Mrtpc Stay On Bank Guarantees Under Sc Scrutiny

The Supreme Court yesterday decided to answer the question whether the Monopolies and Restrictive Trade Practices Commission can stay the encashment of bank guarantees in a complaint of unfair trade practice.

The court admitted the appeal of State Trading Corporation against the order of the commission staying the encashment of a bank guarantee against a firm. The court, while allowing the encashment, also stayed the proceedings in the commission related to the complaint.

The firm argued before a bench consisting of Chief Justice M M Punchhi, Justice B N Kirpal and Justice M Srinivasan that if the commission was not allowed to pass stay order in bank guarantees, it would virtually take away the power of the commission in dealing with unfair trade practice. STC has already encashed the guarantee, but it wanted the question to be decided.

 

In several recent judgements, the apex court has held that the courts should not stay the encashment of bank guarantees unless there was fraud or some other compelling reasons to do so. It had criticised some high courts for liberally passing stay orders, violating its earlier judgements.