The court established the entitlement of the Plaintiff to refund of money, loss of profit, and permanent injunction against invocation of bank guarantees based on the breach of contract and the settled law on bank guarantees.

JUDGMENT :

SUGATO MAJUMDAR, J.

1. The instant suit is filed by the Plaintiff praying for decree of delivery and cancellation of bank guarantee, mandatory injunction and permanent injunction as well as decree for recovery of damages.

2. The Plaintiff is a company registered under the Companies’ Act 1956 having registered office at Room No. 22, Stephen House, B.B.D. Bag (East), Kolkata-700001, within jurisdiction of this Court. The Plaintiff carries on business of trading in wood and bamboo materials.

3. In or around 22/07/1997, the Defendant no. 2 invited tenders for sale of sixty lots of industrial cut bamboo lying at various depot of its Forest Department. In accordance with the terms of tender, the Plaintiff inspected the goods, prior to submission of its offer and the same were found to be in good condition. It was represented by the Defendant no. 2 that necessary contract would be executed immediately on acceptance of the successful offer; goods would be stored and stacked properly using proper scientific methods in order to preserve the same, until delivery and the goods would be delivered after payment of consideration amount. The Plaintiff submitted its offer dated 08.08.1997 for purchase of sixty lots with the Defendant no. 2. The Plaintiff also submitted a sum of Rs. 20,00,000/- as 5% of the tender amount, being the earnest money.

4. The offer of the Plaintiff was accepted as the highest bid. The offer was accepted by a letter dated 05/11/1997 for purchase of sixty lots of the said industrial cut bamboo. Several agreements were executed between the Plaintiff and the Defendant no. 2. In terms of the contract the Plaintiff furnished eight bank guarantees amounting to a sum of Rs. 40,00,000/-. The bank guarantees were furnished by Defendant no. 1 within jurisdiction of this Court at 14, Netaji Subhas Road, Kolkata-700001. Pursuant to the agreement, the Plaintiff made payment of Rs. 3,25,01,961/- to the Defendant no. 2 and took delivery of 43 lots of industrial cut bamboo from Lanji Depot and Garra Bansagar Depot belonging to the Defendant no. 2. Payments were made through the Defendant no. 1. The aforesaid two depot of the Defendant no. 2 were specialized bamboo storage depot manned by trained staff. Though there was a heavy rainfall, goods lifted from these depot were in good condition, and fit for the purpose for which they were purchased that is for manufacture of paper pulp. But the Defendant no. 2 stored sixteen lots of goods in Garra Kastagarh Depot which was meant for storing timber. The said depot was not manned by the trained staff and goods were not stored in proper and scientific manner. Apprehending damage, the Plaintiff wrote to the Defendant no. 2 in terms of letter dated 31.12.1997 to stock and store the said goods namely industrial cut bamboo in proper condition to prevent any damage but the Defendant no. 2 failed to do so. The Plaintiff also requested the Defendant no. 2, in terms of several letters to, allow the Plaintiff to inspect the goods prior to make payment and delivery but the Defendant no. 2 neglected and failed to do so. The Plaintiff made payment of Rs. 28,33,356/- against taking delivery of lot numbers 17, 18, 19 and 20 from Garra Kastagarh Depot. On payment being made, the Defendant no. 2 allowed delivery of the said goods. Only then it became manifest that goods of the said lots were rotted and spoilt in its entirety and could no longer be classified as industrial cut bamboo. In the meantime, by or on 26/02/1998 the Plaintiff duly applied for extension of time for taking delivery of the goods and for waiver of interest for the extended period from the Chief Conservator of Forest. During pendency of approval, election was declared in the State of Madhya Pradesh resulting in delay in approval. The Defendant no. 2, in terms of the letter dated 31.12.1998 stated, that time for execution of the agreement expired and threatened the Plaintiff to invoke bank guarantees.

5. The case of the Plaintiff is t