Crest Communications Ltd. . vs State Bank of India and another

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1999 Supreme(Bom) 951

IN THE HIGH COURT OF BOMBAY
Ashok A. Desai P.S. Patankar, JJ.
Bombay Environmental Action Group another ..... Petitioners.
Versus
State of Maharashtra others..... Respondents.
Writ Petition Nos. 2773, 2247 3041 of 1997, decided on 4-12-1998.
Advocates appeared :
I.M. Chagla with J.D. Dwarkadas, D.J. Khambata, G.S. Patel, M.S. Doctor, Ms. Renu Parekh i/b. Hariani Co., for petitioners in Writ Petition No. 2773 of 1997 W.P. No. 3041 of 1997.
Smt. Kiran Bagalia with Mrs. Lalita Panchakshri, for petitioners in Writ Petition No. 2247 of 1997.
K.S. Cooper with Shiraz Rustamjee . Ms. Vidya Udas, for interveners.
K.K. Singhvi with D.R. Zaiwala, Navnit Shah, R. Dharmadhikari Markand C. Gandhi i/b. Markand Gandhi Co., for respondents - Sahara India Ltd. (in all three Writ Petitions).
C.J. Sawant, A.G. with Shekhar Naphade, S.C. with U.G. Kerkar, A.G.P., for respondents Nos. 1 2 (in all three Writ Petitions).
Vijay A. Thorat with Vineet B. Naik, for interveners with respondent Sahara India Ltd. Grampanchayat.

Headnote:Section 126-Invocation of Bank Guarantee-1st defendant furnished a performance guarantee on behalf of plaintiff-Plaintiff performed the contract completely to the satisfaction of 2nd defendant and 2nd defendant accepted the same-100% payment was made by 2nd defendant to plaintiff-Despite the satisfactory performance of the contract by the plaintiff 2nd defendant sought for invocation of bank guarantee-Demand of 2nd defendant for invocation of bank guarantee not in accord with terms and conditions of the performance guarantee-Temporary injunction restraining invocation of bank guarantee in favour of plaintiff as such invocation of bank guarantee would cause irretrievable injustice to the plaintiff.-Plaintiff was required to supply four films to the 2nd defendant for a consideration of Rs. 67,30,950 to be paid by 2nd defendant. 60% of the consideration was paid by the 2nd defendant to the plaintiff on 11-12-1998. The delivery was to be effected by the plaintiff within 30 days there from. However, the script was not finalised by the 2nd defendant enabling the plaintiff to maintain the time schedule of delivery. The script for the films was finalised by the 2nd defendant in the month of June 1999 and in the month of June itself three films were supplied. The fourth film was also supplied immediately thereafter in the month of July 1999. No only that the 2nd defendant accepted the supply of films made by the plaintiff without any demur or objection but they recorded their satisfaction of the films supplied by the plaintiff, 2nd defendant having been satisfied with the supply, made the remaining payment of 40% to the plaintiff. The purchase order stipulated 100% of the value of the goods to be paid after full satisfaction. Performance guarantee was given by the 1st defendant on behalf of the plaintiff in the sum of Rs. 6,73,100/-. After completion of contract and receipt of 100% payment of the supply made by the plaintiff and the fact that the films were found satisfactory by the 2nd defendant, the plaintiff wrote to the 2nd defendant for release of the bank guarantee. However, 2nd defendant did not release the bank guarantee and instead sought to invoke the bank guarantee.
Held, that contract had been performed completely to the satisfaction of the 2nd defendant. If the 2nd defendant was permitted to invoke bank guarantee it would definitely cause irretrievable injustice to the plaintiff. Under the terms of the performance guarantee, the bank was under obligation to pay the guaranteed amount or any part thereof upon written demand by the 2nd defendant (beneficiary) declaring the supplier (plaintiff) to be in default. 2nd defendant had made demure to 1st defendant for the invocation "I bank guarantee, the said demand was not in accord with the terms and conditions of the performance guarantee inasmuch as there was no declaration by the 2nd defendant that the plaintiff was defaulter under the contract. Moreover there could not have been such declaration by 2nd defendant since the 2nd defendant accepted the supplies made by the plaintiff under purchase order without demur to its satisfaction. Notice of Motion n1ade absolute. State Bank restrained during the pendency of suit from paying to 2nd defendant a "1m of Rs. 6,73,100/- or any part thereof under the performance guarantee dated 8-121998.

Judgment

P.S. PATANKAR, J.:---All these three petitions under Article 226 of the Constitution of India can be disposed of by this common Judgment as they involve common questions.

2.Writ Petition No. 2773 of 1997 and Writ Petition No. 3041 of 1997 are filed by the same Environment Group from Bombay as public interest litigation. The prayer in W.P. No. 2773 of 1997 is for declaring Notifications dated 26-11-96 and 25-11-97 issued by the Government of Maharashtra as void and illegal. W.P. No. 3041 of 1997 is for setting aside the letter of Intent dated 7th January, 1997 issued by the State Government in favour of Sahara India Housing Ltd. (hereinafter referred to as Sahara) and to restrain Sahara from carrying out any development on that basis. W.P. No. 2247 of 1997 is also filed as a public interest litigation by an Association from Pune. The prayer made is to declare the Government Notification dated 26-11-96 as null and void. There is also intervention made on behalf of 36 tribals praying for getting back their lands alleged to be presently in possession of Sahara. There is also intervention on behalf of three Sarpanchas of the concerned villages supporting the State Government and Sahara.

3.We shall state the facts: Regional Plan for Pune Metropolitan Region was sanctioned by Government Notification dated 27-2-1976 under the Maharashtra Regional Town Planning Act, 1966 (MRTP Act for short) for 1970-1991. By Government Notification dated 18-5-1990, Pune Metropolitan Region was redefined. Entire Revenue District of Pune was included for preparation of Regional Plan. By the said Notification, Pune Regional Planning Board was constituted under section 4(1)(2) and section 20(1) of M.R.T.P. Act. The said Board prepared existing land use map of the region and published Draft Regional Plan for Pune on 13-9-1993. Mr. Mohan Dharia, one of the petitioners, was a member of the said Board. This was for the period 1990-2011. After considering the suggestions and objections, the Draft Regional Plan was modified and submitted to the Government for sanction on 30-1-1995. The Government sanctioned it by notification dated 25-11-1997 and brought into force the Regional Plan for 1990-2011 for Pune region on 10-2-1998. There is a Schedule to the said notification of modifications containing six modifications. MPR 3 thereof included 8 villages of Mulshi Taluka, District Pune with which we are concerned.

4.On 24-7-1991, Government of India, Ministry of Industries, issued Policy Statement. It recognised Tourism as one of the industries for automatic approval for foreign technological arrangements, etc. This was clarified on 25-11-91 to include beach resorts and tourism complexes. The Central Government finally issued its Policy resolution on 27-6-1997 describing tourism as industry. The Government of Maharashtra also in the meanwhile in 1993 published its Tourism Policy declared Tourism as industry. Under the said policy, areas were divided into (1) Central sponsored and (2) State sponsored special tourism. State sponsored tourism areas included Mulshi Taluka. The 8 villages with which these petitions concern fall in this Taluka. The State Government also passed a resolution dated 30-10-93 declaring "the Package Scheme of Incentives for Tourism 1993". It provided for exemption from payment of Sales Tax, Octroi, Luxury Tax, etc.

5.69 persons purchased on different dates and separately during 1992 to 1996 agricultural lands from the 8 villages of Mulshi Taluka. They purchased 3736 acres of land and the purchases continued thereafter. The purchasers have executed a General Power of Attorney in favour of Sahara at the time of purchase permitting it to develop the land. We are told that the target of Sahara is 5000 acres and Sahara has already started development since March 1995.

6.On 27-9-1993, Sahara applied to the Collector, Pune District, to convert some lands into non-agricultural for making construction of farm houses. It was rejected on 25th Ja

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1999 Supreme(Bom) 951

Cases Referred (3)