IMPORTANT POINT
The main legal point established is that bank guarantees represent an independent contract between the bank and the beneficiary, and injunction against their invocation is sparingly allowed except in cases of established fraud or irretrievable injury.

JUDGMENT :

Sugato Majumdar, J.

1. The instant suit is filed by the Plaintiff praying for perpetual and mandatory injunction in respect of bank guarantees.

2. The original Plaintiff of the suit was M/S Bansal Cylinders & Tubes Ltd., a company registered under the Companies’ Act 1956. The original Plaintiff was engaged in the business of manufacture and sale of 40M NB Light Weight Towers, commonly known as telecommunication towers as well as in the business of manufacture and sale of accessories and components of the telecommunication towers. The original Plaintiff was previously known as M/s BMW Industries Limited having registered office at 23A, Netaji Subhas Road, 5th Floor, Kolkata – 700001. M/s BMW Industries Limited became the original Plaintiff which subsequently merged and amalgamated to the present Plaintiff M/S Skipper Ltd.

3. The Defendant No.1 M/S Bharat Sanchar Nigam Ltd. is a public sector undertaking engaged in the business telecommunication and the Defendant No.2 State Bank of India is banking company and is a nationalized bank.

4. A tender enquiry for supply of 40M NB Light Weight Towers were issued by the Defendant No. 1. The Plaintiff participated in the tender and the bid of the Plaintiff was accepted at the registered office of the said later at 23A, Netaji Subhas Road, 5th Floor, Kolkata – 700001. On acceptance of the Plaintiff’s bid, three different purchase orders were placed by the Defendant No. 1 to the Plaintiff. Detailed terms and conditions were incorporated in the tender documents itself. One of the conditions was to furnish bank guarantees. The Plaintiff furnished bank guarantees representing performance security deposit of 5% of the total value. The Plaintiff was also required to submit additional bank guarantees for further 5% of the total value of goods to be supplied for securing damages and shortages. Six bank guarantees were furnished by the Plaintiff. Thus, the Plaintiff duly caused six bank guarantees to be furnished by the Defendant No. 2 in favour of the Defendant No. 1 which were issued at 24, Park Street, Kolkata – 700016 within jurisdiction of this Court. Details of the bank guarantees are given below:

5. The Plaintiff duly caused the entire supply to be made in terms of purchase orders which were duly accepted by the Defendant No. 1 without any objection, demur or protest. The bank guarantees, given for securing shortages or damages of goods were permitted to be lapsed by the Defendant No. 1. One of the conditions of the contract was and in particular Clause 11 provided that 95% payment was to be made by the Defendant No. 1 upon proof of the items supplied. The balance 5% of payment was to be released within six months from the date of supply of equipment in absence of any damages or shortages.

6. Between the month of April and the month of July 2005, the Defendant No. 1 issued various letters dated 29/04/2005, 26/05/2005, 28/05/2005, 15/06/2005, 29/06/2005, 02/07/2005 and 14/07/2005 alleging short supply of goods and requesting for delivery thereof. It is the case of the Plaintiff that in order to buy peace and to maintain good relations, the Plaintiff caused all the goods required by the Defendant No. 1 to be supplied against the alleged short supply and the last of supply made by the Plaintiff on 28/07/2005. Subsequent thereto, the Defendant No. 1 made payment of the balance outstanding amount. In other words, full payment was made by the Defendant No. 1 to the Plaintiff on proof of receipt of goods without any damage or shortage.

7. All