Back
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ROSHAN DALVI, J.
Union of India - Plaintiff
Vs.
Indusind Bank Ltd. & Ors. - Defendants
CHAMBER SUMMONS (L) NO. 1137 OF 2015 AND CHAMBER SUMMONS (L) NO. 1119 OF 2015 IN SUIT NO. 163 OF 2008
Decided on : 27.07.2015
Bank Guarantee - Invocation of Bank Guarantee - Order 7 Rule 14(3) of the CPC - The court allowed the plaintiff to rely upon two additional letters, dated 13.09.2002 and 24.03.2006, which were not initially relied upon in the plaint, under Order 7 Rule 14(3) of the CPC. The court held that the plaintiff must obtain leave of the Court to receive further documents in evidence and that the discretion to grant leave must be exercised judiciously. The court considered the history and purpose of the amendment to the CPC in 2002, which mandated the plaintiff to produce all documents with the plaint and allowed the plaintiff to rely upon further documents only with the leave of the Court. The court emphasized the need for discretion to be exercised judiciously and not arbitrarily, capriciously, or mischievously. The court also discussed the parameters for granting leave, including the requirement to show good cause for non-production of documents at an earlier stage, and the need for the court to act as a watchdog, not a bloodhound, in granting leave. The court granted the plaintiff's application to produce and rely upon the two letters, condoning any delay in their production.
Fact of the Case:
The plaintiff sued for recovery of Rs.11.02 Cr with interest upon invocation of a bank guarantee given by defendant No.1 in respect of custom duty payable by defendant No.4. The real issue was whether a second or subsequent invocation of a continuing bank guarantee can be legally made or whether the bank guarantee would come to an end upon the first invocation being honoured. The plaintiff sought to rely upon two additional letters, dated 13.09.2002 and 24.03.2006, which were not initially relied upon in the plaint, and to carry out certain amendments in the plaint to place on record the correspondence between the parties.
Finding of the Court:
The court allowed the plaintiff to rely upon the two additional letters, condoning any delay in their production, under Order 7 Rule 14(3) of the CPC. The court held that the plaintiff must obtain leave of the Court to receive further documents in evidence and that the discretion to grant leave must be exercised judiciously. The court emphasized the need for discretion to be exercised judiciously and not arbitrarily, capriciously, or mischievously.
Issues: The main issue was whether the plaintiff could rely upon two additional letters, dated 13.09.2002 and 24.03.2006, which were not initially relied upon in the plaint, and carry out certain amendments in the plaint to place on record the correspondence between the parties.
Ratio Decidendi: The court held that the plaintiff must obtain leave of the Court to receive further documents in evidence under Order 7 Rule 14(3) of the CPC. The court emphasized the need for discretion to be exercised judiciously and not arbitrarily, capriciously, or mischievously. The court considered the history and purpose of the amendment to the CPC in 2002, which mandated the plaintiff to produce all documents with the plaint and allowed the plaintiff to rely upon further documents only with the leave of the Court. The court also discussed the parameters for granting leave, including the requirement to show good cause for non-production of documents at an earlier stage, and the need for the court to act as a watchdog, not a bloodhound, in granting leave.
Final Decision: The court granted the plaintiff's application to produce and rely upon the two letters, condoning any delay in their production.
1. The plaintiff has sued for recovery of Rs.11.02 Cr with interest thereon @ 24% p.a. as per Exhibit K to the plaint. The suit is filed upon invocation of a bank guarantee. The bank guarantee has been given to the plaintiff by defendant No.1 in respect of custom duty payable by defendant No.4. Certain custom duty was levied. The bank guarantee was invoked. That amount was paid. Later there was a second invocation of the same bank guarantee. The defendants obtained an attorney's opinion based upon the invocation and refused to honour that invocation.
2. The real issue between the parties is only whether in a continuing bank guarantee a second or subsequent invocations can be legally made or whether upon the first invocation being honoured the bank guarantee would come to an end.
3. The execution of the bank guarantee and the invocations have been admitted. Hence the parties wisely did not desire to lead oral evidence. There was none to lead. The documentary evidence between the parties and the admitted facts of the issue and the invocation of the bank guarantee would be seen upon interpretation of the terms of the guarantee and the related law.
4. Consequently the issue came up on board for arguments on 10.06.2015. The arguments commenced. Soon it was realized that the second invocation made by the plaintiff upon defendant No.1 under its letter dated 13.09.2002 and received by defendant No.1 was itself not on record. However that invocation was relied upon by defendant No.1 to obtain the attorney's opinion which was conveyed to the plaintiff and which was annexed to the written statement based upon which the legal contention on behalf of the defendants was advised.
5. Under these circumstances the plaintiff has sought to rely upon, tender and produce the said letter in fact relied upon by defendant No.1 in the opinion. This would be an additional document relied upon by the plaintiff which was not relied upon in the plaint. Consequently the plaintiff has sought to amend the plaintiff and/or to rely upon the said document. Of course, the plaintiff has sought to rely upon certain further documents also. These are the letter of defendant No.1 in reply to the plaintiff's, second invocation and certain further notice given by the plaintiff which is replied by the defendants. Other than this the plaintiff has sought to rely upon its letter dated 24.03.2006 which has been replied by the defendants by its letter dated 25.03.2006 already marked Exhibit J to the plaint.
6. The plaintiff, therefore, has essentially sought to make the record complete. The further documents to be relied upon by the plaintiff are essentially only consequent upon the letter dated 13.09.2002 upon receipt of which the legal opinion was taken which has already been relied upon in the written statement. The last letter to be relied upon by the plaintiff is the letter in reply to which Exhibit J has already been relied upon in the plaint.
7. The plaintiff has also sought to carry out certain amendments in the plaint to place on record how the correspondence came to be.
8. It may at once be stated that the part of the correspondence hitherto not relied upon making demands of similar nature does not enhance the plaintiff's case. The further letters are not required to be allowed to be relied upon or incorporated in the plaint for determining the real issue between the parties. The execution of all the aforesaid letters and the replies thereto form a chain of correspondence.
9. Mr. Madon on behalf of defendant No.1 rightly conceded that these may be relevant documents. He also did not wrongly contend that they are not the correct correspondence between the parties or that they are fabricated or brought in at a late stage to defeat the defence of the defendants or which would cause prejudice to the defendants.
10. Defendant No.1 nevertheless has vehemently opposed the plaintiff's reliance upon these documents as also the application for amendment of the plaint.
11
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
