PRABIR KUMAR MAJUMDAR, J, J. ( 1 ) THE petitioner Scrap Mould entered into a contract with the respondent Metal Trade Corporation Limited on or about 10th June, 1987 for supply of 28,000 MT plus minus shredded scrap at the sellers option. The scrap was intended to be purchased by the respondent as the canalising agent for distribution to various ultimate consumers in the Country. ( 2 ) ONE of the terms and conditions of the said contract between the parties required the petitioner to furnish a performance bond from an approved ink for US Dollars 1,82,280. 00 being 5% of the value of the contract. ( 3 ) IN compliance with the aforesaid requirement the petitioner furnished a bank guarantee issued by Standard Chartered Rank, 4, Netaji Subhas Road, Calcutta for US Dollars 1,82,280. ( 4 ) BY the said bank guarantee, the said Standard Chartered Bank guaranteed that they would indemnify the respondent and/or keep the respondent indemnified against any loss or damage that may be caused to or suffered by the respondent by reason of any breach of contract by the petitioner of any of the terms and conditions of the said contract or performance thereof. ( 5 ) THE relevant portion of the said Bank Guarantee is as follows:"against Contract No. FT/11/ms/c-24/7-88 dated 10. 6. ( 5 ) THE relevant portion of the said Bank Guarantee is as follows:"against Contract No. FT/11/ms/c-24/7-88 dated 10. 6. 87 covering 28,000 MT 50/0 Melting Scrap of Carbon Steel-Shredded Scrap confirming to US ISIS Code No. 210/211 (hereinafter called said Contract) entered into between Metal Scrap Trade Corporation Ltd. Calcutta (hereinafter called the Purchaser) and Scrap Mould Will (hereinafter called the Seller) this is to certify that at the request of the seller, we, Standard Chartered Bank, 4, Netaji Subhas Road, Calcutta-l, are holding in trust in favour of the Purchaser Metal Scrap Trade Corporation Ltd. , Calcutta, the amount of US 1,82,280 (U. S. Dollars one hundred eighty two thousand two hundred eighty only) to indemnify and keep indemnified the Purchaser, Metal Scrap Trade Corporation Ltd. , Calcutta against any loss or damage that may be caused to or suffered by the Purchaser, Metal Scrap Trade Corporation Ltd. , Calcutta by reason of any breach of contract by Seller of any of the terms and conditions of the said contract and/or the performance thereof, we agree that the decision of the purchaser Metal Scrap Trade Corporation Ltd. , Calcutta whether any breach of any of the terms and conditions of the said Contract and/or in the performance thereof has been committed by the Seller and the amount of loss or damage that has been caused or suffered shall be final and binding on us and the amount of the said loss or damage shall be paid by us forthwith on demand to the Metal Scrap Trade Corporation Ltd. , Calcutta. " ( 6 ) BY a letter dated 19th December, 1987, the respondent invoked the said bank guarantee dated 1st July, 1987. The said letter is in following terms: Metal Scrap trade Corporation Ltd. 225f, Acharya j. C. Bose Road, Calcutta-20. Ref. No. ACT|ft|ms|c-24|87-88|p-4 Dated 19th december, 1987 The Manager Corporate Banking, Standard Chartered Bank, 4, Netaji Subhas Road, Calcutta. Dear Sir, Sub: Performance guarantee Bond No. 852/301/87 dt. 1. 7. 87 for USD 1,82,280 executed by you in our favour on behalf of Scrap Mould Will Bahrain claim for encashment thereof due to non-performance by the seller. In reference to above, we hereby invoke the above guarantee for encashment for a value of USD 1,82,280 (United States Dollar one lakh eighty two thousand two hundred eighty)as the party has failed to perform under the contract. In reference to above, we hereby invoke the above guarantee for encashment for a value of USD 1,82,280 (United States Dollar one lakh eighty two thousand two hundred eighty)as the party has failed to perform under the contract. You are directed to issue a draft in our favour in equivalent Indian rupees immediately on receipt of this notice for encashment. Thanking you, Yours faithfully, For Metal scrap Trade Corporation Ltd. Sd/- (S. Sinha ray) Dy. Manager (FTA) 19. 12. 87. ( 7 ) A further letter of demand by the respondent dated 2nd January, 1988 was also addressed to the said Standard Chartered Bank. The said letter is as follows: Metal Scrap Trade corporation Ltd. (A Government of india Enterprise) 225f, Acharya jagadish Bose Road, Calcutta-700 020. Ref. No. ACT|ft|ms|c-24|87-88|pg Date 2. 1. 1988. The Manager (Corporate Banking) Standard Chartered Bank, 4, Netaji Subhas Road, Calcutta-1. Dear Sir, Sub: Guarantee No. 852/301/87 dt. 1. 7. 87 for USD 1,82,280 executed by you claim for encashment vide our letter dated 19. 12. 87. Please refer to our letter invoking the above guarantee due to nonperformance of contract for supply of materials against our contract with. the seller. You are hereby requested to encash the said P. G. Bond for USD 1,82,280 and draft/pay order may be issued accordingly in our favour. Your immediate action in this regard will be appreciated. Thanking you, Yours faithfully, For Metal Scrap trade Corporation Ltd. Sd/- (S. Sinha ray) Dy. Manager (FTA ). ( 8 ) IT appears from the said letter dated 19th December, 1987 that the respondent invoked the said bank guarantee as, according to the respondent, the petitioner has failed "to perform under the contract". It appears from the said further letter of demand dated 2nd January, 1988, the respondent issued a reminder as to invocation of the said bank guarantee due to non-performance of contract for supply of materials against the respondent's contract with the petitioner. ( 9 ) READING said two letters together it appears that the respondent invoked the said bank guarantee on the ground that the petitioner has failed to perform under the contract or the petitioner's non-performance of the contract for supply of materials against the respondent's contract with the seller i. e. , the petitioner. ( 10 ) THE said contract dated 10th June, 1987 between the parties contained an arbitration clause. ( 10 ) THE said contract dated 10th June, 1987 between the parties contained an arbitration clause. ( 11 ) THE petitioner states that the petitioner has performed a substantial part of the said contract dated 10th June, 1987 and is ready and willing to perform the rest of the contract, but is prevented from so doing by the arbitrary action of the respondent and breach of its obligation by the respondent under the contract. ( 12 ) THE petitioner has filed an application under Section 20 of the Arbitration Act for filing of the said arbitration agreement contained in the said contract being Contract No. FT/11/ms/c-24/7 dated 10th June, 1987, as, according to the petitioner, the disputed and differences have arisen under the said contract. ( 13 ) THIS application is followed by the present application under Section 41 of the Arbitration Act for an injunction restraining the enforcement of the said bank guarantee pursuant to the demand made by the respondent by its said letter dated 19th December, 1987. ( 14 ) IT has been contended by the petitioner that the said bank guarantee has to be enforced in terms thereof, that is, the demand for payment or encashment of the bank guarantee must be in terms of the guarantee itself. ( 15 ) THE petitioner had contended that the said bank guarantee can be enforced upon fulfillment of the conditions, that the petitioner has committed a breach of any of the terms of the contract or performance thereof as a result of which a loss or damage has been caused to or suffered by the respondent, and the respondent has quantified the loss or damage allegedly suffered by the respondent due to alleged breach or non-performance of the contract. It is contended by the petitioner that none of the said conditions is fulfilled. It is also the contention of the petitioner that even if there is quantification of loss or damage such quantification of loss or damage has not been stated in the said letter of demand, nor has the: bank been informed of that otherwise. ( 16 ) THE petitioner has also contended that the allegations of the respondents in the said letter of demand dated 19th December, 1987 to the effect that the petitioner has failed to perform under the contract is wholly incorrect. ( 16 ) THE petitioner has also contended that the allegations of the respondents in the said letter of demand dated 19th December, 1987 to the effect that the petitioner has failed to perform under the contract is wholly incorrect. The petitioner has further contended that the respondent had deliberately and mischievously misled the bank to get the entire payment covered by the said bank guarantee by practising fraud upon the banker by suppressing the material fact. According to the petitioner such suppressing amounts to fraud giving rise to a special equity in favour of the petitioner. ( 17 ) THE respondent has disputed the aforesaid contentions of the petitioner, and has also denied that the said invocation of the Bank Guarantee by the respondent by its said letter dated 19th December, 1988 is illegal or wrongful. ( 18 ) IT has been submitted by the respondent that the Bank Guarantee is part of an international commercial transaction in the form of performance guarantee wherein an irrevocable commitment in the form of bank guarantee has been issued in favour of the beneficiary by the bank. ( 19 ) THE respondent has also submitted that it is not necessary for invocation of the said bank guarantee to actually quantify the actual loss or damage suffered by the respondent for the non-performance of the said contract. ( 20 ) THE respondent has also contended that under the said bank guarantee the bank undertook an absolute obligation to pay to the respondent and the bank is holding the money covered by the said bank guarantee in trust to and for and on behalf of the respondent. According to the respondent, this cannot be stopped directly or indirectly or in any manner by the petitioner. The respondent contends that the effect of the order prayed for by the petitioner would be an injunction restraining the bank from performing its obligations under the said guarantee, and the petitioner cannot be allowed to do indirectly what the petitioner cannot do directly. ( 21 ) THE principles upon which the enforcement of bank guarantee can be invoked or restrained are now well settled. The law on this point is now well settled both in the Courts in England and the Courts in our country. ( 21 ) THE principles upon which the enforcement of bank guarantee can be invoked or restrained are now well settled. The law on this point is now well settled both in the Courts in England and the Courts in our country. ( 22 ) THE Court of Appeal in England had occasion to consider this question in Hamzeh Melas and Sons vs. British Imex Industries (1958)2, Q. B. D. 127. There the plaintiffs contracted to purchase from the defendants a large quantity of reinforced steel rods to be delivered in two installments. Payment was to be effected by opening in favour of the defendants two letters of credit in respect of said two installments. Letters of Credit were opened, and the defendants realised the amount against the first of such letters of credit upon delivery of the first installment. The plaintiffs complained that the installment was defective, and sought an in- junction restraining the defendants from realising the second letter of credit. The Trial Judge refused such prayer and the plaintiffs appealed to Court of Appeal. It was held by Court of Appeal that although Court had wide jurisdiction to grant injunction, this was not a case in which in exercise of its discretion, it ought to do. Jenkins L. J. speaking for the Court observed:"we have been referred to a number of authorities, and it seems to be plain enough that the opening of a confirmed letters of credit constitutes a bargain between the banker and the vendor of the goods, which imposes upon the banker an absolute obligation to pay, irrespective of any dispute there may be between the parties as to whether goods are upto contract or not. An elaborate commercial system has been built up on the footing that the banker's confirmed credits are of that character, and, in my judgment, it would be wrong for this Court in the present case to interfere with that established practice. " ( 23 ) THE Court of Appeal in England had occasion once again to consider this question, in Elian and Rabbath Trading vs. Mastas and Ors. (1966)2 Lloyds Reports 495. Lord Denning MR while refusing to grant injunction observed:". . . . . a bank guarantee is very much like a letter of credit. The Courts will do their utmost to enforce it according to its terms. (1966)2 Lloyds Reports 495. Lord Denning MR while refusing to grant injunction observed:". . . . . a bank guarantee is very much like a letter of credit. The Courts will do their utmost to enforce it according to its terms. They will not, do in the ordinary course of things, interfere by way of in- junction to prevent its due implementation. " ( 24 ) THIS question was again considered in R. D. Harbottle (Mercantile) Ltd. vs. National Westminister Bank Ltd. 1977 (2) All E. R. 862 where the Court observed as follows:"it is only in exceptional cases that the Courts will interfere with the machinery of irrevocable obligations assumed by banks. They are the life blood of international commerce. Such obligations are regarded as collateral to the underlying rights and obligations between the merchants at either and of the banking chain. Except possibly in clear cases of fraud of which the banks have notice, the courts will leave the merchants to settle their disputes under the contracts by litigation or arbitration. The machinery and commitments of banks are on a different level. They must be allowed to be honoured free from interference by Courts. Otherwise, trust in international commerce could be irreparably damaged. " ( 25 ) THE point was again reviewed by Court of Appeal in the case of Edward Owen Engineering Ltd. vs. Barclays Bank International Ltd. 1977 (3) W. L. R. 764 when Lord Denning MR speaking for the court observed:"all this leads to the conclusion that the performance guarantee stand's on a similar footing to a letter of credit. A Bank which gives a performance guarantee must honour that guarantee according to its terms. It is not concerned in the least with the relations between the supplier and the customer, nor with the question whether the supplier has performed his contracted obligatories or not nor with the question whether the supplier is in default or not. The Bank must pay according to its guarantee on demand, if so stipulated, without proof or conditions. The only exception is whether there is a clear fraud of which the Bank had notice. " ( 26 ) RECENTLY, the House of Lords considered this question in (1982)2 All E. R. 720 in United City Merchants (Investments) Ltd. and Ors. vs. Royal Bank of Canada and Ors. The earlier view is reiterated. The only exception is whether there is a clear fraud of which the Bank had notice. " ( 26 ) RECENTLY, the House of Lords considered this question in (1982)2 All E. R. 720 in United City Merchants (Investments) Ltd. and Ors. vs. Royal Bank of Canada and Ors. The earlier view is reiterated. It is observed that whole commercial purpose, for which the system of confirmed irrevocable documentary credits had been developed in international trade was to give the seller of goods an assured right to be paid before he parted with control of the goods without risk of payment being refused, reduced or deferred because of a dispute with the buyer. The bank's duty to the seller is only vitiated if there was fraud on the part of the seller. ( 27 ) THE Supreme Court in Tarapore and Co. Madras vs. Tractor Export Moscow, AIR 1970 SC 891 considering the question of enforceability of a confirmed letter of credit observed that the opening of a letter of credit constitutes a bargain between the banker and the seller of the goods which imposes absolute obligation on the bank to pay. ( 28 ) THE Supreme Court in the case of United Commercial Bank vs. Bank of India reported in AIR 1981, S. C. 1426 has observed that a bank issuing or confirming a letter of credit is not concerned with the underlying contract between the buyer and seller. The Supreme Court also proceed to observe that the opening of a confirmed letter of credit constitutes a bargain between the bankers and the vendors of the goods which imposed on the banker an absolute obligation to pay. It is further observed by the Supreme Court that the same consideration also applied to a bank guarantee. A letter of credit sometimes resembles and is analogous to contract of guarantee. A bank which gives a performance guarantee must honour that guarantee according to its terms. ( 29 ) THIS is the consistent view taken by the Supreme Court in the later decisions with regard to the effect and operation of the performance guarantee or the bank guarantee. The same view is also reiterated in Centax (India) Ltd. vs. Vinmar Impex, 1986 (4) S. C. C. 136. ( 29 ) THIS is the consistent view taken by the Supreme Court in the later decisions with regard to the effect and operation of the performance guarantee or the bank guarantee. The same view is also reiterated in Centax (India) Ltd. vs. Vinmar Impex, 1986 (4) S. C. C. 136. ( 30 ) THE latest decision of the Supreme Court on the point is in the case of J. P. Co-operative Federation Ltd. vs. Singh Consultants and Engineers Pvt. Ltd. reported in 1988 (1) S. C. C. 174. The Supreme Court again had to consider the effect of the bank guarantee and whether the bank should be restrained from honouring such guarantee given by it. In this case, it has been held by the Supreme Court that an irrevocable commitment either in the form of confirmed bank guarantee or irrevocable letter of credit cannot be interferred with except in case of fraud or in case of question of apprehension of irretrievable injustice has been made out. It has also been held by the Supreme Court in this case that commitments of the bank must be honoured free from interference by the courts. Otherwise, trust in commerce internal or international would be irreparably damaged. It is, however, recognised by the Court that only exceptional cases that is to say in case of fraud or in case of irretrievable injustice that may be caused to the party, the Court should interfere by issuing an order restraining the bank from honouring the guarantee. ( 31 ) THE Supreme Court has also recognised the position that whether it is a traditional letter of credit or a new device like performance band or performance guarantee, the obligation of the bank appears to be the same. ( 32 ) THIS Court also had occasion to consider the effect of bank guarantee and whether injunction should be granted restraining the bank from honouring the guarantee. These are the cases AIR 1979, Calcutta 44 (Texmaco Ltd. vs. State Bank of India), 83 C. W. N. 802 (Bird Co. vs. Tripura Jute Mills), AIR 1985 Cal. 23 ' (National Project Construction Corporation Ltd. vs. G. Ranjan), AIR 1985, Cal. 96 (United Commercial Bank vs. Hanuman Synthetics Ltd.), AIR 1986, Cal. 31 (D. T. R. Construction vs. Steel Authority of India) and others. vs. Tripura Jute Mills), AIR 1985 Cal. 23 ' (National Project Construction Corporation Ltd. vs. G. Ranjan), AIR 1985, Cal. 96 (United Commercial Bank vs. Hanuman Synthetics Ltd.), AIR 1986, Cal. 31 (D. T. R. Construction vs. Steel Authority of India) and others. ( 33 ) KEEPING the aforesaid principles in mind let me now examine the bank guarantee in the instant case. I have already set out the bank guarantee that the bank is to indemnify and keep indemnified the purchaser Metal Scrap Trade Corporation Ltd. by reason of any breach of contract by the seller of any of the terms and conditions of the said contract and/or the performance thereof. It would also appear from the said bank guarantee that the decision of the purchaser Metal Scrap Trade Corporation Ltd. whether any breach of terms and conditions or in the performance thereof has been committed by the seller and the amount of loss or damage that has been caused or suffered shall be foal and binding on the bank and the amount of such loss or damage shall be paid by the bank forthwith on demand to the Metal Scrap Trade Corporation Ltd. Calcutta. ( 34 ) THE effect of the said bank guarantee is that the bank forthwith en demand shall pay the amount of the loss or damage that may be caused to or suffered by the purchaser Metal Scrap Trade Corporation Ltd. , and also the decision of the Metal Scrap Trade Corporation Ltd. as to whether there has been any breach of any terms and conditions of the contract or in the performance thereof and also the amount of loss or damage that has been caused or suffered shall be final and binding on the bank. Therefore, as soon as there is invocation of the bank guarantee in writing as has been done here by the letter dated 19th December, 1987 read with the other letter dated 2nd January, 1988 the bank should honour the said guarantee. It appears from the letter dated 19th December, 1987 that the Metal Scrap Trade Corporation Ltd. invoked the bank guarantee for encashment for a value of USD 1,82,280 (United States Dollar One lac eighty two thousand two hundred eighty) as according to the Metal Scrap Trade Corporation Ltd. the party has failed to perform under the contract. It appears from the letter dated 19th December, 1987 that the Metal Scrap Trade Corporation Ltd. invoked the bank guarantee for encashment for a value of USD 1,82,280 (United States Dollar One lac eighty two thousand two hundred eighty) as according to the Metal Scrap Trade Corporation Ltd. the party has failed to perform under the contract. The Second letter dated 2nd January, 1988 the Metal Scrap Trade Corporation Ltd. invoked the bank guarantee due to non-performance of the contract for supply of materials against their contract with the seller. ( 35 ) IT has been contended by the petitioner seeking an order of injunction restraining the bank from honouring the bank guarantee that the guarantee is not unconditional guarantee. It is also contended on behalf of the petitioner that there has been no assessment of loss or damage. Therefore, as has been contended by the learned Counsel for the petitioner, the invocation of bank guarantee has not been made in accordance with the terms of the bank guarantee. The learned Counsel for the petitioner submits that it is clear from the decisions of English Courts as also the Supreme Court and High Courts of this Country that the bank guarantee must be enforced according to the terms of the guarantee. According to the learned Counsel for the petitioner the conditions of the bank guarantees are that there has been a breach of contract and secondly as a result of such breach the party invoking the bank guarantee has suffered loss or damages, and thirdly, such loss or damage has to be quantified. The learned Counsel contends, that it has not been adjudicated as yet that there has been any breach of contract on the part of the petitioner nor the condition has been fulfilled, namely, that the quantification of amount of loss and damages by some adjudication. ( 36 ) THE learned Counsel for the petitioner has drawn the attention of the Court to the bank guarantee and particularly the expression contained therein that the bank agreed to indemnify and keep indemnified the respondent Metal Scrap Trade Corporation Ltd. against any loss or damage that may be caused to or suffered by the respondent by reason of any breach of the contract by the seller, namely, the petitioner, of any of the terms and conditions of the contract or performance thereof. The learned Counsel has also pointed out that there is no decision by the respondent about the amount of loss or damage that has been caused or suffered by the respondent. It is submitted by the learned Counsel for the petitioner that by the letter of invocation dated 19th December, 1987 or the other letter dated 2nd January, 1988, it has been alleged by the respondent that the party, namely, the petitioner has failed to perform under the contract and by such invocation the respondent has demanded the entire value of the bank guarantee that is USD 1,82,280. It will appear from the said invocation letter that the respondent has failed to make any decision quantifying the amount of loss alleged to have been suffered by the respondent nor is there any mention that the respondent has suffered any loss or damage nor has there been any mention of any quantification of the alleged loss or damage. It is, therefore, contended by the learned Counsel appearing for the petitioner that this invocation is not according to the terms of the bank guarantee and since it is not in accordance with the terms and conditions of the bank guarantee, the bank should be restrained from honouring the bank guarantee on the alleged demand of the respondent as continued in the said letter of invocation. The learned Counsel referring the various English decisions referred to above as also the Indian decisions mentioned above, strenuously contended that as there has been no quantification of the amount of loss nor as there has been any adjudication of breach of the contract the invocation is not according to the terms of the contract and it has been consistently held by the Courts that bank guarantee should be honoured in accordance with its terms and conditions. ( 37 ) IT has also been contended on behalf of the petitioner that there has been suppression on the part of the respondent before invoking the said bank guarantee that the petitioner has fully performed its part of the contract. The petitioner contends that the respondents' allegation that the petitioner has failed to perform under the contract is not correct as there has been part performance of the contract by the petitioner, and it cannot be the case that the petitioner failed to perform under the contract, that is, nothing has been supplied by the petitioner. The petitioner contends that the respondents' allegation that the petitioner has failed to perform under the contract is not correct as there has been part performance of the contract by the petitioner, and it cannot be the case that the petitioner failed to perform under the contract, that is, nothing has been supplied by the petitioner. The learned Counsel contends that this is a suppression of fact which tantamounts to fraud resulting in special equities in favour of the petitioner. ( 38 ) IN this connection, the learned Counsel for the petitioner has placed heavy reliance on the decision of this Court in the case of Banerjee and Banerjee vs. Hindusthain Steel Works Construction Ltd. reported in AIR 1986 Cal 374 . In this case there were two sets of bank guarantees one of security deposit and the other in respect of the mobilisation advance made to the petitioner in this case. It was noticed by the learned Single Judge deciding the said case that under the terms of the guarantees, the party invoking the guarantee had to make a written demand stating that the person at whose instance the said guarantee was furnished had committed a breach of contract and as a result loss or damage has been suffered by the party invoking the bank guarantee. According to the learned Judge deciding the said case that the two conditions are there in this kind of guarantee, that is, there has been a breach of contract and as a result thereof, the party invoking the bank guarantee has suffered loss and damages and. has taken a decision regarding the quantification of such damage of loss. ( 39 ) THE learned Judge finally held that there has been suppression of fact inasmuch as the beneficiary attempted to recover the entire sum under the bank without making any decision to the quantum of loss or damage suffered and this suppression of material fact would give rise to a special equity in favour of the person at whose instance the said guarantee was furnished. The learned Judge, has, however, found that although there was no allegations of fraud in, the petite a willful or false representation. by the beneficiary that the entire guaranteed amount had become due should be treated on the same footing as fraud giving rise to special equity. The learned Judge, has, however, found that although there was no allegations of fraud in, the petite a willful or false representation. by the beneficiary that the entire guaranteed amount had become due should be treated on the same footing as fraud giving rise to special equity. ( 40 ) THE learned Counsel for the petitioner has also in this connection, relied on a decision of Delhi High Court reported in AIR 1988 Del 207 which followed the decision of this Court in Banerjee and Banerjee (Supra ). ( 41 ) THE learned Counsel for the respondent has, however, submitted that the bank guarantee is really a contract between the bank and the beneficiary of the bank guarantee to the effect that whenever there is a demand by the beneficiary in terms of the bank guarantee, the bank ought to honour the bank guarantee. In honouring such bank guarantee the bank is not concerned with the underlying contract nor is the bank concerned with the relationship between the beneficiary and the party at whose instance the bank has furnished the guarantee. According to the learned Counsel for the respondent, the bank is also not concerned with the question whether the party furnishing the bank guarantee has committed any breach of contract or has failed to perform its contractual obligations. ( 42 ) IT has also been contended by the learned Counsel for the respondent that it is sufficient if the bank understood the purport of the notice in a commercial sense then the bank has to honour the bank guarantee and the beneficiary can invoke the same for enforcement. ( 43 ) IT has also been contended by the learned Counsel for the respondent that mere allegation of fraud is not enough to persuade the court to grant the relief by way of an order of injunction. He has, however, submitted that it is true that the fraud may give rise to special equity and that is only exception to the rule that the Court should not interfere with enforcement of the bank guarantee which is an independent contract between the bank and the beneficiary of the guarantee. The learned Counsel for the respondent has also submitted that it is not enough to allege fraud. It must be established and very clearly established. The learned Counsel for the respondent has also submitted that it is not enough to allege fraud. It must be established and very clearly established. In other words, there must be very strong prima facie case of fraud, and special equities in the form of preventing irretrievable injustice. ( 44 ) THE learned Counsel has relied on a very recent decision of th8 Supreme Court in U. P. Co-operative Federation Ltd. vs. Singh Consultants 1988 (1) S. C. C. 174 (Supra ). It has been contended by the learned Counsel for the respondent that the special equity has to be understood in the sense of irretrievable injustice. It has further been observed by the Supreme Court, as has been pointed out by the learned Counsel for the respondent that it must be of an egregious nature of fraud of the beneficiary and not the fraud of somebody else and there must be strong prima facie case in special equity requiring interference by the court for preventing irretrievable injustice between the parties. ( 45 ) REGARDING the quantification of amount of loss the learned Counsel for the respondent has pointed out that this very objection has already been taken into consideration in the Texmaco case (Supra) decision of which has also been followed and confirmed in the latest Supreme Court decision. in 1988 (1) S. C. C. 174 (Supra ). ( 46 ) IT has been observed in the Texmaco Case ( AIR 1979 Cal. 44 ), para 12 as follows -"then it was contended that there has been no decision of STC as contemplated under C1. 3 referred to hereinbefore and no demand. This position also, in my opinion, cannot be sustained because in the letter dated 15th June, 1974 it has been stipulated that "notwithstanding the foregoing" STC maintains Texmaco failed to perform in an orderly manner its obligations under the aforesaid contract. In the view of the foregoing, STC hereby asks you to make full payment". Whether STC has acted logically or illogically, rationally or irrationally is not the question relevant but in this case of course there is no evidence that STC has acted illogically or irrationally. Then, Counsel for the petitioner submitted that with a foreign buyer it was being contended by STC that there has been orderly performance. Whether STC has acted logically or illogically, rationally or irrationally is not the question relevant but in this case of course there is no evidence that STC has acted illogically or irrationally. Then, Counsel for the petitioner submitted that with a foreign buyer it was being contended by STC that there has been orderly performance. Therefore, it was urged that there was inconsistent stand or in other words STC could not be allowed to both approbate and reprobate. This position also is not relevant. Under the terms of the bank guarantee it is upon STC's decision to claim the money notwithstanding any dispute between STC and Texmaco and that the bank has obliged itself to discharge that liabilities. Learned Solicitor General appearing for the STC has assured the Court that in case ultimately STC succeeds in reducing ok in wiping out the liability payable to the foreign Yugoslav firm in respect of the main contract, proportionate reduction and refund will be given to the petitioner. In that view of the matter, the terms of the guarantee oblige the bank to pay to the STC on demand being made and the existence of the dispute as to due performance or orderly performance is irrelevant on this aspect of the matter. There is no question of any fraud or any equity entitling the plaintiff to an injunction. If that is the position then, in my opinion, the plaint' is not entitled to an injunction in this application. " ( 47 ) THIS court also in the case of D. T. H. Construction Pvt. Ltd. AIR 1986 Cal. 31 (Supra) has held that if the notice of demand issued by the beneficiary of the bank guarantee is not strictly in accordance with the language of the bank guarantee that would not be an excuse for the bank for non-payment of the amount due under the guarantee. 31 (Supra) has held that if the notice of demand issued by the beneficiary of the bank guarantee is not strictly in accordance with the language of the bank guarantee that would not be an excuse for the bank for non-payment of the amount due under the guarantee. It has been observed that if the bank understood the purport of the notice, then the bank cannot be heard to say that there has been no statement in the notice that the beneficiary has suffered loss and/or damages on account of the defaults committed by the person on whose behalf the guarantee was given this Court has also observed in this case that if there is substantial compliance with the terms of the guarantee in the notice that would be sufficient and if there be no defect in understanding the nature and purport of Such notice by the bank, the bank is bound to honour its commitment under the guarantee. In this connection, the Court referred to a decision of this Court in another case reported in AIR 1983 Cal. 91 . ( 48 ) THE principle of law as deduced from the cases referred to above is that the bank guarantee is a contract between the bank and the beneficiary independent of any underlying contract between the parties. The only exception to such rule is the case of fraud. Another circumstances has been added, namely, irretrievable injustice as has been indicated in the latest. Supreme Court case in U. P. Co-operative Federation case (Supra ). It has also been recognised by the Supreme Court as also the other High Courts that it is certainly not enough to allege fraud; it must be established, and in such circumstances very clearly established. ( 49 ) IN my opinion, there is no case for irretrievable injustice. If it is ultimately found that the bank has honoured the bank guarantee not according to law or that the beneficiary has invoked the guarantee not according to its term, the petitioner can very well proceed against the defaulting party under the law and claim damages from the defaulting party, if such case is established in a court of law. ( 50 ) I see that the invocation of the bank guarantee by the beneficiary has been made in this case in accordance with the terms of the bank guarantee. ( 50 ) I see that the invocation of the bank guarantee by the beneficiary has been made in this case in accordance with the terms of the bank guarantee. I also hold that quantification of loss or damage is not absolutely necessary but a decision by the beneficiary that there has been a loss or damage caused to the beneficiary by reason of breach of contract by the party at whose instance the bank guarantee was furnished was sufficient. The demand for the sum covered by the bank guarantee may be taken as a decision as to quantification of loss or damages and such is not dependent upon any adjudication by any other forum. When the bank guarantee is -invoked as has been done here claiming the entire sum covered by the bank guarantee, that may be taken as a loss or damages suffered by the beneficiary. The learned Counsel for the petitioner has however, submitted that since there is difference in view with regard to the enforcement of the bank guarantee as has been indicated in the case of Banerjee and Banerjee (Supra) and the other cases of this Court referred to above, this court should refer the matter to a larger bench for final decision on it. I do not think that it is necessary. I have referred to the Supreme Court decision on the point as also the English decisions and the consistent view taken by the Courts is that the bank should always honour bank guarantee on demand by the beneficiary irrespective of any dispute that may arise between the parties under the underlying contract entered into between the parties, inasmuch as the bank is not a party to such contract nor is the bank bound by such contract. The only exception, as has been pointed out, is the case of fraud and also another circumstance that is irretrievable injustice. I have already indicated before, that no case of fraud has been established in this case nor is there any case for apprehension of irretrievable injustice. ( 51 ) THE bank's obligation to honour the bank guarantee has been made clear by the several decisions of the Supreme Court and therefore, the decision in Banerjee and Banerjee (Supra), although taken on the facts of that case, does not lend any assistance to the petitioner. ( 51 ) THE bank's obligation to honour the bank guarantee has been made clear by the several decisions of the Supreme Court and therefore, the decision in Banerjee and Banerjee (Supra), although taken on the facts of that case, does not lend any assistance to the petitioner. ( 52 ) I would, therefore, hold that the petitioner is not entitled to reliefs claimed in this, petition. I also do not see any reason to interfere with the bank guarantee nor do I see any prime facie case for grant of an order of injunction as prayed for by the petitioner. ( 53 ) THIS application, therefore, fails and is hereby dismissed. There will be no order as to costs in the facts and circumstances of this case. Interim orders are vacated. ( 54 ) THE learned Advocate appearing for the petitioner prays for stay of operation of this order. The prayer is refused. Application dismissed.