N.T.P.C. LTD. vs FLOWMORE PVT. LTD.

The Supreme Court addressed the enforceability of bank guarantees issued under a contract, emphasizing that the guarantees are payable on demand without any reference to disputes between the parties. The Court held that the bank guarantees, particularly the one dated 26.7.86 for Rs.85,000, contained an express clause making the demand binding, while the others did not include such a clause but still guaranteed payment upon demand. The Court affirmed the principle that bank guarantees are independent contracts and must be honored regardless of underlying disputes, thereby upholding the enforceability of the guarantees in question.