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2010 Supreme(Cal) 220
HIGH COURT OF CALCUTTA
Mohit S. Shah, CJ and Bhaskar Bhattacharya, J.
POLLEN DEALCOM PRIVATE LIMITED
VS.
CHAMBAL FERTILISERS AND CHEMICALS LTD.
C. S. No. 332 of 2009
Decided On: March 1, 2010
In order to overcome enforcement of an unconditional bank-guarantee what should be the nature of fraud and arrived at the conclusion that the fraud pleaded in this case does not come within its purview.
Headnote:
BANKING - UNCONDITIONAL BANK GUARANTEE - INVOCATION - FRAUD - Prima facie case - Held, the nature of allegation of fraud pleaded in the application is insufficient to resist a valid invocation of bank-guarantee.
Fact of the Case:
Plaintiffs filed a suit for declaration that two bank guarantees are null and void, for mandatory injunction upon the defendants to forthwith make over the aforesaid bank guarantees dated 29th July, 2009 to the plaintiffs with further prayer for perpetual injunction restraining the defendant No. 1 from receiving any payment in respect of those two bank-guarantees, mentioned above, given by the defendant No. 2, the Bank, and for a decree of Rs. 1 crore as damages from the defendant No. 1. The other consequential reliefs of interest and injunction were also prayed for.
Finding of the Court:
The invocation of the bank-guarantee by the Respondent No. 1 was a proper one in accordance with the terms of the guarantee.
Issues: Whether the invocation of the bank-guarantees was proper and in accordance with the terms of the guarantee.
Ratio Decidendi: 1. A bank-guarantee is a suitable method of securing payment of money in commercial dealings because the beneficiary, under the guarantee, is entitled to realize the whole of the amount under that guarantee in terms thereof irrespective of any pending dispute between the person on whose behalf the guarantee was given and the beneficiary. 2. The Courts would not grant any injunction restraining the invocation except in the case of fraud or irretrievable injury. 3. The fraud, which vitiates the contract, must have a nexus with the acts of the parties prior to entering into the contract and subsequent breach of contract on the part of a party would not vitiate the contract itself.
Final Decision: Appeal dismissed.
( 1 ) THIS appeal is at the instance of the plaintiffs in a suit for declaration that the two bank-guarantees, both dated 29th July, 2009, being Annexure 'c' and 'd' to the plaint, are null and void, for mandatory injunction upon the defendants to forthwith make over the aforesaid bank-guarantees dated 29th July, 2009 to the plaintiffs with further prayer for perpetual injunction restraining the defendant No. l from receiving any payment in respect of those two bank-guarantees, mentioned above, given by the defendant No. 2, the Bank, and for a decree of Rs. 1 crore as damages from the defendant No. l. The other consequential reliefs of interest and injunction were also prayed for.
( 2 ) THE case made out by the plaintiffs in the aforesaid suit may be summed up thus:
(a) The plaintiffs are the owners of an area of 30,419 sq. ft. on lower and upper ground floor, first floor and second floor together with 32 car parking spaces at the building popularly known as "avani Heights" at Premises No. 59a, Chowringhee Road, Kolkata-20. (b) On July 29, 2009, an agreement was entered into by and between the plaintiffs on one hand and the defendant No. 1 on the other, for lease of the demised portion for a period of 9 years at the rent of rs. 91/- per sq. ft. plus service tax. The said agreement was entered into at the office of the plaintiffs at 119, Park Street, Kolkata-16 within the jurisdiction of this Court. (c) In terms of the said agreement, the defendant No. 1 deposited a sum of Rs. 83,04,000/- which is equivalent to the amount of rent for three months as interest-free security-deposit and the plaintiffs furnished two separate bank-guarantees both issued by the defendant No. 2 for an aggregate sum of Rs. 83,04,000/ -. The relevant terms of the said agreement pertaining to furnishing of those bank-guarantees and the security deposit are set out below: "an amount of Rs. 83,04,000/- (Rs. 2,370,000/- and Rs. 59,34,000/-to M/s. Pollen Dealcom Pvt. Ltd. and Standard Vinimay Pvt. Ltd. respectively in terms of clause No. 5 is payable by the Lessee to the lessor at the time of signing of this term sheet. This amount will be forfeited totally if India Steamship (A division of Chambal Fertilisers and Chemicals Ltd.) do not take possession of the aforesaid space and starts paying monthly rentals within the aforesaid time of ninety days. However, if the Lessor fails to give possession within October, 09 or fails to make out a good and marketable title of the aforesaid premises to the Lessee on or before 15th October, 2009, the amount will be returned immediately to the Lessee. The refund if any shall be secured by irrevocable bank guarantee. " (d) The defendant No. 1 by a letter dated August 24, 2009 expressed its willingness to takeover possession of the demised portion and represented that it had already made arrangement for meeting its architects with the object of commencing work in the demised portion for making it usable as its office. The defendant No. 1 also agreed to take possession either of the entire demised portion or a part thereof. (e) All of a sudden, on August 31, 2009, the defendant No. 1 made a requisition on title and also asked for the various documents i. e. KMC tax receipts, copy of sanctioned plan and occupancy certificate. Even though the defendant No. 1 had already received the copies of all the documents mentioned In its letter, the plaintiffs offered immediate inspection of the originals thereof. (f) Subsequently, the defendant No. 1 caused further inspection of the demised portion with architects. According to the defendant No. 1, necessary additions and alterations had to be made to make it suitable for running an office therefrom. Mainly on this pretext, the possession of the ground floor and the second floor portions were not taken by the defendant No. 1. (g) By September 24, 2009, the plaintiffs managed to get the entire demised portion vacated and for this purpose, the plaintiffs had to in
