9911796707
TMI Blog1998 (4) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... its Indian partner M/s. Alkaram Aluminium Pvt. Ltd of New Delhi, is engaged in the manufacture, installation and sale of aluminium curtain wall, cladding and glazing for the construction industry.Defendant no.1 is the Canara Bank, who have furnished the bank guarantee in question on behalf of the plaintiff. Defendant no.2 is M/s. Gemini Arts Ltd., a company engaged in the business of construction of multi-storeyed buildings. 5. Defendant No.2 undertook the construction of a multi-storeyed project, named as Prasad Towers, at Chennai. Pursuant to negotiations between the plaintiff and the said defendant regarding fixing of semi-utilized aluminium curtain wall for the said Prasad Towers, the defendant awarded the job to the plaintiff by communicating the work order to them on 28 December 1995. The relevant portion of the work order reads as follows: Completion Time: the total work shall be started immediately and completed within 5 months in phased manner from the date of this work order. However, we will give one more month for final finishing . x x x x x x x x x x x x Mobilization advance: 20% of the contract price shall be paid to you as Mobilization Advance against b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defeated and the present being neither a case of fraud nor of irretrievable loss, the suit is misconceived. In support, reliance is heavily placed on the decision of the Supreme Court in U.P. State Sugar Corporation Vs. Sumac International Ltd., (1977) 1 S 568. It is alleged that the advance of ₹ 20 lacs was given to the plaintiff for using it exclusively for the purpose of the contract, to be executed within six months, time being the essence of the contract, but after receiving the said amount, the plaintiff, with ulterior motive, did nothing towards the execution of the contract and did not utilise the said amount; the plaintiff has no valid claim against the defendant; it can always sue the defendant for damages and it has no right under law for injuncting the defendant from invoking the bank guarantee. It is denied that any officer of the plaintiff company had visited the site or that the defendant had ever waived the clause of completion of work within six months. It is asserted that the site was made available for commencement of work on 21 October 1996, and on failure of the plaintiff, the contract in question was cancelled telephonically on 9 August 1997 and the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etter to the plaintiff - site will be ready by 15 July 1997. 17 July 1996 Defendant's fax message to the plaintiff - site still not ready for commencing structural glazing work. Clearance will be intimated within a fortnight . 8 August 1996 Plaintiff's fax to the defendant, requesting it to make site available. 3 October 1996 Fax message from defendant's General Manager to the plaintiff stating: This is to inform you that after a slight delay on the project, we are back on track and we will be in a position to hand over the site to you by the 21st of this month. Please do the needful to start the work by then. 31 March 1997 Plaintiff's letter to defendant - informing that huge amount spent in procuring designed frames and brackets and requesting to inform if site is ready so that it could send workers to take measurements. 9 April 1997 Defendant No.2's letter to the plaintiff saying: we understand from the letter that you have already purchased th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce not being recovered in full and decision of the Employer that the said Contractor has not utilised the said advance or any part thereof for the purpose of the said contract as to the amount or amounts of loss or damage caused to or suffered by the Employer shall be final and binding on us . 11. It would appear that the bank guarantee is an absolute one and irrespective of the existence of any disputes between the parties, it is invokable by the beneficiary as per stipulations therein. 12. As noticed above, apart from the breach attributed to defendant no.2 in its failures to discharge its obligations, like those reflected in the affronted resume of correspondence, the invocation of bank guarantee is challenged primarily on the grounds: (a) the fraud allegedly perpetrated by defendant no.2 on the plaintiff and (b) irretrievable injustice to the plaintiff as a consequence of allowing its encashment. 13. Elaborating the plea of fraud played by defendant no.2, Mr.Bhagat, has contended that the gamut of correspondence between the parties clearly indicates that the defendant neither intended to nor was in a position to hand over the site but was only making fraudulent misrepr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ND mortgaged by M/s. Green Garden (P) Ltd. (13 grounds and 1804 sq.ft.) to the loans granted by the bank to M/s. Gemini Arts (P) Ltd. The mortgages are in favour of Indian Bank, Thousand Lights Branch. Above mortgages are extended to the loans granted by the bank to M/s. Ravishankar Industries (P) Ltd. The said mortgages are continuing and hence, bank has got rights over the below mentioned properties as per law. Any transaction in respect of these properties now known as Gemini Towers without consent of the bank is not binding on the bank and any person who deals with these properties either as a lessee or a purchaser or the like in any manner whatsoever will be doing so at his own risk and responsibility . 15. Though the fact of defendant being under a heavy debt is disputed but issue of public notice by the bank is not denied in the written statement. During the course of hearing, a copy of the letter dated 9 August 1997, written by defendant no.2 to the bank asking it to remit the amount under the bank guarantee in question was placed on record and it was submitted that the invocation of bank guarantee is not in accordance with its terms, as it neither stated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 450, National Thermal Power Corporation Vs. Flowmore Pvt. Ltd. (1995) 4 SCC 515 and my order in Delkon India Private Limited Vs. Bharat Heavy Electricals Limited. There is no quarrel with the principles of law governing the bank guarantees, laid down in the affronted judgments. It is well settled by a catena of decisions of the Supreme Court, including the ones noted above, that a bank guarantee is an independent contract whereby a bank undertakes to unconditionally and unequivocally abide by its terms and it cannot be affected by disputes between the parties to the underlying transactions. It creates an irrevocable obligation on the bank to perform the contract in terms thereof and on occurrence of the events mentioned therein, the bank guarantee becomes enforceable. It is only in exceptional cases like : (i) a case of established fraud (based on material events and not on bald pleadings in the application for stay) of egregious nature of which the bank has the knowledge and (ii) allowing encashment would result in irretrievable injustice to one of the parties concerned, the Court may interdict the encashment of the bank guarantee. In all other cases, the bank, giving such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if injunction, as prayed, is not granted, it would suffer irretrievable injustice. 21. As noticed above, there were delays in diverse ways by the defendant. To start with, the mobilization advance was released to the plaintiff on 9 May 1996 after the expiry of more than four months from the date of work order (dated 28 December 1995) and after more than three months of furnishing of bank guarantee by the plaintiff, when, as per the terms of the contract, the stipulated completion time of contract was only five months, extendable by one month for final finishing. Again, vide letter dated 29 May 1996, the plaintiff furnished to the defendant precise details of the deficiencies in the civil work as a result whereof it was unable to carry out the structural glazing. Though the defendant objected to the tone of the letter but nonetheless admitted that there were areas of civil work which were yet to be taken up. Similarly, it kept quiet on the request of the plaintiff contained in the same letter that the date of start of work may be considered from the date the site was handed over to them after completion of the civil work. 22. As for the plea in defense based on the work order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iff has successfully brought out special circumstances which are sufficient to make the present case an exceptional one justifying interference by restraining defendant no.2 from enforcing the bank guarantee in question. As a matter of fact having gained knowledge that the plaintiff has procured substantial material, even invocation of the bank guarantee after oral termination of the contract appears to be fraudulent. Bearing in mind all these factors, I find that special equities are in favour of the plaintiff and if the defendant is allowed to encash the bank guarantee in question, it would amount to irretrievable injustice to the plaintiff. I am, therefore, satisfied that it is a fit case where defendant no.1 needs being interdicted from encashing the bank guarantee in question. 25. For the view I have taken, it is unnecessary to go into the pleas of fraud and improper invocation of the bank guarantee raised by the plaintiff, although the invocation of bank guarantee by defendant no.2's letter dated 9 August 1997, asking the bank- defendant no.1 to remit the amount under the bank guarantee, prima facie, does not appear to be in terms of the bank guarantee. 26. For all ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
