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2006 Supreme(Bom) 396
IN THE HIGH COURT OF BOMBAY
Bhumiputra Commerce Bank
Versus
P. V. P. Products Ltd
Decided on,MARCH 17, 2006
Headnote:Balance of convenience - Bank is bound by the terms of the bank guarantee. Where the Bank has acted upon the order of the Supreme Court in the civil appeal and having itself given a guarantee for sum of Rs. 10 lacs which also specifically states that it is also available to satisfy such amount of interest as may be decreed in favour of the plaintiff in the present suit but when the question came of renewing the guarantee further for a subsequent period after 2005 that the bank has now taken up a stand that they will only renew a guarantee for a sum of Rs. 10 lacs and not for any further amount.
Held, that once the bank has acted upon the order of the Supreme Court and volunteered to give guarantee in consonance with the terms and conditions of the said order passed by the Supreme Court which specifically provides that the said guarantee will be of Rs. 10 lacs plus interest amount which may be decreed by the Court. The bank is therefore liable to make payment of Rs. 10 lacs as per the guarantee with further interest at the rate of 12% p.a. simple interest from the date of the suit till payment as decreed by this Court.
( 2 ) THE defendant is a public Limited company in the name of M/s. Premier Vegetable Products ltd. Sometime in/or about September/october 1977 the defendant approached the plaintiff bank known as M/s. Patel Holdings Sendirian Berhad, Penang (Malaysia) for the facility of negotiation of documents pertaining to one particular shipment proposed to be made through India. The said M/s. Patel Holdings Sendirian Berhad got the said shipment effected and drew a Bill of Exchange bearing no. 1610/77 dated 14-10-1977 from the defendant company. The said Bill of exchange was payable on its order 45 days from the sailing date of the vessel S. S. "dong Moon" for sum of U. S. $ 255. 968 equivalent to Rs. 20,47,744/ -. This amount was the C. I. F. cost of 399. 950 metric tonnes of malaysian refined bleached deodorised palm oil shipped to Bombay on the said vessel. Under the said bill of lading the cargo was consigned to the plaintiff and the defendant company was to be notified of the arrival of the said goods.
( 3 ) M/s. Patel Holdings Sendirian Berhad presented the said Bill of Exchange No. 1610 of 77 dated 14-10-19777 alongwith the original shipping documents including the Bill of Lading to the plaintiff bank. The said bill of exchange was thereafter negotiated and discounted by the plaintiff bank. in favour of M/s. Patel Holding. On the due date of the said bill of exchange the plaintiff sent the bill of exchange and the original shipping documents to the bank of rajasthan which was acting as the collecting agents in order that the said bill of exchange may be presented to the defendant company for payment and the original shipping document to be released to the defendant company against the said payment. The said bill of exchange was presented to the defendant company on its due date through the bank of Rajasthan. In the mean time M/s. Patel holdings Ld informed the defendant company of arrival of the goods of 299. 950 metric tonnes of the Malaysian refined bleached deodorised palm oil. The said vessel S. S. "dong Moon" arrived at bombay and M/s. Eastern Steamship Ltd notified the said arrival to the defendant company.
( 4 ) IT is the case of the plaintiff that the defendant company took the delivery of the goods without producing the original shipping documents and the said original documents remained in the possession of the plaintiff bank. It is further case of the plaintiff that the said defendant company approached the shipping agency M/s. Eastern Steamship Ltd and representing themselves as the consignees of the said shipment requested the shipping agency to release the goods without the original Bill of Lading. It is his further case that the defendant company executed and lodged with the shipping agent a guarantee/indemenity bond purported to be counter-signed by the Bank of Rajasthan, and the same has been found to be forged document. The shipping agent released the entire quantity of 399. 50 metric tonnes of Malaysian refined bleached deodorised palm, oil on the basis of the said forged documents and the defendant company took delivery thereof.
( 5 ) THE Bank of Rajasthan Ltd as collecting agents of the plaintiff bank presented the said bill of exchange dated 14. 10. 1977 to the defendant company but the defendant company failed to make payment of the amount of U. S. $ 255,968 equivalent to Rs. 20,47,744/ -. The plaintiff bank thereafter through Bank of Rajasthan repeatedly requested the defendant company to make payment of the amount covered under the Bill of exchange but no payment was forthcoming. The defendant company thereafter by their letter dated 15. 12. 1978 addressed to the plaintiff bank admitted the liability to pay the amount covered under
