IMPORTANT POINT
Bank guarantees are independent contracts and should be honored as per their terms, and any dispute between the parties does not affect the invocation of the bank guarantee.

JUDGMENT

Mini Pushkarna, J. - The present appeal has been filed challenging the Judgment dated 19th September, 2022 passed by the learned Single Judge in CS (COMM) No. 323/2022. By the impugned Judgment, the learned Single Judge has allowed I.A. No. 7704/2022 filed under Order XXXIX Rule 1 and 2 of Code of Civil Procedure, 1908 ("CPC") by respondent no.1/plaintiff and has dismissed I.A. No. 9797/2022 filed under Order XXXIX Rule 4 CPC by the appellant/defendant no.1, thereby making absolute the interim injunction granted by him vide order dated 13th May, 2022. The instant appeal has been preferred by the appellant being aggrieved by the impugned Judgment of the learned Single Judge whereby the invocation of the advance bank guarantees and performance bank guarantees have been stayed.

2. Facts in brief are as under:

2.1. The appellant/defendant no.1 placed six purchase orders upon the respondent no.1/plaintiff from 14th October, 2020 to 13th December, 2021 for manufacture and supply of MH Covers and Frame, Manholes, IC Chambers, RCC Pipes, HSC Chambers, Precast Boxes, Culvert Boxes, etc. for a total amount of Rs.248,26,68,539/-. The said work orders were to be completed within 12 months.

2.2. The appellant provided to the respondent no.1 mobilization advance, in lieu whereof, the respondent no.1 furnished to the appellant advance bank guarantees and performance bank guarantees. In total 24 bank guarantees were furnished by the respondent no.1 to the appellant in the aggregate sum of Rs.41,21,57,263/-.

2.3. It is the case of the appellant that the respondent no.1 was unable to complete the contracts in the first year and had a shortfall in excess of Rs.170 Crores of supplies. Thus, appellant renegotiated the initial contract for 12 months for an addendum for increase in the supplies and at the same time for renewal of the bank guarantees. Accordingly, the purchase orders were amended on 18th December, 2021. The revised amount of the purchase orders was to the tune of Rs.310 Crores.

2.4. The respondent no.1 supplied goods/materials to the appellant from 03rd November, 2020 to 28th January, 2022. As per the appellant, a number of supplied goods/materials were defective. Therefore, the appellant issued debit notes of approximately Rs.3 Crores to the respondent no.1. It is the case of the appellant that the respondent no.1 has not supplied any product to the appellant since January, 2021. The respondent no.1 has supplied materials/goods to the appellant worth only of Rs.81,86,32,711/- as against approximately Rs.310 Crores worth of purchase orders. Therefore, it is the case of the appellant that the respondent no.1 has supplied only 25-30% of the entire ordered materials/goods. It is further the case of the appellant that the respondent no.1 has supplied Rs.81 Crores worth of materials/goods against a total payment of approximately Rs.94 Crores by the appellant. Therefore, the respondent no.1 has an excess of approximately Rs.13 Crores currently lying with it.

2.5. The appellant invoked the bank guarantees on 09th May, 2022, vide separate notices of invocations. Thus, the respondent no.1 filed suit bearing CS (COMM) No. 323/2022 inter-alia seeking an injunction to restrain the invocation and encashment of 24 bank guarantees submitted by respondent no.1 to the appellant for a total sum of Rs.41,21,57,263/- against the six purchase orders.

2.6. By an ex parte ad interim order dated 13th May, 2022, in I.A. No. 7704/2022 under Order XXXIX Rule 1 and 2 CPC filed by respondent no.1/plaintiff herein, the learned Single Judge restrained the respondent banks viz. respondent nos. 2, 3, 4 and 6 from releasing any amounts against the bank guarantees furnished by the respondent no.1. Since bank guarantee of Rs.18.27 Crores out of total bank guarantees for Rs.41,21,57,263/- were encashed by the appellant before passing of the order dated 13th May, 2022 passed by the learned Single Judge, therefore, restraint order issued by the learned Single Judge vide