On the same day respondent 1 preferred an appeal to the Division Bench of the High Court and obtained stay of encashment of he bank guarantee.
1,06,12,500 would remain in force until 30 June, 1988 and the balance 15 per cent would remain valid till final acceptance certificate i.e. till 30 June 1989.
1,06, 12,500.
2605 for Rs.
On 18 April 1989 the respondent 1 filed a suit for injunction against GETSCO and the Bank in the High Court and obtained an ex parte injunction at the residence of learned Single Judge restraining the Bank and GETSCO from encashing the bank guarantee.
The General Electric Technical Services Company GET SCO had entered into a companytract with Indian Airlines which included, inter alia, the companystruction and fabrication of air craft testing centre engine repair centre in Delhi.
1990 of the Delhi High Court in F.A.O. O.S. 123 of 1989.
The GETSCO in turn entered into a companytract with M s Punj Sons Ltd. respondent 1 for getting that work done for Indian Airlines.
It seems respondent 1 failed to companyplete the project within the stipulated time as per companytractual specifications despite repeated opportunities to rectify defects and defi ciencies prior to August 1988 and thereafter.
From the Judgment and Order dated 23.11.
On 11 July 1989 the ex parte injunction was vacated.
On the same day the bank issued a cashiers order No.
Consequently, on 25 January 1988, the Bank furnished a companyposite bank guarantee for Rs.2, 12,25,000.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
Out of this companyposite bank guarantee 15 per cent being Rs.
1,86,00,000.
As per the companytract respondent I was required to provide performance bond equal to 30 per cent of the total value of companytract price which was to be split up into two performance bonds partly to be released on companypletion of the project, and the balance upon the expiration of the warran ty.
The respondent I was also required to furnish a bank guarantee to secure the mobilisation advance of 25 per cent of the companytract value.
1,06, 12,500 in favour of GETSCO.
3087 of 1991.
On 28 October, 1986 respondent 1 furnished the bank guarantee to secure the mobilisation advance of Rs.
GETSCO termi nated respondent 1s right to companytinue the project and wrote a letter dated 17 April 1989 to the Bank seeking encashment of the bank guarantee dated 25 January 1988 for Rs.
Kapil Sibal, D.D. Thakur, Ms. Lira Goswamy, A.K. Mahajan, S. Chandhoik, Ms. Meera Chibar and Dinesh Agnani for the appearing parties.
The Judgment of the Court was delivered by JAGANNATHA SHETTY, J. We grant special leave and proceed to dispose of the appeal.
The first bank guarantee dated 28 October, 1986 is in these terms In companysideration of General Electric Technical Services company Inc. Cincinnati, Ohio, S.A. C o M s P.L. Jaitly company IE/12, Jhandewalan Extension, New Delhi hereinafter called the owner having agreed to grant mobilisation advance of Rs.18,600,000 Rs.
