Banks cannot stop payment under Bank Gaurantees/ LCs for Dispute between Buyer/Seller

Satish Kansal Vs Synergy Tradeco NV (Delhi High Court) Merely because there is a dispute between the buyer and the seller with regard to the contract of supply of goods, that cannot be ground for interfering with the LC. Therefore, the courts have recognized only two exceptions to the aforesaid principle where courts would pass an injunction in respect of payments under an LC, in cases of ‘egregious fraud and irretrievable injustice’. It has repeatedly been held by the courts that ‘egregious fraud’ has to be a fraud of the kind which goes to the very root of the matter. Applying the a...