Fargo Freight Ltd vs Commodities Exchange Corporation And ...

The Supreme Court held that the Delhi High Court erred in directing the 3rd Respondent, the issuer of the irrevocable Standby Letter of Credit, to keep it alive despite no allegations against them. The Court emphasized that a Letter of Credit transaction is independent of the underlying contract between the parties, and thus the 3rd Respondent should not have been bound by the injunction. The Court set aside the High Court's order, reaffirming that only the 1st Respondent should be responsible for maintaining the Letter of Credit until the arbitration dispute was resolved.