A bank guarantee furnished as a condition for granting leave to defend a summary suit does not lapse upon the conclusion of the suit and can be enforced by the plaintiff if the plaintiff succeeds in the suit.

These revision petitions are directed against the orders of the City Civil Court, Madras, which on the face of them appear to be extremely unusual, having regard to the facts of the case and the nature of the decree in question. Admittedly the first defendant who is the first respondent in C.R.P.1605 of 1984 and the sole respondent in C.R.P.1606 of 1984 was not granted leave to defend a summary suit which was filed by the plaintiff in this court. His request for unconditional leave was rejected by the Master, by the learned single Judge and by a Division Bench of this Court. The matter was taken to the Supreme Court by the first defendant. On 11-9-1968, the Supreme Court made an order as follows :-

"Counsel for the appellant (first defendant) agrees to furnish a bank guarantee for Rs.83,375 before the Registrar, Madras High Court, within five weeks from today. Leave to the defendant to appear and defend is hereby granted by it will stand revoked if the bank guarantee abovementioned is not furnished within five weeks from today. Bank guarantee to be renewed every six months so long as the suit is pending. The written statements to be filed within three months after the Bank guarantee is furnished." *

With these observations, the first defendant's appeal was allowed. A Bank guarantee for a sum of Rs.83,375 was given in the form of a letter of guarantee dt.16-10-1978 by the Central Bank of India in favour of the Registrar of the High Court, Madras, on account of Sri K. Ramnarayana Bhattad, 127 Angappa Naicken St. Madras 1 (first defendant). This Bank guarantee was renewed from time to time.

2. The suit proceeded to trial and a decree was passed on 6-2-1984 as follows -

"1. that the first defendant do pay plaintiff Rs.75000 with interest at 6% from date of plaint till payment;

2. that the first defendant shall have the amount paid by defendants 2 to 6, 8 and 9, to the plaintiff to discharge decree;

3. that the first defendant shall have indemnity for the sum of Rs.75000 with interest at 6% and pro costs;

4. that defendants 1 to 6, 8 and 9 do pay plaintiff Rs.6004 (Rs. six thousand and four only) as and for the costs of the suit as taxed." *

After the decree was passed, the plaintiff filed I. A. No. 5746 of 1984, praying that the Central Bank of India which furnished the Bank guarantee should be directed to deposit the entire amount covered under the Bank guarantee, to be credited to the suit so that it should be paid over to the plaintiff and a prayer was also made that after the money was received, the payment of the same should be ordered to be made to the plaintiff.

3. An application I. A.4529 of 1984, also came to be made by the first defendant in which he stated that an adjustment of Rs.75000 which was made under an agreement between the first defendant on the one side and defendants 2 to 7 and 9 on the other was binding on the plaintiff and therefore it was for defendants 2 to 7 and 9, to pay the amount to the plaintiff. According to the first defendant, the decretal amount has to be paid by defendants 2 to 7 and 9 to the plaintiff and not by the first defendant. The first defendant contended that it was just and equitable that the plaintiff should proceed against defendants 2 to 7 and 9. On these grounds, the first defendant sought the cancellation of the Bank guarantee executed by him in favour of the plaintiff in respect of the suit. Both these applications were disposed of by the 1st Additional Judge, City Civil Court, Madras. The learned Additional Judge took the view that while disposing of the suit, the court, on assessment of the evidence, had come to the conclusion that by reason of the agreement Ex. A 1, the defendants 2 to 7 and 9 were liable to pay the amount covered by the decree to the plaintiff and therefore it was but fair and appropriate that the plaintiff should execute the decree at the first instance against defendants 2 to 7 and 9. The trial Court noticed that it was not the case of the plaintiff th