M/S. ADANI AGRI FRESH LTD. versus MAHABOOB SHARIF & ORS.

Citation: [2015] 15 S.C.R. 1 · Decided: 02-12-2015 · Supreme Court of India · Bench: J.S. KHEHAR · Disposal: Disposed off
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Judgment (excerpt)

[2015] 15 S.C.R. 1 
M/S ADANI AGRI FRESH LTD. 
MAHABOOB SHARIF & ORS. 
(Civil Appeal No.14015 of2015) 
DECEMBER 02, 2015 
[JAGDISH SINGH KHEHAR AND R. BANUMATHI, JJ.] 
A 
B 
Injunction -
Of Bank Guarantee -
Scope of -
C 
Contractual agreement between the appellant (supplier) and 
the respondent (wholesale dealer) - Respondent furnished 
unconditional Bank Guarantee in favour of the appellant -
Outstanding demand by appellant to the respondent - On 
failure to honour the demand, appellant invoked Bank D 
Guarantees - Respondent filed suit seeking permanent 
injunction against the appellant and the Bank from paying 
the guaranteed amount - Trial Court by interim injunction 
restrained the Banks from makingpayment to the appellant-
E 
The Interim order was approved upto High Court - On appeal 
held: When in the course of commercial dealings 
·unconditional Bank guarantees have been given, the 
beneficiary is entitled to realize such guarantee irrespective 
of any pending disputes - Injunction of unconditional Bank F 
Guarantees can be granted only when the court is satisfied 
about the commission of a flagrant fraud, at the hands of 
one or the other contracting parties, or when the court is 
satisfied that an irreparable injury or irretrievable injustice 
would be caused to the concerned party- In the facts of the G 
present case, courts below were not justified in injuncting the 
invocation· of the three Bank Guarantees - Therefore, the 
Bank directed to honour the Bank Guarantees - Bank 
Guarantee. 
H 
1 
2 
SUPREME COURT REPORTS 
[2015) 15 S.C.R. 
A 
U.P. Cooperative Federation Ltd. v. Singh 
Consultants and Engineers (P) Ltd. (1988) 1 SCC 
174 : 1988 (1) SCR 1124; Vinitec Electronics 
Private Ltd. v. HCL lnfosystems Ltd. (2008) 1 SCC 
544: 2007 (11) SCR 897 - relied on. 
B 
c 
Case Law Reference 
1988 (1) SCR 1124 
2007 (11) SCR 897 
relied on 
Para 6 
relied on 
Para 8 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
14015 of 2015. 
From the Judgment and Order dated 16.12.2013 of the 
o High Court of Kamataka at Bangalore in Writ Petition No. 4654 
of2012. 
Akhil Sibal, Sr. Adv., Ashish Prasad, Ms. Mukta Dutta, 
Aditya Garg, Praveen Kumar, Advs., for the Appellant. 
E 
Praneet Ranjan, E. C. Vidya Sagar, Ms. Jennifer John, 
F 
Subeshchandra Sagar, B. K. Gautam, Advs., for the 
Respondents. 
The Judgment of the Court was delivered by 
JAGDISH SINGH KHEHAR, J. 1. Leave granted; 
2. The appellant-M/sAdaniAgri Fresh Ltd. (hereinafter 
referred to as 'M/sAAFL') is a supplier offruit and vegetables. 
G It entered into a contractual agreement with M/s RMS Fruits 
and Company (hereinafter referred to as 'M/s RMSFC'), a 
wholesale dealer in fruits, whose proprietor is one Mahaboob 
Sharif (respondent No.1 herein). For securing payment in lieu 
of the products supplied by the appellant to respondent No.1 -
H Mis RMSFC, the appellant required respondent No.1 to furnish 
M/SADANIAGRI FRESH LTD. v. MAHA800B SHARIF 
3 
[JAGDISH SINGH KHEHAR, J.] 
bank guarantees, whereby the appellant would be entitled to A 
recover the proceeds of the products, transported by it to Mis 
RMSFC. Three such registered bank guarantees constitute 
the basis of the controversy in hand. The said bank guarantees 
were executed by the State Bank of Mysore on 24.12.2010, 
09.02.2011 and 10.02.2011. The terms of the bank guarantees B 
being identical, reference to one will be sufficient for all intents 
and purposes. Relevant clauses of the first bank guarantee 
are being extracted hereunder: 
"NOW THE GUARANTOR HEREBY IRREVOCABLY C 
AND UNCONDIOTIONALLY GUARANTEES as follows, 
irrespective of the validity and legal effects of the 
agreement, if any entered between the parties and 
waiving all rights of objection and defense arising there 
from, that the Guarantor shall pay any amount up to the D 
maximum amount of guarantee mentioned herein 
below. upon the AAFL first demand to the AAFL in the 
event that the whole seller fails to perform its 
understanding under any agreement or terms and 
conditions contained in the consignment order and/or E 
sale invoice. or by any reason of whole seller failure to 
make the reimbursement thereof to the AAFL, in time. 
1. The Guarantee shall come into effect upon offer of 
delivery by the transport agent of AAFL to whole seller F 
at the invoiced address, to the whole seller account any 
co.nsignment and/or sale order after the date of 
execution of this guarantee deed. 
2. The Guarantor shall immediately pay at Gur
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