow the writ petition with costs." The aforesaid relief No.1 is to quash the letter/communication dated 22.8.2019 passed by the respondent no.3-Divisional Railway Manager, North Eastern Railway, Lucknow, by which the respondent no.3 directed the Bank to encash the Bank Guarantee submitted by the petitioner in favour of F.A. and C.A.O./NER/Gorakhpur. It is well settled that Bank Guarantee is a stand-alone agreement independent of the agreement in terms of which any Bank Guarantee was furnished. The Supreme Court in a Judgment reported as General Electric Technical Services Co. Inc. v. Punj Sons (P) Ltd ., (1991) 4 SCC 230, held that the Bank must honour the Bank Guarantee free from interference by the courts. Since the Bank pledges its own credit involving its reputation, it has no defence except in the case of fraud. The extract of the Judgment reads as under:- "9. The question is whether the court was justified in restraining the Bank from paying to GETSCO under the bank guarantee at the instance of respondent 1. The law as to the contractual obligations under the bank guarantee has been well settled in a catena of cases. Almost all such cases have been considered in a recent judgment of this Court in U.P. Cooperative Federation Ltd. v. Singh Consultants and Engineers (P) Ltd ., (1988) 1 SCC 174, wherein Sabyasachi Mukharji, J., as he then was, observed (SCC p. 189, para 28) that "[I]n order to restrain the operation either of irrevocable letter of credit or of confirmed letter of credit or of bank guarantee, there should be serious dispute and there should be good prima facie case of fraud and special equities in the form of preventing irretrievable injustice between the parties. Otherwise, the very purpose of bank guarantees would be negatived and the fabric of trading operations will get jeopardised". It was further observed that the Bank must honour the bank guarantee free from interference by the courts. Otherwise, trust in commerce internal and international would be irreparably damaged. It is only in exceptional cases that is to say in case of fraud or in case of irretrievable injustice, the court should interfere. In the concurring opinion one of us (K. Jagannatha Shetty, J.) has observed that whether it is a traditional bond or performance guarantee, the obligation of the Bank appears to be the same. If the documentary credits are irrevocable and independent, the Bank must pay when demand is made. Since the Bank pledges its own credit involving its reputation, it has no defence except in the case of fraud. The Bank's obligations of course should not be extended to protect the unscrupulous party, that is, the party who is responsible for the fraud. But the banker must be sure of his ground before declining to pay. The nature of the fraud that the courts talk about is fraud of an "egregious nature as to vitiate the entire underlying transaction". It is fraud of the beneficiary, not the fraud of somebody else." The issue has been examined by the Apex Court in a judgment reported as Gujarat Maritime Board Vs. Larsen and Toubro Infrastructure Development Projects Limited and another, (2016) 10 SCC 46, wherein it has been held as under: "12. An injunction against the invocation of an absolute and an unconditional bank guarantee cannot be granted except in situations of egregious fraud or irretrievable injury to one of the parties concerned. This position also is no more res integra. In Himadri Chemicals Industries Limited v. Coal Tar Refining Company , (2007) 8 SCC 110, at paragraph -14: (SCC pp.117-18) "14. From the discussions made hereinabove relating to the principles for grant or refusal to grant of injunction to restrain enforcement of a bank guarantee or a letter of credit, we find that the following principles should be noted in the matter of injunction to restrain the encashment of a bank guarantee or a letter of credit: (i) While dealing with an application for injunction in the course of commercial dealings, and when an unconditional bank guarantee or letter of credit is given or accepted, the beneficiary is entitled to realise such a bank guarantee or a letter of credit in terms thereof irrespective of any pending disputes relating to the terms of the contract. (ii) The bank giving such guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer. (iii) The courts should be slow in granting an order of injunction to restrain the realisation of a bank guarantee or a letter of credit. (iv) Since a bank guarantee or a letter of credit is an independent and a separate contract and is absolute in nature, the existence of any dispute between the parties to the contract is not a ground for issuing an order of injunction to restrain enforcement of bank guarantees or letters of credit. (v) Fraud of an egregious nature which would vitiate the very foundation of such a bank guarantee or letter of credit and the beneficiary seeks to take advantage of the situation. (vi) Allowing encashment of an unconditional bank guarantee or a letter of credit would result in irretrievable harm or injustice to one of the parties concerned."
(3.) In view of the aforesaid judgments, learned counsel for the petitioner prays for withdrawal of relief No.1 as reproduced hereinabove.;