N.T.P.C. LTD. vs FLOWMORE PVT. LTD. — C.A. No. 5437 - 5438/1995

Case Summary: NTPC Ltd. v. Flowmore Pvt. Ltd. (1995) The Supreme Court allowed NTPC's appeals and vacated the Delhi High Court's injunction restraining NTPC from invoking five bank guarantees issued by Canara Bank. NTPC held these guarantees from Flowmore under a 1980 supply contract for pumps and equipment; disputes arose regarding performance and payment obligations. The Court held that demand-based bank guarantees are unconditional instruments and banks cannot be restrained from honoring them merely because disputes exist between parties. The respondent's argument that implicit understanding between parties precluded invocation during pending arbitration was rejected as bank guarantees are independent of underlying contract disputes and can be invoked unless fraud of an "egregious nature" or genuine irretrievable injustice is established—neither existed here. This case analysis is maintained by casestatus.in based on publicly available court records.