Approach of Court in such cases explained.

SATHIADEV J.

Petitioner is the plaintiff in O. S. No. 163 of 1982, on file of the Sub-Court, Gobichettipalayam. It filed the suit against respondents herein, for grant of a permanent injunction restraining them from recovering the sum of Rs. 85, 639.89 from the State Bank of India, Gobichettipalayam Branch, till they establish their claim against the plaintiff in a court of law. Pending disposal of the suit in I. A. No. 737 of 1982, it sought for grant of a temporary injunction under Order 39, rule 1 and section 151, CPC, restraining respondents from realising the said amount by enforcing the bank guarantee till the disposal of the suit. Courts below having rejected the relief, this civil revision petition is preferred. The plaintiff claimed as follows : The first defendant manufactures nitrogenous and other chemical fertilisers. The plaintiff was appointed as a dealer under exhibit B-25 dated September 25, 1980, for the sale and distribution of its products in certain territories of Tamil Nadu. As and when the plaintiff informs the second defendant specifying the requirements, allocation would be made by issue of delivery notes to the concerned warehouse, and, thereafter, the plaintiff will receive the supply. The second defendant issues invoices whereupon the plaintiff makes payments. In order to assure prompt payment of invoice, the plaintiff was directed to furnish bank guarantee, and it had furnished two bank guarantees totalling Rs. 1 lakh, under exhibits B-13 and B-14 dated October 17, 1979, for Rs. 50, 000 each, issued by the State Bank of India, Gobichettipalayam. Though the plaintiff was prompt in payment of invoices, it understands that some of the officials of the second defendant supplied products to retailers and other parties closely known to them, and to avoid detection, for record purposes they bring those transactions under any one of the recognised dealers in a clandestine manner, and so long as payments are received within time from such clandestine purchasers, there was no trouble. But when it fails, the officials in order to exculpate themselves demand payments from authorised dealers, and that was how a demand for Rs. 1, 29, 183.69 was made on the plaintiff by letter dated July 17, 1982 (exhibit A-4). The defendants having threatened to invoke the bank guarantee in default of payment of the amount so claimed, it sent a reply on August 3, 1982 (exhibit A-5), requesting. for details to be furnished. But the second defendant had not chosen to give any reply so far. Out of the claim made, the plaintiff admits liability only for Rs. 43, 543.50 and has already paid a sum of Rs. 20, 735 on July 29, 1982, and is prepared to pay the balance at any time. It disputes liability only for Rs. 85, 639.89. In paragraph 7 of the plaint, it refers to certain communications to show how the demand made by the second defendant was fraudulent. When the product was not actually supplied, the bank, as the surety, is also not liable to pay the amount as per the terms in exhibits B-13 and B-14. Bank guarantees have been invoked only to save the skin of the officers of the defendants who have committed fraud, and, hence, the suit had been filed.The second defendant in the written statement had repudiated this claim stating that, when an irrevocable bank guarantee had been furnished, a demand having been made by letter dated October 1, 1982, for payment of the sum of Rs. 1, 29, 183.69, the plaintiff had unjustly intercepted it by filing the suit. The bank had violated the terms of the bank guarantees. It is due to inability to pay debts, in spite of taking delivery of goods, that the suit had been filed on false grounds. After referring to the procedure adopted in selling the goods, the allegations made in paragraphs 6 to 9 of the plaint have been denied. In the light of the decision in United Commercial Bank v. Bank of India, the bank has no other option than to honour the bank guarantee.

The trial court held that docume