---
title: "Breach of Main Contract no ground for stopping payment under Bank Guarantee"
date: 2022-02-22
author: "Shrishail Kittad"
url: https://www.indialaw.in/blog/banking-and-finance/breach-of-main-contract-no-ground-for-stopping-payment-under-bank-guarantee/
---

# Breach of Main Contract no ground for stopping payment under Bank Guarantee

Posted On - 22 February, 2022 •

By - [Shrishail Kittad](https://www.indialaw.in/people/adv-shrishail-kittad/ "Posts by Shrishail Kittad") and [Nim Dem Dorjee](https://www.indialaw.in/people/nim-dem-dorjee/ "Posts by Nim Dem Dorjee")

[![|ndustrial Tribunal: Supreme Court](https://www.indialaw.in/wp-content/uploads/19060165_1391425387571857_5252963044412178685_n-1.jpg)](https://www.indialaw.in/wp-content/uploads/19060165_1391425387571857_5252963044412178685_n-1.jpg)

Recently, the Delhi High Court, in *Satish Kansal vs Synergy Tradeco NV and others*, reiterated that letter of credits (LC)/bank guarantees are independent of the main contract and a dispute under the main contract cannot be a ground for injuncting payment under the [**LC/ bank guarantee.**](https://www.tradefinanceglobal.com/letters-of-credit/difference-between-lcs-and-bank-guarantees/)

Plaintiff contended that the description of goods/material supplied did not match with the shipment and fraud has been committed. It was further contended that irretrievable injustice would be caused to the plaintiff, if the aforesaid amounts under the LCs are remitted to the defendant. The defendants, on the other hand, argued that that out of the four containers supplied by the defendant to the plaintiff, only two containers have alleged to have defective goods. Therefore, at best, the case made out by the plaintiff is with regard to breach of contract and it is not the case of fraud.

The Court referred *[United Commercial Bank](https://www.indialaw.in/blog/banking-and-finance/) vs Banks of India* which settled the laws relating to judicial intervention on LCs/bank guarantee. It is a settled position of law that contracts in respect of Bank Guarantees and LCs are independent of the main contract between the parties. Therefore, even if there is a breach of the main contract between the parties, that cannot be a ground for injuncting payments under the Bank Guarantees/LCs. Bank Guarantees/LCs are irrevocable obligation undertaken by the issuing bank, to honour the same if the documents in terms of the said LCs/ Bank Guarantees are submitted by the beneficiary. LCs/ Bank Guarantees are the bedrock on which international trade and commerce is based. The goods are supplied by the seller to the buyer on the strength of the LCs/ Bank Guarantees provided by the buyer in favour of the seller, which functions as an assurance that once the goods are shipped and the documents in respect thereof are presented by the seller, the payment would be assured. The courts should be loath to interfere with the mechanism of LCs/ Bank Guarantees as it would have an impact on the efficacy and functioning of international trade.

The Court held that merely because there is a dispute between the buyer and the seller with regard to the contract of supply of goods, that cannot be ground for interfering with the LC/ Bank Guarantees. There are only two exceptions to the aforesaid principle where courts would pass an injunction respect of payments under an LC/ Bank Guarantees, in cases of ‘egregious fraud and irretrievable injustice’. It has repeatedly been held by the courts that ‘egregious fraud’ has to be a fraud of the kind which goes to the very root of the matter.

Applying the aforesaid principles, while dismissing the appeal, the Court held that no case for interference with the LCs has been made out by the plaintiff

[Download PDF](https://www.indialaw.in/blog/banking-and-finance/breach-of-main-contract-no-ground-for-stopping-payment-under-bank-guarantee//pdf/)

Last Updated On - 13 May, 2026

Disclaimer - This article is intended for general informational purposes and does not constitute legal advice. Readers should seek specific legal counsel in relation to their individual circumstances.

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# IndiaLaw LLP — Offices & Contact Details

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## General Contact

| | |
|---|---|
| **Website** | https://www.indialaw.in |
| **Primary email** | contact@indialaw.in |
| **Primary phone** | +91 836-9995919 |
| **Contact form** | https://www.indialaw.in/connect/ |
| **Careers (separate channel)** | https://www.indialaw.in/careers/ |


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### 1. Mumbai — Registered Office & Head Office (Apeejay Chambers)

| | |
|---|---|
| **Address** | Apeejay Chambers, Ground Floor, Wallace Street, Fort, Mumbai – 400 001 |
| **Phone** | [022-6924-7400](tel:02269247400) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/mumbai/ |
| **Practice focus** | Litigation · Arbitration · Insolvency & Bankruptcy · Corporate · Banking · Real Estate · IP |
| **Notes** | The HQ. 5 partners based here. Handles PAN-India litigation, arbitration, corporate, banking, IP and real estate practice. Largest team across all offices. |

### 2. Mumbai — Non-Litigation Office (Excelsior, Fort)

| | |
|---|---|
| **Address** | 4th Floor, New Excelsior Theatre Pvt. Ltd., Amrit Keshav Nayak Marg, Fort, Mumbai – 400 001 |
| **Phone** | [022-697-40500](tel:022-697-40500) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/mumbai/ |
| **Practice focus** | Non-litigation only — consultations, negotiations, transactional work |
| **Notes** | Opened 2024. Litigation and arbitration remain at the Apeejay Chambers head office. |

### 3. Delhi

| | |
|---|---|
| **Address** | Flat No. 1107 & 1108, Prakashdeep Building, Tolstoy Marg, Connaught Place, New Delhi – 110 001 |
| **Phone** | (general line: +91 836-9995919) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/delhi/ |
| **Practice focus** | Litigation · Arbitration · Insolvency & Bankruptcy · Corporate · Banking · Real Estate |
| **Notes** | 3 partners based here. Located near the Supreme Court of India, Delhi High Court and other appellate bodies. |

### 4. Kolkata

| | |
|---|---|
| **Address** | Centre Point Building, Room No. 214, 2nd Floor, Premises No. 21, Hemanta Basu Sarani, Opp. Great Eastern Hotel, P.S. Hare Street, Kolkata – 700 001, West Bengal |
| **Phone** | [+91 33 4813 1001](tel:+913348131001) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/kolkata/ |
| **Practice focus** | Insolvency & Bankruptcy · Commercial & Civil Litigation · Arbitration · Banking Litigation · Real Estate · Labour & Employment · Consumer |
| **Notes** | Advises banks, NBFCs, MSMEs and corporates on transactions and dispute resolution. Works in close coordination with the Mumbai HO. |

### 5. Chennai

| | |
|---|---|
| **Address** | GF-A, 19 Casa Major Road, Egmore, Chennai – 600 008 |
| **Phone** | (general line: +91 836-9995919) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/chennai/ |
| **Practice focus** | Litigation · Insolvency & Bankruptcy · Real Estate |
| **Notes** | Full-fledged office with experienced legal team. Supported by Mumbai HO. |

### 6. Bengaluru (Bangalore)

| | |
|---|---|
| **Address** | INDIALAW LLP, No. 7 Chinnaswamy Mudaliar Road, Shivaji Nagar, Bangalore – 560 051 |
| **Phone** | [080-4167-2444](tel:08041672444) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/bengaluru/ |
| **Practice focus** | Litigation · Insolvency & Bankruptcy · Real Estate · Family Laws · Labour |
| **Notes** | Located near Bangalore High Court. Handles corporate, commercial, banking and matrimonial disputes. |

### 7. Hyderabad

| | |
|---|---|
| **Address** | 403, 4th Floor, Sanatana Ecstasy Building, beside Tanishq Show Room, Himayathnagar, Hyderabad – 500 029, Telangana |
| **Phone** | [040-6666-5166](tel:04066665166) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/hyderabad/ |
| **Practice focus** | Litigation · Banking · Insolvency & Bankruptcy · Real Estate |
| **Notes** | Particularly well known for complex banking matters and real estate transactions. |

### 8. Cochin (Kochi)

| | |
|---|---|
| **Address** | Second Floor, Pulikkal Building, K.K. Padmanabhan Road, Ernakulam North – 682 018, Kerala |
| **Phone** | [0484-3583961](tel:04843583961) |
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| **Page** | https://www.indialaw.in/cochin/ |
| **Practice focus** | Litigation · Insolvency & Bankruptcy · Real Estate |
| **Notes** | Commercial disputes, property litigation, financial-claim arbitrations and real estate transactions. |

### 9. Noida (NCR)

| | |
|---|---|
| **Address** | No. 16 & 17, Silver Offices, 17th Floor, Wave One, Sector 18, Noida – 201 301 |
| **Phone** | (general line: +91 836-9995919) |
| **Email** | contact@indialaw.in |
| **Page** | https://www.indialaw.in/noida/ |
| **Practice focus** | Aviation · Insurance · Mergers & Acquisitions · Corporate |
| **Office head** | **Mr. Dinesh Gupta** (joined August 2025 to lead and expand the corporate practice) |
| **Notes** | Newest office. Sector-focused on highly regulated industries serving NCR-based clients. |

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## Quick-Dial Phone List

| Office | Phone |
|---|---|
| Mumbai HO (Apeejay) | 022-6924-7400 |
| Mumbai Excelsior | 022-697-40500 |
| Kolkata | +91 33 4813 1001 |
| Bengaluru | 080-4167-2444 |
| Hyderabad | 040-6666-5166 |
| Cochin | 0484-3583961 |
| **General / Marketing line** | **+91 836-9995919** |

Delhi, Chennai and Noida route through the general number.

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