The Civil Court at Tenali has jurisdiction to try the suit, and the defendant's actions in invoking the bank guarantee and collecting double the amount due from the plaintiff were contrary to law and not permissible.

JUDGMENT :

This Appeal, under Section 96 of the Code of Civil Procedure [for short ‘the C.P.C.’], is filed by the Appellant/defendant challenging the Decree and Judgment, dated 30.12.2005, in O.S. No.47 of 1998 passed by the learned Principal Senior Civil Judge, Tenali [for short ‘the trial Court’]. The Respondent herein is the plaintiff in the said Suit.

2. The Plaintiff filed the above said suit for relief of declaration that the plaintiff is entitled to the amount deposited by the defendant federation, rendition of accounts and ascertainment of amount payable, for costs and subsequent interest with bank rate.

3. Both the parties in the Appeal will be referred to as they are arrayed before the trial Court.

4. The brief averments of the plaint, in O.S. No.47 of 1998, are as under :

(i) The plaintiff is a proprietary concern doing business in selling coconut oil etc., at Tenali. The plaintiff, earlier, had agreement with the defendant federation for promotion and sale of coconut oil in Andhra Pradesh and latest agreement is dated 15.04.1996. As per terms of agreement the defendant has to supply coconut oil in various packages of different capacities, for which the plaintiff has to furnish bank guarantee for Rs.10,00,000/-. Commission will be given to the plaintiff also. That the plaintiff should pay in cash for the consignment within 15 days else the plaintiff is liable to pay interest. On the request of plaintiff, Indian Bank, Tenali Branch extended bank guarantee for Rs.10,00,000/- i.e., on 28.05.1997 for Rs.7,50,000/- and for Rs.2,50,000/-, in total Rs.10,00,000/- bank guarantee will be expired by 17.1.1998. The defendant by its letter dated 15.12.1997 addressed to the bank, Invoked the bank guarantee to a tune of Rs.8,36,816/- and requested the bank to pay the same by 22.12.1997. The defendant wrote another letter dated 27.01.1998 to the bank referring to the letter dated 15.12.1997 requesting the bank to pay the invoked amount by 10.02.1998. The plaintiff went to Trivendram and met the officials of the defendant company, discussed the matter with them by staying there itself from 19.02.1998 to 23.02.1998. As a result the defendant company on 23.02.1998 telephoned to the Indian bank, Tenali Branch and said that the plaintiff had paid the amount by way of delivering post dated cheques and the bank need not sent the money Invoked, as nothing is due from plaintiff as on 23.02.1998 in view of the post dated cheques for Rs.8,00,000/-. The defendant also informed the bank people through phone that the invocation of bank guarantee on 23.12.1997 and follow up letter dated 27.01.1998 are to be ignored by the bank. Under the circumstances, plaintiff gave a letter date 23.02.1998 to the defendant and the details of post dated cheques given by the plaintiff to the defendant federation on 23.02.1998 are as follows:-

1. Cheque No.447651, dt.10.03.1998 for Rs.1,00,000/-

2. Cheque No.447652, dt.21.03.1998 for Rs.1,00,000/-

3. Cheque No.447653, dt.31.03.1998 for Rs.1,00,000/-

4. Cheque No.447654, dt.13.04.1998 for Rs.1,00,000/-

5. Cheque No.447655, dt.23.04.1998 for Rs.1,00,000/-

6. Cheque No.447656, dt.30.04.1998 for Rs.1,00,000/-

7. Cheque No.447657, dt.07.05.1998 for Rs.1,00,000/-

8. Cheque No.447658, dt.15.05.1998 for Rs.1,00,000/-

Both the plaintiff and defendant came to an understanding for the following terms :

1. That the defendant refrains from presenting the cheques dated 07.05.1998 and 15.05.1998 till the compromise is fully worked out. By writing suitable letters, defendant withdraws immediately the invocation of the bank guarantee made by its letter dated 15.12.1997 and another letter dated 27.01.1998.

2. The question of interest, sales tax and other contentions of the plaintiff will be placed before the Board of the defendant federation and the amount will be paid to the plaintiff by way of reimbursement.

(ii) The defendant committed breach of contract by its letter dated 23.03.1998 addressed to the Indian Bank Branch, Tenali, Invoked the ban