MAHARASHTRA STATE ELECTRICITY BOARD, BOMBAY vs OFFICIAL LIQUIDATOR, HIGH COURT, ERNAKULAM, ANR.

The Supreme Court held that the Board could recover the sum of Rs. 50,000 from the Bank under the bank guarantee, as the order by the company Judge prohibiting such recovery was not permissible under the Companies Act, 1956. The Court clarified that the bank guarantee constituted a contract of guarantee, not indemnity, and the transactions involved were independent. The Board was entitled to demand payment without proving default by the company in liquidation, thus allowing the appeal and reversing the High Court's decision.