2003 (9) TMI 812 - SC - Indian Laws

Suit for damages for non delivery - breach of the original agreement - supplemental agreement - enforcement of bank guarantees - HELD THAT - Undoubtedly, if the promisor abstains from doing something that could be consideration for the contract. However, in the supplemental agreement there is no mention that the consideration is non-enforcement of bank guarantees. Further the Respondents had delivered the dal. The Appellants has accepted the dal. Thus the Respondents could not be said to be in breach of the original agreement. If the Respondents were not in breach of the original agreement, then the bank guarantees could not have been enforced by the Appellant. Lastly and most importantly in the suit it is not claimed that the consideration for the supplemental agreement was not the enforcement of the bank guarantees. For all these reasons, we are in agreement with the reasoning given in the impugned judgment that the supplemental agreement was without consideration. We therefore see no reason to interfere. Accordingly the Appeal stands dismissed. There shall be no order as to costs.

Summary

Issues Involved:
The judgment involves issues related to breach of contract, consideration for supplemental agreement, and enforcement of bank guarantees.

Breach of Contract:
The Appellant filed a suit for damages due to non-delivery of dal as per the original agreement. The suit was decreed for the non-delivery of 89.607 tonnes of dal, but other claims were rejected as they arose under the supplemental agreement entered into under duress and coercion, without consideration.

Consideration for Supplemental Agreement:
The Appellant argued that the supplemental agreement did not require further consideration as it was part of the original agreement. However, the Court held that the original agreements were fulfilled once the dal was accepted, and the supplemental agreement for upgrading dal required separate consideration.

Enforcement of Bank Guarantees:
The Appellant claimed that the consideration for the supplemental agreement was the forbearance on their part not to enforce bank guarantees given by the Respondents. The Court found that there was no mention of this in the supplemental agreement, and since the Respondents had delivered and the Appellant had accepted the dal, there was no breach of the original agreement to warrant enforcement of bank guarantees.

The Appeal was dismissed as the Court agreed with the reasoning that the supplemental agreement lacked consideration. The judgment highlighted that the original agreements and the supplemental agreement served different purposes, and the claims in the suit were based solely on the supplemental agreement.