Important Legal Definitions

The judicial restraint of a beneficiary from invoking or encashing an unconditional bank guarantee, granted by Indian courts only upon establishing two narrow exceptions: (1) egregious fraud vitiating the guarantee, or (2) irretrievable injustice/harm.

In U.P. State Sugar Corporation v. Sumac International Ltd., the Supreme Court reaffirmed that courts will not grant an injunction restraining the encashment of an unconditional bank guarantee unless fraud of an egregious nature or irretrievable injustice is established.