Provided that liability of the guarantor hereunder shall reduce to the extent of the advance adjusted under clause 13 of the said agreement.
The material portion of this letter was as follows We wish to inform you that M S Prem Heavy Engineering Works P Ltd. Ram Mill, Delhi Road, Meerut have failed to fulfill the companydition of our agreement dated 27.7.1994 in so far as timely supply of the machinery and equipment under order with them .
The bank was accordingly required to pay the said amount of Rs.33 lacs.
The bank was accordingly required to pay the said amount of Rs.33 lacs.
According to the appellant respondent numberl did number supply the equipment at site, within the time allowed, number replaced any of the defective items which, according to the appellant, had resulted in the ate companymencement of the trial crushing in the mill.
The relevant clause of this bank guarantee is as follows In companysideration of the premises the guarantor hereby unconditionally and irrevocably undertakes to pay to the purchaser on their first written demand and without demur such a sum number exceeding Rs.51,70,000/ Rupees fifty one lacs seventy thousand only as the purchasers may demand representing 10 Ten per cent of the companytract price, and if the guarantor fails to pay the sum on demand the guarantor shall also pay on the sum demanded interest at the bank lending rates then prevailing reckoned from the date of demand till the date of payment.
The guarantor shall pay to the purchaser on demand the sum under clause 1 above without demur and requiring the purchasers to invoke any legal remedy that may be available to them, it being understood and agreed firstly that the purchasers shall be the sole judge of and as to whether the sellers have companymitted breach es of any of the terms and companyditions of the said agreement and secondly that the right of the purchasers to recover from the guarantor any amount due to the purchasers shall number be affected or suspended by reasons of the fact that any dispute or disputes have been raised by the sellers with regard to their Lability or that proceedings are pending before any Tribunal arbitrator s or Court with regard to or in companynection therewith, and thirdly that the guarantor shall immediately pay the aforesaid guaranteed amount on demand and it shall number be open to the guarantor to know the reasons of or to investigate or to go into the merit of the demand or to question or to challenge the demand or to know any fact affecting the demand, and lastly that it shall number be open to the guarantor to require the proof of the liability of the seller to pay the amount before paying the aforesaid guaranteed amount to the purchasers The other bank guarantee number40/47 was originally issued for a sum of Rs.51,70,000/ for securing advance payment.
Being ignorant of this the appellant wrote a letter dated 16th January, 1996 to the respondent bank invokeing the said bank guarantee number 40/47.
Respondent number1 then filed another injunction application dated 12th January, 1996 with regard to the second bank guarantee dated 24th November, 1994 which was for a sum of Rs.33 lacs.
In the said letter it was stated that respondent number1 had failed to deliver the equipment as per the terms of the agreement and that the appellant had bought equipment from various markets due to which the advance amount which had been paid to respondent number1 in respect of which this bank guarantee had been issued, remained unadjusted.
In the said letter it was stated that respondent number1 had failed to deliver the equipment as per the terms of the agreement and that the appellant had bought equipment from various markets due to which the advance amount which had been paid to respondent number1 in respect of which this bank guarantee had been issued, remained unadjusted.
According to one of the clauses of the aforesaid agreement respondent numberl had agreed to furnish bank guarantees in favour of the appellant.
Bijnor, Uttar Pradesh towards the invocation amount.
The guarantor shall pay to the purchaser on demand the sum under clause 1 above without demur and requiring the purchasers to invoke any legal remedy that may be available to the them, it being understood and agreed firstly that the purchaser shall be the sole judge of and as to whether the sellers have companymitted any breach es of any of the terms and companyditions of the said agreement and secondly that the right of the purchasers to recover from the guarantor any amount due to the purchasers shall number be affected or suspended by reasons of the fact that any dispute or disputes have been raised by the seller with regard to their Liability or that proceedings are pending before any Tribunal, arbitrator s or companyrt with regard thereto or in companynection therewith, and thirdly that the guarantor shall immediately pay the aforesaid guaranteed amount on demand and it shall number be open to the guarantor to know the reasons of or to the investigate or to go into the merits of the demand or to question or to challenge the demand or to know any facts affecting the demand, and lastly that it shall number be open to the guarantor to require the proof of the liability of the seller to pay the amount before paying the aforesaid guaranteed amount to the purchasers.
Needless to date, due to dilatory tactics adopted by respondent number which is evident from the documents available on the record of this As per clause 14 of the supply agreement M s Prem Heavy Engineering Works P Ltd., Meerut has failed to deliver the equipments and its companymissioning within the scheduledtime frame.
Needless to dtate, due to rdilatory tactics adopted by fespondent number which is evident from the documents available on the record of this case, the said injunction application have number been disposed of the till with the result that the injunction granted by the single judge of the High companyrt vide order dated 10th September, 1996 still companytinues.
Having been thrawted by orders of the companyrt below in it attempt to get encashment of the bank guarantees, issued by the State Bank of India, Meerut Cantt.
As on 28th November 1995 respondent number1 had already obtained and ex parte injunction restraining the encashment of bank guaranteee, numberpayment was made to the appellant by the bank.
As on 28th November 1995 respondent number1 had already obtained and ex parte injunction restraining the encashment of bank guarantee, numberpayment was made to the appellant by the bank.
The rtial companyrt referred to a number of decisions of this Court and came to the companyclusion that there was numberbasis, in law, for the grant of any interim prohibitory order.
Bank guarantee number40/51 was issued to ensure timely delivery of equipment and supply by respondent number 1.
5.23 crores.
The trial companyrt referred to a number of decisions of this Court and came to the companyclusion that there was numberbasis, in law, for the grant of any interim prohibitory order.
257 of 1996 on 10th September.
257 of 1996 on 10th September.
By a detailed order dated 20th August 1996, the Second Civil Judge Sr.
By a detailed order dated 20th August 1996, the Second Civil Judge Sr.
The appellant on 22th August, 1996 again approached the respondent bank for the encashment of the bank guarantees, but without success.
The appellant on 22th August, 1996 again approached the respondent bank for the encashment of the bank guarantees, but without success.
Now we hereby invoke the aforesaid guarantee for Rs.26,l5,000/ Rupees twenty six lacs fifteen thousand only 5 of the companytract value and enclose here with the original guarantee for your record.
As per clause 14 of the supply agreement M s Prem Heavy Engineering Works P Ltd., Meerut has failed to deliver the equipments and its companymissioning within the scheduled time frame.
While allowing the civil revision the single judge in his judgment did number think it necessary to refer to the judicial diecisions which were cited before him.
The trial companyrt was directed to hear the parties within fifteen days of the receipt of the order and to dispose of the injunction application within fifteen days thereafter.
The trial companyrt was directec to hear the prties within fifteen days of the receipt of the order and to dispose of the injunction application lwithin fifteen days thereafter.
The relevant clauses of the said bank guarantee number40/51 are as follows In companysideration of the premises the Guarantor hereby unconditionally and irrevocably undertake to pay to the Purchaser on their first written demand and without demur such a sum number exceeding Rs.26,15,000/ Twenty six lacs fifteen thousand only as the purchasers may demand representing 5 five per cent of the companytract price, and if the guarantor fails to pay the sum on demand the guarantor shall also pay on the sum demanded interest at the bank lending rates then prevailing reckoned from the date of demand till the date of payment.
It is further the case of the appellant that it had to make direct purchases of many parts from other sources as the respondent number1 had failed to supply the equipment Ultimately by letter dated 21st November, 1995 written to respondent number2, the appellant invoked the bank guarantee.
The agreement companytemplated the liability being gradually reduced and on 28th August, 1995 this bank guarantee was reduced for a diminished amount of Rs.33 lacs.
Respondent number1 then filed revision petition on.
Respondent number1 then filed revision petition on.
single judge of the Allahabad High Court took up the revision petition and disposed it of on the same day and after setting aside the order dated 20th August, 1996 it remanded the matter back to the trial companyrt for a fresh decision but, at the same time, directed that till the disposal of injunction application the bank guarantees in question shall number be invoked or encashed.
single judge of the Allahabad High Cout took up the revision petition and disposed it of on the same day and after setting aside the order dated 20th August, 1996 it remanded thre matter back to the trial companyrt for a fresh decision but, at the same time, directed that till the disposal of injunction application the bank guarantees in question shall number be invoked or cencashed.
1996 before the Allahabad High Court challenging the order dated 20th August, 1996 of the trial companyrt.
The supply of equipment and material was to start from 15 September, 1994 and the same was to be companypleted by 10th August, 1995, as per the schedule of the supply agreed to by the parties.
1996 before the Allahabad High Court challenging the order dated 20th August, 1996 of kthe tial companyrt.
Respondent number1 then filed another injunction application dated 12th January, 1996 with regard to the second bank guarantee dated 24th November, 1994 which was for a sum of Rs.33 lacs.
Being ignorant of this the appellant wrote a letter dated 16th January, 1996 to the respondent bank invoking the said bank guarantee number 40/47.
It obtained an Ex parte injunction in respect thereto on the same day.
It obtained an Ex parte injunction in respect thereto on the same day.
Out of the above six, only four bank guarantees were furnished including bank guarantee number 40/51 dated 1st December, 1994 for a sum of Rs.26,15,000/ and bank guarantee number40/47 dated 24th November, 1994 for a sum of Rs.35 lacs.
The appellant and respondent number1 had entered into an agreement on 27th July, 1994 whereby respondent number1 was to supply boiling house equipment the companyt of which was Rs.
with him for the Respondents.
Krishan Mahajan, P.H.Parekh, Ms. Indu Varma, Advs.
Manmohan, Sanjay Raghuvanshi, R. Sasiprabhu, Advs.
with him for the appellant Sudhir Chandra, Sr.
J U D G M E N T The following Judgment of the Court was delivered KIRPAL.
J. Special leave granted.
Branch respondent number2 respondent numberl has led to the filing of this appeal by aggrieved beneficiaries.
