HINDUSTAN STEELWORKS CONSTRUCTION LTD. vs M/S.TARAPORE AND COMPANY

The Supreme Court upheld the Andhra Pradesh High Court's decision to restrain Hindustan Steelwork Construction Ltd. (HSCL) from encashing bank guarantees provided by Bank of India at the request of M/S. Tarapore & Co. The Court emphasized that the bank guarantees were intended to indemnify HSCL against losses due to contractor breaches, and HSCL's determination of such breaches was deemed final. The judgment clarified the enforceability of bank guarantees in contractual disputes, reinforcing the principle that banks must honor their commitments without contesting the contractor's claims.