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2001 Supreme(Del) 603
High Court Of Delhi
GALAXY POWER CABLES LIMITED - Appellant
Versus
CANARA BANK - Respondent
Interim Application 6558 of 1994
Decided On : 05/07/2001
AJAY K.JAIN, Asha Saxena, ATANU MUKHERJI, ISHVAR SAHAR, J.P.Gupta, S.K.Gambhir, S.K.TRIPATHI, V.P.Singh
Headnote:Bank Guarantee - Bank Guarantee — Bank Guarantee in the nature of a performance Guarantee — Plaintiff declared as a sick company — Bank Guarantee accepted by defendant in lieu of cash deposit by way of security for due and faithful performance — Bank Guarantee only requires lodging of demand — Mere perfunctory use of the word performance will not transform an unequivocal and on demand Bank Guarantee into a conditional one — Bank Guarantee is unconditional — Plaintiffs application for interim injunction restraining bank from relasing Bank Guarantee has no merit — Application dismissed — Bank Guarantee directed to be encashed.
Held:
In this analysis I am of the opinion that the subject Bank Guarantee was unconditional. This being so no reasons need have been stated for justifying its invocation. The statement in the telegram to the effect that the Bank Guarantee was being invoked, in June 1994, because the Plaintiff had failed to arrange for its renewal must be considered in the sequence of the various previous correspondence exchanged between the parties. Even if the request for encashment was predicated on the failure of the Plaintiff to arrange for the renewal of the Bank Guarantee, in the circumstances of the Bank Guarantee, being unconditional, it would require to be ignored. No prima facie case for the issuance of the interim injunction exists.
( 1 ) BY these Orders, the following applications shall be disposed off - I. A. 6558/94 filed by the plaintiff under Order XXXIX Rules 1 and 2 of the Code of civil Procedure (hereinafter referred to as the civil Procedure Code. ) for an interim injunction restraining the encashment of Bank Guarantee No. 86/90. issued by the canara Bank-Defendant No. 1 in favour of Madhya Pradesh state Electricity Board-Defendant No. 2; and I. A. No. 7886/97, being the application under Order XXXIX Rule 4 of the Civil Procedure Code. filed by Defendant No. 2 for " (a) modification of the order dated 6. 7. 1994 to the effect that defendant No. 2 should properly invoke the bank guarantee and no further invocation was required and (b) that a direction be given to Defendant No. l to honour the bank guarantee, encash the same and remit the sum of rs. 14,12,850. 00 to the defendant No. 2; and I. A. 8488/99 under Section 151 of the Civil Procedure Code. filed by defendant No. l for the passing of "clear cut directions to Defendant No. l in dealing with the guarantee. " These applications are intrinsically interwoven with each other and should be disposed off simultaneously.
( 2 ) ON the first date of hearing, i. e. 5. 7. 1994, the following Orders were passed;
I. A. 6559/94. THE requisite court fee has been filed. The. application is disposed of accordirigly. S. No. 1368/94 and I. A. 6561/94 let the suit be registered. Let the plaintiff place on record the copies of all the correspondence exchanged with regard to the renewal of the bank guarantee. In order to find out whether the letter mentioned in the telegram of defendant No. 2 addressed to defendant no. l has been received by the bank or not and if so, in order to see the contents of the said letter, let summons be taken out to the defendant no. 1 with the direction that the said letter, if received, be produced in court, returnable on 6/07/1994.
( 3 ) TWO documents had been filed by the Plaintiff on 5. 7. 1994 and these are reproduced in order to show that they. do not shed any light whatsoever on the question of the renewal of the Bank Guarantee:
"fax. MESSAGE executive DIRECTOR (PRG) TO-M/s. GALAXY POWER m. P. E. B. JABALPUR CABLES LTD. NEW DELHI. (FAX NO. Oil - 4625694 1st INDIA) sub; SUPPLY OF CABLES submission OF EXTN. OF B. G. NO. 86/90 expiring ON 31. 12. 93 REG. REF: P. O. NO. 07-01/ke/106-H/8018 dt. 25. 11. 89. REF. OUR TELEX DT. 28. 12. 93 REG STATUS of BALANCE SUPPLY OF CABLES AND EXTN. OF B. G. NO. 86/90, WHICH IS REPRODUCED AS BELOW; "reord NO. 07-01/ke/106-H/8018 DTD. 25. 11. 89 placed ON YOU FOR SUPPLY OF CABLES (.) IT HAS been OBSERVED FROM OUR RECORDS THAT OUT OF total 286. 2 KMS OF CABLES ORDERED YOU ve supplied 155. 75 KMS OF CABLES (.) ON YR request 24. 7 KMS + 78. 25 KMS OF CABLES WERE deleted FROM YR SCOPE OF SUPPLY VIDE T. O. REF no. 07-01/stp-AMK/106-H/3999 DT. 22. 7. 91 and no. 3875 DT. 8. 9. 92 (.) THUS TOTAL 27. 5 KMS. OF CABLES SUPPLY (INCLUDING CABLES AGAINST OUR despatch INSTRUCTIONS VIDE NO. 07-01/kp/106-H/1677 DT. 19. 3. 91) IS. STILL pending SINCE A LONG LAPSE (.) IN ORDER TO settle THE ISSUE YOU re REQUESTED TO CONFIRM reg. STATUS OF BALANCE SUPPLY ALONG WITH details OF PAYMENT. RECD. /pending ETC. (.) also SUBMIT EXTN. TO YR. B. G. NO . 86/90 dt. 19. 5. 91 TOWARDS PERFORMANCE/guarantee clause, ON N/j STAMP PAPER WORTH RS. 50. 00 keeping VALIDITY TILL END JUNE-94 (.) REPLY per RETURN (.) MATTER MOST URGENT" you re ONCE AGAIN REQUESTED TO TAKE AN immediate ACTION SO THAT THE MATTER MAY BE closed/settled AT THE EARLIEST. EXECUTIVE-DIRECTOR (PRG) m. P. E. B. JABALPUR dt. 30. 12. 1993. " " 5/01/1994 to : THE EXECUTIVE DIRECTOR (PRG) mpeb. JABALPUR. DEAR SIR, kindly REF YR FAX OF DEC. 30. YR TLX MESSAGE of DEC. 12 HAS NOT BEEN RECD. IT IS REGRETTED THAT YOU HAVE TAKEN TWO YEARS to REVERT TO OUR REPRESENTATIONS AND approaches WITH REGARD TO RELEASE OF PAYMENT vis-A-VIS DESPATCH OF MANUFACTURED GOODS. REGRET BANKERS WILL NOT AGREE FOR SUPPLY OF further MATE
