AIR 1981 SUPREME COURT 1426 ::1981 UJ (SC) 653 ::1981 (2) SCC 766 ::1981 Bom LR 83 379 ::(1982) 95 Mad LW 29 ::1983 Bom LR 379

Supreme Court Of India

(From : Bombay)*

Hon'ble Judge(s): A. C. Gupta, A. P. Sen , JJ

Civil P.C. (5 of 1908) , O.39 R.1, O.39 R.2— Banking Regulation Act (10 of 1949) , S.6— Interim injunction - Banking - Irrevocable letter of credit - Courts should refrain from granting injunction restraining performance of contractual obligations arising out of a letter of credit or a Bank guarantee between one bank and another - Grant of injunction - Interference by Supreme Court with such an interlocutory order. Appeal No. 382 of 1979 in Suit No. 1028 of 1979, D/- 17-10-1979 (Bom), Reversed. Constitution of India , Art.136— Contract Act (9 of 1872) , S.126— Banking - Guarantee - Letter of Credit. A bank issuing or confirming a letter of credit is not concerned with the underlying contract between the buyer and seller. Duties of a bank under a letter of credit are created by the document itself, but in any case it has the power and is subject to the limitations which are given or imposed by it, in the absence of the appropriate provisions in the letter of credit. In view of the banker's obligation under an irrevocable letter of credit to pay, his buyer-customer cannot instruct him not to pay. The opening of a confirmed letter of credit constitutes a bargain between the banker and the vendor of the goods which imposes on the banker an absolute obligation to pay. The same considerations apply to a bank guarantee. A letter of credit sometimes ....