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Gujarat High Court
Judgename :R.M.Doshit
Centurion Bank Ltd. - Appellant
Versus
Lersen and Tubro Ltd. - Respondent
S.C.A.3142 of 2004
Decided On : 05/03/2004
Constitution of India - Article 227, 226 - Civil Procedure Code, Section 96,115,11 -Limitation Act, Section 5, sub-section (3) of Section 27 - Petitions preferred under article of the Constitution of India arise from the orders refusing to grant leave to defend and the decree passed against the defendant in Special Summary Suits respectively - All the four suits arose between the same parties in similar set of facts - Learned advocates agree that these petitions be heard for final disposal - Since all the petitions raise identical question these petitions are disposed off by this common judgment - For the sake of convenience facts are recorded as stated in Special Summary suit alone - Plaintiff and one Messrs - KND engineering Technologies Limited thereinafter referred to as limited" had entered into a contract for supply of equipment for construction works site State In accordance with the terms and conditions of the said contract the plaintiff had made advance payment in the sum of in respect of of the cost of the Equipment - KND Limited had furnished security by way of Bank guarantee in favour of the plaintiff for the like amount - By letter dated the plaintiff invoked the said Bank Guarantee - On refusal of the defendant to pay the amount agreed under the Bank Guarantee, the plaintiff took out the summons for judgment under order - In the said summons for Judgement the defendant moved application for leave to defend under order CPC - Defendant also moved application under Order Rule to implead M/s. KND Limited as party defendant to the suit. Both the said applications were contested by the plaintiff - By impugned Orders dated both the said Applications came to be rejected - Decree in the suit amount with interest per annum from the date of the - Suit till realization came to be passed in each suit against the defendant. Feeling aggrieved - Defendant has preferred the present petitions - Held, He has submitted that in each running bill, there is a proportionate adjustment made against the advance payment made by the plaintiff - Amount guaranteed under the suit Guarantee shall stand reduced to that extent has questioned the genuineness of the said statements and has submitted that the said statements/bills are not approved by the plaintiff - Plaintiff had made advance payment to the extent mentioned in the suit guarantee - Recitals clearly stipulate that the defendant guaranteed payment of the sum not exceeding the amount mentioned in the suit Guarantee - Condition reproduced hereinabove mentions refund of such advance payment or any portion thereof - Necessarily means that on the date of demand the amount outstanding under the suit Guarantee may be less than the amount specified - Nature of guarantee given by the defendant is peculiar in as much as the suit Guarantee was given to the plaintiff to indemnify the plaintiff to the extent the amount of advance paid by the plaintiff - Work progresses and actual amount becomes due and payable to the vendor - KND Limited there shall be proportionate adjustment against the advance paid by the plaintiff - On such adjustment being made the liability under the suit Guarantee would diminish to that extent - Guarantee cannot be said to be an absolute guarantee under which the defendant should make payment of the amount guaranteed on demand. Further right to make adjustments against progressive bills has been given to the vendor - It is specifically provided that guarantee will cover all the purchasers claim or claims against the vendor from time to time only to the extent of unadjusted advance payment - Question of adjustment or the extent of adjustment shall certainly arise - Said question cannot be decided on the basis of the copies of progressive bills produced by the defendant or the copy of the minutes relied upon by the plaintiff. question would require adjudication after recording evidence - For decision on the said question the presence of the vendor is necessary of the opinion that the vendor - Engineering technologies Limited would indeed be a necessary party to the suit - Defendant had successfully raised triable issue which would require adjudication after recording evidence - Defendant was therefore entitled to unconditional leave to defend - Petitions are allowed.
( 1 ) HEARD the learned advocates
( 2 ) THESE four petitions preferred under article 227 of the Constitution of India arise from the orders refusing to grant leave to defend and the decree passed against the defendant in Special Summary Suits No. 429 of 2001; 430 of 2001; 431 of 2001 and 432 of 2001 respectively. All the four suits arose between the same parties in similar set of facts. The learned advocates agree that these petitions be heard for final disposal. Since all the petitions raise identical question, these petitions are disposed off by this common judgment. For the sake of convenience, facts are recorded as stated in Special Summary suit No. 429/2001 alone.
( 3 ) THE plaintiff in the aforesaid suits is larsen and Tubro Limited, a Public Limited company thereinafter referred to as, "the plaintiff ". The defendant, is the Centurion bank Limited thereinafter referred to as, "the defendant". The plaintiff and one Messrs. KND engineering Technologies Limited thereinafter referred to as, "m/s. KND limited" had entered into a contract for supply of equipment for construction works site, digbai, Assam State, In accordance with the terms and conditions of the said contract, the plaintiff had made advance payment in the sum of Rs. 44, 31,159=00 in respect of 3% of the cost of the Equipment. M/s. KND Limited had furnished security by way of Bank guarantee in favour of the plaintiff for the like amount. By letter dated 12th March, 2001 the plaintiff invoked the said Bank Guarantee. On refusal of the defendant to pay the amount agreed under the Bank Guarantee, the plaintiff took out the summons for judgment under order 37 Rules 1 and 2 CPC. In the said summons for Judgement, the defendant moved application for leave to defend under order 37 Rule 3 CPC. The defendant also moved application Ex. 13 under Order 1 Rule 10 CPC to implead M/s. KND Limited as party defendant to the suit. Both the said applications were contested by the plaintiff. By impugned Orders dated 19th January, 2004, both the said Applications came to be rejected. Decree in the suit amount with interest @ 6%. per annum from the date of the -suit till realization came to be passed in each suit against the defendant. Feeling aggrieved, the defendant has preferred the present petitions.
( 4 ) LEARNED advocate Mr. Vakil has raised a preliminary contention that the present petitions under Article 227 of the constitution of India against the decree passed in summary suits are not maintainable. He has submitted that the decree passed against the defendant can be challenged in appeal under Section 96 CPC and not in a petition under Article 227 of the Constitution. He has submitted that no petition under Article 227 of the Constitution shall lie in the subject matter where a substantive appeal shall lie under the CPC, In support thereof, he has relied upon the judgment in the matter of sheth Chand Ratan vs. Pandit Durga Prasad (D) By. LRs. and Ors. (2003 (5) SCC 399 ). In the said matter, a writ petition under Article 226/ 227 of the Constitution against the order of the learned Additional District Judge came to be entertained by the High Court of Madhya pradesh. Against the said order of the learned addl. District Judge, the writ petitioner had also preferred Misc. First Appeal. The said first Appeal was time barred, the application filed under Section 5 of the Limitation Act for condonation of delay came to be rejected by the High Court. However, the writ petition was entertained and was allowed. In appeal before the Division Bench of the High Court, the Bench was of the opinion that, ". . . existence or an alternative remedy does not divest the high Court of its Jurisdiction under Article 226 and 227 of the Constitution of India. " The division Bench accordingly dismissed the appeal, In appeal to the Honble Supreme court against the order of the Division Bench, the Honble Court observed that the aforesaid view taken by the Division Bench of the High cou
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