High Court Of Delhi
SIMAX CONSTRUCTION PRIVATE LIMITED - Appellant
Versus
STATE BANK OF INDIA - Respondent
Interim Application 8096 of 1991
Decided On : 12/12/1991
CONTRACT - BANK GUARANTEE - INJUNCTION - SUIT FOR PERMANENT INJUNCTION AGAINST BANK FROM MAKING PAYMENT TO DEFENDANT OF BANK GUARANTEES - APPLICATION FOR INTERIM INJUNCTION - SUPRESSION OF MATERIAL FACTS - DISMISSAL OF APPLICATION - LEGAL PRINCIPLES.
Fact of the Case:
Plaintiff sought a decree declaring two letters invoking bank guarantees illegal and sought permanent injunction against the bank from making payment to the defendant. Plaintiff also sought to restrain the defendant from receiving the payments. Plaintiff had submitted a performance guarantee for Rs. 5 lakhs and another for Rs. 4,38,000. Plaintiff alleged that the defendant fraudulently procured the performance guarantee and invoked it without executing the agreement. The defendant opposed the application and raised various objections, including suppression of material facts by the plaintiff.
Finding of the Court:
The court found that the plaintiff had suppressed material facts from the court by not disclosing the filing of two earlier suits in which similar relief was sought. The court held that the plaintiff was not entitled to any discretionary relief as it had not approached the court with clean hands.
Issues: 1. Whether the plaintiff had suppressed material facts from the court by not disclosing the filing of two earlier suits in which similar relief was sought. 2. Whether the plaintiff was entitled to any discretionary relief as it had not approached the court with clean hands.
Ratio Decidendi: The court held that the plaintiff had suppressed material facts from the court by not disclosing the filing of two earlier suits in which similar relief was sought. The court held that the plaintiff was not entitled to any discretionary relief as it had not approached the court with clean hands.
Final Decision: The court dismissed the application for interim injunction with costs quantified as Rs. 3,000.
( 1 ) IN the suit plaintiff has sought a decree declaring that two letters dated 3rd July 1991 issued by defendant No. 2 invoking the bank guarantees mentioned in the said letters are illegal, inoperative and void. Plaintiff has also sought a decree for permanent injunction against defendant No. 1 State Bank of India from making payment to defendant No. 2 of Rs. 5 lakhs and Rs. 4,38,000. 00 being the amounts of the two bank guarantees. The plaintiff has further prayed that defendant No. 2 shall be restrained from receiving the said amounts from defendant No. 1. By this application filed under 0. 39, Rr. 1 and 2 read with S. 151, Civil Procedure Code plaintiff prays that pending the decision of the suit defendant No. 1 be restrained from making payments and defendant No. 2 be restrained from receiving the said payments of the said bank guarantees. Briefly, the facts pleaded in the plaint are as under:
( 2 ) THE plaintiff is a private limited com- pany engaged in the construction of civil works. Defendant No. 2 by notice advertised for pre-qualification of bidders for construc- tion of a complex at Bikaner. The bid of the plaintiff being the lowest was accepted. Communication of the award of the contract was sent by defendant No. 2 to plaintiff by telegram dated 14-8-90 received by plaintiff on 16th August, 1990. As per the terms and conditions of the bid documents the bidders were required to deposit the earnest money of Rs. 1,50,000. 00 along with the tender. The plaintiff deposited that amount. As per the other terms of the bid document the success- ful bidders bid security was to be discharged upon the bidder s executing a contract and furnishing the performance guarantee. The plaintiff was required to furnish the per- formance guarantee in the sum of Rs. 5 lakhs within 15 days after the supplier s receipt of notification of the award of the contract. The plaintiff by its letter dated 22nd August 1990 wrote to defendant No. 2 to release the earnest money of Rs. 1,50,000/ - as bid of the plaintiff was accepted in view of the terms of the bid document. In response to that letter defendant No. 2 by letter dated 31st August 1990 required the plaintiff to submit the performance security so as to enable defendant No. 2 to release the earnest money. Defendant No. 2 also called upon the plaintiff to visit the office of defendant No. 2 at Pune to sign the main contract agreement. With letter dated 6th September 1990 defendant No. 2 sent a pro forma of performance secu- rity of Rs. 5 lakhs and also required the plaintiff to sign the agreement. The plaintiff got a performance guarantee prepared for a sum of Rs. 5 lakhs from defendant No. 1 on 30th October 1990. The said guarantee was valid up to 16th February 1992. The plaintiff, however, did not handover the guarantee to defendant No. 2 as agreement between the parties was not executed till then. It was a pre-condition of the terms agreed between plaintiff and defendant No. 2 that on execution of the agreement the plaintiff was required to furnish a performance guarantee for Rs. 5 lakhs. The plaintiff wanted that the agreement should be signed simultaneously along with the handing over of the per- formance guarantee. The Managing Director of the plaintiff company visited the office of defendant No. 2 at Pune on 5th November 1990. In the meeting held on 5th November 1990 the agreement which was prepared by defendant No. 2 was finalised and the plaintiff signed the same on 5th November 1990 itself. Defendant No. 2, however, did not sign the said agreement and informed the plaintiff that they would be signing it but each and every page is to be signed by the concerned officer and that would take some time and, as such, defendant No. 2 would send copy of the agreement to the plaintiff in due course. On the said representations of defendant No. 2, the plaintiff was made to handover the performance guarantee of Rs. 5 lakhs. The performance guarantee could have been made operat
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