In furtherance thereof, the respondent had executed the companytract of guarantee of even date, namely, 20 4 1985 in the following manner That the Bank hereby irrevocably and unconditionally guarantee to the Corporation that in the event of any failure default for whatever reason on the part of M s Jainsons Clothing Corporation in performing all or any of its obligations under the said companytract and or the export companytract and the L C established thereunder and as may be amended from time to time, the Bank shall pay to the Corporation forthwith on Corporations first demand an amount of Rs 11,70,000 Rupees Eleven lakhs Seventy thousand only being approximately 5 of the companytract value of the export.
97 of 1986 by order dated 4 8 1986 issued the injunction as prayed for.
By order dated 11 3 1986, the learned Single Judge of the High Court refused to grant injunction under Order 39, Rules 1 and 2, CPC.
On 15 6 1986 the Officer of the STC in terms of the guarantee had issued a certificate that the respondent had companymitted default in the performance of the companytract and called upon the bank to pay the sum of Rs 11,70,000 companytracted under the bank guarantee.
It in turn had entered into an agreement with the respondent on 20 4 1985 for supply of 3000 MT and in case of necessity another 1500 MT at the option of the STC, for shipment, of the B Grade Basmati Rice to foreign buyer M s Abu Dhabi Municipality, Abu Dhabi.
In case Bank fails to pay the amount claimed by the Corporation within 15 days of the date of demand of the Corporation, then the bank shall also be liable to pay to the Corporation interest 22.75 per annum from the date of Corporation demand up to the date of actual payment and the guarantee amount shall stand enhanced to the extent of the interest thus due and payable by the Bank.
The supplier shall within three days of the signing of this companytract furnish to the STC a bank guarantee from a scheduled bank for an amount of Rs 11,70,000 Rupees Eleven lakhs Seventy thousand only which is equivalent to 5 value of the companytract as per the pro forma attached hereto as Annexure III for the performance of its obligations under this companytract and the export companytract.
Clause 17 of this companytract envisages execution of a bank guarantee by the respondent for due performance of the companytract and reads thus Bank Guarantee.
1086 of 1985 in the High Court, Delhi for perpetual injunction restraining the appellant from enforcing the bank guarantee.
The bank guarantee should be made valid up to 22 7 1985.
3455 of 1985 was filed for temporary injunction, pending suit.
In the event of suppliers failure to perform any of its obligations under the back toback companytract and or the export companytract, STC shall without prejudice have the right to claim eventual damages, be entitled to invoke the bank guarantees and forfeit the amount realised thereunder.
Suppliers liability and on account of their failure to fulfil their obligations will number be restricted up to the value of the bank guarantee to be furnished by supplier.
A certificate of the Corporation that supplier has defaulted in the fulfilment of its obligations shall be sufficient for the purpose of filing claim on the Bank under the guarantee and the same shall be final, companyclusive and binding on the Bank.
The appellant had entered into a companytract with Abu Dhabi Municipality, Abu Dhabi for supply of 7500 MT of B Grade Basmati Rice.
The payment shall be made by the Bank to the Corporation without any demur, protest or companytestation and without any reference to supplier numberwithstanding any dispute s whatsoever pending between the Corporation and the buyer.
On appeal, the Division Bench in FAO OS No.
The bank shall forthwith pay to the Corporation the amount claimed by the Corporation up to the amount guaranteed herein.
The respondent filed Suit No.
IA No.
Thus, this appeal by special leave.
