Point of Law : Invocation of Bank guaranteed – Stay of - Just as injunctions relating to invocation of the bank guarantee are granted in exceptional cases, the same logic applies to grant of stay of operation of an injunction order at the ad interim stage of an appeal against such order, since such a stay order would tantamount to finally allowing the appeal without hearing the parties on merits. No such exceptional case has been made out by the petitioner for the stay of the injunction order at the initial stage of the appeal.

JUDGMENT :

Sabyasachi Bhattacharyya, J.

1. The present application under Article 227 of the Constitution of India has been filed against an appellate court’s order rejecting an application filed by the petitioner for stay of operation of the ad interim injunction order passed by the trial court restraining the defendant no. 1/petitioner and other defendants from invoking or encashing a bank guarantee issued by the UCO Bank, Dumdum Nagerbazar Branch (proforma opposite party no. 2) at the behest of the petitioner as also pursuing with the claim of occupational charges, against which the miscellaneous appeal itself had been filed.

2. The plaint case of the plaintiff/opposite party no. 1 is that the plaintiff used to provide ground handling service for certain Airlines in connection with the business of cargo handling, airport ground service and/or logistics related to airport activities run by the defendant no. 1/petitioner. The service was subsequently discontinued on the basis of a decision taken by the petitioner-Authority, pursuant to which the plaintiff/opposite party no. 1 removed its equipment from the airport and stopped providing any service from May 1, 2020.

3. As per agreement, a bank guarantee had been furnished by the opposite party no. 1 as security. Upon all dues being cleared, the opposite party no. 1 asked the petitioner to release the bank guarantee. Instead of doing so, it is alleged in the plaint, the petitioner issued a demand notice on March 1, 2021 for Rs. 54,41,395/-towards occupational charge for the period between May 2, 2015 and February 8, 2021. Unless the payment was made within ten days, the petitioner stated in the notice that it would adjust the same from the bank guarantee.

4. The plaintiff has contended that, on September 9, 2020, a ‘no dues certificate’ was issued by the petitioner with regard to royalty for the period up to February 29, 2020. It has further been contended that there was no licence agreement as such between the parties.

5. Learned senior counsel appearing for the petitioner, by placing reliance on the said document, contends that the certificate dated September 9, 2020 was strictly confined to outstanding dues against royalty. It was further mentioned in the notice, he points out, that any interest/arrear/other bills raised subsequently for the period stated there-in-above shall be treated as outstanding and shall be payable by the party.

6. It is contended that the bank guarantee furnished by the opposite party no.1 and issued by the proforma opposite party no.2 cover such other bills and arrears as well and, hence, can very well be invoked by the petitioner. Learned senior counsel further submits that the bank guarantee itself refers to licence fees and royalty and other charges due from the licencee, which clearly indicates that the scope of the bank guarantee was wider than the ‘no dues certificate’ issued in respect of royalty alone.

7. Learned senior counsel for the petitioner places reliance on the judgment reported at (2016) 10 SCC 46 [Gujarat Maritime Board vs. Larsen and Toubro Infrastructure Development Projects Limited & Anr.] in support of the proposition that injunctions regarding invocation of bank guarantee is granted only in exceptional cases. There is no extraordinary circumstance in the present case to justify such injunction. It is submitted that the bank guarantee was irrevocable and unconditional and its invocation could not have been interdicted by the court on frivolous allegations made in the plaint.

8. It is, thus, contended by the petitioner that the appellate court refused to exercise jurisdiction vested in it by law in rejecting the prayer for stay of operation of the injunction order, made by the petitioner, despite the injunction having been granted in gross violation of law.

9. Learned senior counsel appearing on behalf of the opposite party no.1 places reliance on the demand notice issued by the petitioner, annexed at page-101 of the revisional application