9911796707
TMI Blog2004 (1) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... Units (CPU). As per the said contract, it was agreed that the work should be completed within 16 months in the first phase and 16 months in the second phase. In connection with the said contract, respondent No. 1 had asked the Bank of Maharashtra to issue three Bank Guarantees in favour of the appellant; the first one being No. 1/95-96 dated 3rd May, 1995 in the sum of Rs. 17,25,000, the second one being No. 2/95-96 dated 9th June, 1995 in the sum of Rs. 69,00,000 and third one being No. 6/96-97 dated 24th June, 1996 in the sum of Rs. 50,00,000 in order to secure the payment of refundable advance payments made to respondent No. 1. All these Bank Guarantees were to continue to remain in force until all sums due to appellant on account of advance are either adjusted or recovered in full or until the appellant discharged the Guarantee. The work was commenced by respondent No. 1. However, the work could not be completed according to the schedule and, therefore, finally on 30-1-1997, respondent No. 1 expressed serious cash flow problems and informed the appellant that their Bankers were not willing to give additional Bank Guarantees. By 31st October, 1997, according to the appellant, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uidator was accordingly added as a party-respondent. The learned counsel appearing on behalf of the appellant has submitted that the Trial Court has clearly erred in law in issuing an order of injunction restraining respondent No. 2 i.e. original Defendant No. 2 - Bank of Maharashtra from making payment in pursuance of the letter dated 16-1-1998 for an amount of Rs. 17,25,000, Rs. 69,00,000 and Rs. 50,00,000. The learned counsel appearing on behalf of the appellant has submitted that the Trial Court has clearly erred in holding that the plaintiff-respondent No. 1 herein had made out a case of special equity in their favour. She submitted that the Apex Court in catena of cases has held that an injunction restraining the Bank from making payment under valid Bank Guarantee cannot be issued unless it is proved that the fraud has been played upon the Bank while executing the documents in respect of the Bank Guarantee. It was submitted that, in the present case, the appellant had waited for long time and had, in fact, given an advance amount of Rs. 50,00,000 in order to ensure that the work which was entrusted to the plaintiff-respondent No. 1, is carried out within time. She further s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2001] 1 SCC 663 wherein the Apex Court has laid down that in respect of letter of credit no injunction should be granted and that the universal commercial practice adopted in 1983 was applicable, although it was not incorporated in the contract. She also relied upon the Judgment of the Apex Court in the case of Smt. Kalpana Kothari v. Smt. Sudha Yadav [2002] 1 SCC 203 and submitted that the provisions of section 8 of the Arbitration and Conciliation Act, 1996 were all comprehensive and once the provision is made for arbitration clause in the agreement, no stay is required to be obtained under 1996 Act and lastly she relied upon the Judgment of the Apex Court in the case of Union of India v. Popular Construction Co. [2001] 8 SCC 470. 5. The learned counsel appearing on behalf of respondent No. 2 has relied upon the judgment of the Apex Court in the case of the Official Liquidator v. Dharti Dhan (P.) Ltd. AIR 1977 SC 740 and has submitted that once the Provisional Liquidator is appointed, application has to be made to the High Court for the purpose of granting stay to the proceedings in the Trial Court as also in the High Court during the pendency of the liquidation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case that the fraud has been practiced by the appellant herein. On the contrary, from the perusal of the Bank Guarantees it is apparent that the appellant-company had tried to rescue respondent No. 1 from its financial crises and had from time to time made payments for the purpose of ensuring that the work which was entrusted to respondent No. 1 was completed within time. In order to secure the advance payments made to the respondent No. 1 which were substantial, the Bank Guarantees had been obtained by the appellant herein. In fact, there is correspondence on record to the effect that respondent No. 1 had asked for further credit from the appellant herein. However, since the work was not being completed within time, appellant could not give any further credit and, therefore, had asked respondent No. 1 to extend the Bank Guarantee from 14th November, 1997 to 31st March, 1998. Thus it is evident that the appellant had restrained itself from invoking the Bank Guarantee though the work in question was not completed according to the schedule and obviously defaults were committed by respondent No. 1. In the light of all this, I am of the view that the case which is tried to be made o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e view that no order can be passed on the said Civil Application. Respondent No. 2 may be a secured creditor vis-a- vis respondent No. 1. However, the said claim has nothing to do with the Bank Guarantees which have been given to appellant herein. It is an indepen- dent contract which is not dependent upon either liquidation proceedings or on any other contingency. In fact, from the perusal of the Bank Guarantees it is clear that the Bank had specifically agreed to honour the Bank Guarantees irrespective of the fact as to whether the liquidation proceedings were initiated against the said Company or not. The relevant clause is reproduced hereinbelow: "The guarantee herein contained shall not be determined or affected by the liquidation or winding up, dissolution or change of constitution or insolvency of the contractor but shall in all respect and for all purpose be binding and operative until payment of all money due to the Owner in respect of such liability or liabilities." In view of this specific clause, it is not open for the Bank to turn around and claim that it would not honour the Bank Guarantees. The Bank s claims vis-a-vis respondent No. 1 are clearly independent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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