M/S. RELIANCE SALT LTD. vs M/S. COSMOS ENTERPRISES

The Supreme Court addressed the enforceability of a Bank Guarantee in the context of a consignment agreement, emphasizing that the terms of the guarantee are binding and must be adhered to by the consignment agent. The Court held that the Bank is obligated to honor the guarantee upon demand by the Principal Company, without requiring further proof of breach beyond the demand itself. The judgment clarified the legal principles surrounding the nature of guarantees under contract law, affirming the enforceability of such agreements as per the terms laid out in the contract.