The main legal point established in the judgment is that the invocation letter for bank guarantees must meet the requirements specified in the relevant clauses of the bank guarantees, and failure to do so may result in dismissal of the appeal.

VALMIKI J. MEHTA, J.

C.M. Appl. No.22668/2018 (for exemption)

1. Exemption allowed subject to just exceptions.

C.M. stands disposed of.

C.M. Appl. Nos.22667/2018 (for condonation of delay in filing) & 22669/2018 (for condonation of delay in re-filing)

2. For the reasons stated in the application, delays of 89 days in filing and 6 days in re-filing the appeal is condoned.

C.M.s stand disposed of.

RFA No. 460/2018 and C.M. Appl. No. 22666/2018 (for stay)

3. This Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908 (CPC) is filed by the defendant no. 2 in the suit impugning the judgment of the Trial Court dated 23.9.2017 by which the trial court has decreed the suit filed by the respondent no. 1/plaintiff and thereby restrained the appellant no.1/defendant no. 2 from invoking the two bank guarantees dated 4.1.2005 and 9.3.2005 for amounts of Rs.2,24,000/-and Rs.22,40,000/-respectively.

4. At the outset, I would like to express an angst as to how this suit has not only proceeded for framing of issues, but evidence being led by both the parties, inasmuch as a very limited issue was called for decision in the present suit was as to whether the beneficiary of the bank guarantees, being the appellant no. 1 herein and the defendant no. 2 in the suit, had validly invoked the bank guarantees in terms of the requirements of the bank guarantees. For this purpose only the invocation letter along with the language of the bank guarantees had to be seen and nothing else, and which invocation letter and bank guarantees are admitted documents. The judgment therefore would have been passed in this suit at the stage of pleadings itself, but however, the suit which was filed on 30.4.2007 continued for ten years before passing of the impugned judgment dated 23.9.2017 decreeing the suit.

5. Another disturbing aspect to be noted is that for some unknown reason some litigants do not understand, and surprisingly they are not even so advised by the Advocates, that by encashing a bank guarantee rights on merits are not decided because allowing encashment of bank guarantees only has the effect of moneys remaining in the hands of the beneficiary or not remaining in the hands of the beneficiary, only till the disputes on merits are decided either in a suit or in arbitration proceedings. The claim of the appellant no.1/defendant no. 2, if it existed for a monetary relief against the respondent no. 1/plaintiff, then that aspect had to be urged and got decided by filing of a suit or in arbitration proceedings, so that the bank guarantee amount could be recovered if not by encashment of the bank guarantees but by a money decree passed, but I am indeed surprised to know that appellant no.1/defendant no. 2 has not initiated main recovery proceedings, either in the nature of filing of a suit or arbitration proceedings, to claim amounts from respondent no. 1/plaintiff on account of the appellant no.1/defendant no.2 suffering loss because of breach of contract by the respondent no. 1/plaintiff/successful tenderer for the project of design, development, fabrication and supply of 30 ± 1KW integrated Rim driven BLDC for Propulsion Motor (2500 rpm) and Controller assembled with accessories.

6. With the aforesaid angst having been expressed, let us turn to the only relevant issue for determination and which is that whether the invocation letter for the two subject bank guarantees being the letter dated 13.4.2007 Ex.PW1/13, was or was not in accordance with the terms of the bank guarantees. This relevant letter Ex.PW1/13 and the relevant clauses of the bank guarantees dated 4.1.2005 and 9.3.2005 are reproduced as under:-

"Invocation Letter dated 13.4.2007 :

To,

The Chief Manager,

Syndicate Bank,

Hauz Khas Branch,

2, Kaushalya Park, Hauz Khas Branch,

NEW DELHI-110 016

Sub: CANCELLATION OF BANK GUARANTEE/LODGING CLAIM. Dear Sir,

Please refer to the under me