Bombay High Court
Allahabad Bank vs Divya International L.I.C. & Ors on 3 April, 2017
Bench: Anoop V. Mohta
ssm 1 app947.03-Judgment.sxw
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 947 OF 2003
IN
SUMMONS FOR JUDGMENT NO. 413 OF 2001
IN
SUIT NO. 4228 OF 2000
Allahabad Bank, a Body Corporate
Constitute under the Banking Companies
(acquisition & Transfer of Undertaking) Act,
V of 1970 having its Head Office at 2,
Netaji Subhash Road, Calcutta-700 001
and Branch Office at Dharmakripa Bldg.
1st Floor, Old Nagardas Road, Andheri (E),
Mumbai-400 069. .....Appellant.
(Orig. Defendant No.1)
Vs.
1 M/s. Divya International L.I.C.
A Company incorporated in Emirate
of Abu Dhabi as per provisions of
U.A.E. Federal Law having its
Mumbai Office at C/o. Kilitch Drugs
(I) Ltd., 2 Bhaveshwar, 148-B,
Dr. A.B. Road, Worli,
Mumbai-400 018.
2 Mukund Prataprai Mehta
3 Paresh Prataprai Mehta
both of Mumbai Indian Inhabitants
the Managing Directors of the
Respondent No.1 having their office
at C/o. Kilitch Drugs (I) Ltd., 2
Bhaveshwar, 148-B, Dr. A.B. Road,
Worli, Mumbai-400 018.
1/23
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4 M/s. Zan Internet Pvt. Ltd.,
A Company Registered under
Companies Act, 1956 having
its Registered Office at A-51,
Nand Kishore Industrial Estate,
Mahakali Cave Road, Andheri (E),
Mumbai-400 093.
5 Rashid Mohamed Mahran,
Albaloushi of U.A.E. Inhabitant,
carrying on business at P.O. Box
32650, Dubai, U.A.E. .....Respondents.
(Orig. Plaintiffs)
Mr. Bhavik Manek i/by V.N. Ajitkumar for the Appellant.
Mr. Vivek Walavalkar a/w Mr. Hemang Engineer & Ms. Karishma
Shirke i/by Gordhandas & Fozdar for Respondent No.1
Ms. Shaila M. Joshi i/by J.B. Basu & S.M. Joshi for Respondent No.4.
CORAM : ANOOP V. MOHTA AND
P.R. BORA, JJ.
RESERVED ON: 24 JANUARY 2017.
PRONOUNCED ON: 3 APRIL 2017.
JUDGMENT (PER ANOOP V. MOHTA, J.):-
Being aggrieved and dissatisfied by Judgment and Order
dated 13 January 2003, passed by the learned Single Judge in
Summons for Judgment No. 413 of 2001 in Suit No. 4228 of 2000, the
Appellant-Original Defendant No.1 has filed the present Appeal and
thereby prayed to quash and set aside the impugned order.
ssm 3 app947.03-Judgment.sxw
2 In nutshell, the facts and events of the case are as
under:-
The Appellant-Bank is original Defendant No.1.
Respondent Nos. 2, 3 and 5 are the partners of Respondent No.1
company. Respondent No.1's Associate company M/s. Kilitch Drugs
(I) Ltd., had entered into an agreement with the firm of M/s. AL-
Safwa managed by Respondent Nos. 2, 3 and 5 for mechanical
electrical pumping. Respondent Nos. 2 and 3 are also Directors of
M/s. Kilitch Drugs (I) Ltd.. Respondent No.1 was appointed as sub-
contractor to carry out the said work of the factory building at Dubai
for M/s. AL-Safwa by M/s. Kilitch Drugs (I) Ltd.. Respondent No.1
had given a sub contract to Respondent No.4 for electrification of the
factory building. Respondent No.1 company was dissolved by order of
Dubai Court. In view of certain disputes, the contract assigned to
Respondent No.1 was directly transferred to Respondent No.4 and
letter was addressed to record the same. The Bank Guarantee given
for Respondent No.4 was also confirmed to be transferred by M/s. AL-
Safwa Drugs. As Plaintiff No.1 suspended entire business
activities, M/s. AL-Safwa Drugs agreed to get the electrical work done
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by Respondent No.4 directly, and further to execute contract between
M/s. AL-Safwa and Respondent No.4, as all the work of Respondent
No.1 was suspended as it was dissolved by the order of Dubai Court.
Respondent No.1 invoked the bank guarantee and filed the Suit for
recovery.
3 On 22 February 1999, Respondent No.4 entered into the
contract agreement with Respondent No.1, who was a contractor of
M/s. AL Safwa Drugs, Dubai, whereby it sub-contracted to Respondent
No.4 to carry out for mechanical, electrical and Plumbing work in the
factory building at Dubai for M/s AL Safwa Drugs, Dubai. As per
the Agreement, Respondent No.1 was to pay Respondent No.4 amount
of Rs.16 lakhs as advance payment and Respondent No.4 was to
execute a Bank Guarantee of the like amount in favour of Respondent
No.1. On 4 March 1999, the Appellant Bank issued Bank Guarantee
bearing No. 60/6 in favour of Respondent No.1, which was valid
upto 25 August 1999 and later on extended till 16 February 2000.
Due to some disputes, it was decided that the contract of
carrying out the work in the factory building would be transferred
ssm 5 app947.03-Judgment.sxw
directly to Respondent No.4 from Respondent No.1. Therefore, on 15
November 1999, a letter was issued by Respondent No.2 on behalf of
Respondent No.1 to M/s. AL Safwa Drugs FZE (Principal), relieving
Respondent No.4 (Sub-contractor) from the Contract Agreement with
Respondent No.1 and thereby enclosing Bank Guarantee for
completion of electrical works. On 30 November 1999, AL Safwa
Drugs FZE issued a letter to Appellant Bank informing about the
termination of the contract. They have appointed Respondent No. 4
directly to complete the electrification and also agreed to send the
Bank Guarantee to the Appellant, upon receipt of the same from
Respondent No.1. During the period from 22 November 1999 to 1
December 1999, Respondent No.4 issued letters to the Appellant Bank
informing about the change in contract and asked to cancel and/or
revoke the Bank Guarantee. The Appellant Bank replied the same by
letter dated 24 November 1999 and asked for further details.
Respondent No. 2 by his letter dated 18 December 1999, informed to
M/s. AL Safwa, stating that he along with wife and son left for India
due to sudden illness of mother and on 19 December 1999, allegedly
claimed to be authorized signatory of Respondent No.1, issued a letter
to the Appellant Bank and invoked the Bank Guarantee. By suspecting
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foul play on the part of Respondent Nos. 2 and 3, the Appellant Bank
informed Respondent No.4 about the letter of invocation. On 21
December 1999, the Appellant Bank received a letter on behalf of
Respondent No.1 through Respondent No. 5, stating that the Bank
Guarantee was not handed over to AL Safwa Drugs, but illegally
submitted to the Bank for invocation, therefore, requested not to be
invoked. On 23 December 1999, the Appellant Bank informed to
Respondent No.1 that they agreed to honour its commitments under
the subject bank guarantee to the beneficiary name therein. However,
the Appellant Bank called upon Respondent No.1 to verify the
authenticity of address mentioned in the letter of invocation, as well
as, informed about the receipt of letter dated 21 December 1999
issued by Respondent No.1 through Respondent No.5 to cancel the
Bank Guarantee. Attention of Respondent No. 5 was specifically
drawn to letter dated 15 November 1999 addressed to M/s. AL Safwa
Drugs, FZE Dubai through Respondent No.2 and hence forwarded
copies of the above letters and other papers received by the Appellant
to Respondent No.1 to clarify its position for taking appropriate
action.
ssm 7 app947.03-Judgment.sxw
4 Respondent No.2 on behalf of Respondent No.1 issued a
letter dated 25 December 1999 to the Appellant Bank stating that the
normal operations at Dubai has been temporarily suspended except
the banking transaction at Bank of Baroda, Bur Branch, Dubai.
Further, Respondent No.2 stated that all correspondences shall be
communicated to Indian Office at Worli. On 27 December 1999, the
Appellant Bank again forwarded copies of the earlier
letters/correspondences to Respondent No. 2. On 29 December 1999,
the Appellant Bank has received letter from Respondent No.1
requesting it to cancel Bank Guarantee as the same was invoked by
minor partners without their consent. It has been further stated that
they are taking steps to dissolve Respondent No.1, including
cancellation of signature of Respondent Nos. 2 and 3 in Bank of
Baroda from operating the account. On 31 December 1999,
Respondent Nos. 2 and 3 issued legal notice to the Appellant Bank,
calling upon to remit the Guarantee amount to Bank of Baroda at Bur
Branch, Dubai. On 1 January 2000, Respondent No. 2 replied on
behalf of Respondent No.1 to the Appellant Bank's letter dated 27
December 1999, stating that the address of Respondent No. 1 has
changed. Further under the articles of Memorandum of Respondent
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No.1, only Respondent Nos. 2 and 3 were vested with the
management of Respondent No.1. Though Respondent Nos. 2 and 3
referred to letter dated 15 November 1999 stated that M/s. AL Safwa
did not accept advance, as Bank Guarantee was not submitted, hence
they became entitled to invoke. In this letter Respondent Nos. 2 and 3
stated that Respondent No. 5 did not have any right to cancel the
Bank Guarantee. On 2 January 2000, letter issued by Respondent No.
5 to the Appellant Bank stating that Bank Guarantee to be honoured
only if signed by all the partners and that the only address being as
mentioned on the letter-head. Further, minor partners-Respondent
Nos. 2 and 3 without intimation left for India and that they have
initiated steps to dissolve Respondent No.1 company as per laws of
Dubai. On 3 January 2000, a letter issued by Respondent No.4 to the
Appellant Bank stating that invocation of the bank guarantee by
Respondent Nos. 2 and 3 illegal and wrongful and bank justified in
withholding the payment under the guarantee. On 4 January 2000,
two letters issued by Respondent No. 1 through Respondent No.5 to
the Manager, Bank of Baroda, Dubai, UAE branch, stating that
Respondent Nos. 2 and 3 left for India and unlikely to return to Dubai.
By this letter Respondent No.5 called upon the Bank of Baroda,
ssm 9 app947.03-Judgment.sxw
Dubai Branch, not to accept any instructions from Respondent Nos. 2
and 3 without signature of Respondent No. 5, else the bank shall be
liable for damages. On 12 January 2000, the Appellant bank replied
to notice dated 31 December 1999, issued by Respondent No. 2
stating that the Bank is ready and willing to make the Guarantee
payment subject to give clear mandate from all the three partners
concerned, since there was a dispute and bank receiving contrary
instructions from the Respondents. During the period from January
2000 to April 2000, correspondence exchanged between the parties
with regard to serious disputes between Respondent Nos. 1 to 3 and 5
and instructions to the Appellant Bank not to honour the payment
thereunder.
5 By order dated 22 August 2000, Dubai Court of First
Instance, dissolved Respondent No.1 company and appointed the
authorized person to execute the dissolution order and also appointed
Legal Authority to execute the Court order within a week as per the
Commercial Company Act, Dubai. On 5 September 2000, Summary
Suit No. 4228 of 2000 filed by Respondent Nos. 1 to 3 against
Appellant Bank and others, when Respondent No.1 company was
ssm 10 app947.03-Judgment.sxw
under liquidation. In view of the dissolution order of the Dubai Court,
Respondent No.1 had no independent right to file the Suit. On 17
October 2000, notice was issued by Respondent No.5 to Bank of
Baroda, Bur Branch, Dubai informing about dissolution of Respondent
No. 1 company and requested to cancel the operation of accounts
through Mehta Brothers (minor partners). On 3 April 2001, Summons
for Judgment No. 413 of 2001 taken out by Respondent Nos. 1 to 3 in
the above Suit. On 20 April 2001, affidavit-in-reply filed by the
Appellant Bank and opposed Summons for Judgment on the grounds
that; (i) no jurisdiction to decide the Suit in India, as the payment
shall be made in Dubai, (ii) Respondent No. 1 was dissolved on 22
August 2000, as per Dubai Court order, therefore, Respondent Nos. 2
and 3 have no right to represent on behalf of Respondent No. 1
company as the Liquidator was appointed, (iii) By letter dated 15
November 1999, the contract for which the Bank Guarantee came to
be issued has itself being released by Respondent No. 1 through
Respondent No.2 and Respondent No. 4 has been directly appointed
by M/s. AL Safwa to carry out the work, (iv) Furthermore, by letter
dated 21 December 1999, the Bank Guarantee has been cancelled by
Respondent No.1 through majority shareholders.
ssm 11 app947.03-Judgment.sxw
6 In a Memorandum of Association of Respondent No.1
dated 16 January 1999, particularly at Article 16 (Dispute) clearly
mentioned that in case of any dispute or difference between the
parties or Agreement, the Abudabi Court shall have jurisdiction to
decide the same. As per Clause-16 of the Agreement for
Establishment of Limited Liability company, in case of any dispute
arises, it has been clearly mentioned, the jurisdiction shall be in the
Court of Dubai. Therefore, Indian Court does not have jurisdiction to
entertain any proceedings in this regard.
7 On 29 November 2002, affidavit in reply filed by
Respondent No.4 supporting the Appellant Bank and producing
additional documents to show that the Bank Guarantee is not
enforceable. On 8 January 2003, affidavit in rejoinder filed by
Respondent Nos. 2 and 3 on behalf of Respondent No.1 to the affidavit
in reply filed by the Appellant Bank.
8 By impugned order dated 13 January 2003, the Suit has
been decreed in terms of prayer clauses (a) and (b). On 4 June 2003,
ssm 12 app947.03-Judgment.sxw
the present Appeal was filed by the Appellant Bank, challenging the
impugned order. On 20 January 2004, the Appeal has been admitted.
On 26 September 2006, this Court directed the Bank to deposit
decreetal amount with interest within four weeks. Liberty is also
granted to Respondent Nos. 1 to 3 to withdraw subject submission of
Bank of Guarantee. On 23 November 2006, the Appellant Bank
deposited a sum of Rs. 37,03,452/- in this Court, which appears to
have been withdrawn by Respondent No. 1 by furnishing Bank
Guarantee. Hence, the present Appeal challenging impugned order
dated 13 January 2003, passed by the learned Single Judge.
9 The learned counsel appearing for the Appellant read and
referred the following Judgments-
a) Babu Rao Ramchandra Rao & Ors. Vs. Babu
Manaklal Nehrmal1;
b) Mahanth Singh Vs. U Ba Yi2;
c) Nallore Co-operative Urban Bank Ltd. by its
Secretary, Mr. V. Venkatappayya Vs. Akili
Mallikarjunayya3;
1 AIR1938 Nag 413
2 AIR 1939 PC 110
3 AIR (35) 1948 Mad 252
ssm 13 app947.03-Judgment.sxw
d) Larsen and Toubro Limited Vs. Allahabad Bank &
Ors.4;
e) IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd.5;
f) Sudarsan Chits (I) Ltd. Vs. G. Sukumaran Pillai &
Ors.6
10 The learned counsel appearing for Respondent No.1 read
and referred the following Judgments-
a) Oil & Natural Gas Corporation Ltd. Vs. SBI, Overseas
Branch, Bombay7;
b) Mahatma Gandhi Sahakara Sakkare Karkhane Vs.
National Heavy Engg. Coop. Ltd. & Anr.8;
c) M/s. Adani Agri Fresh Ltd. Vs. Mahaboob Sharif &
Ors.9
11 The law with regard to the scope and purpose of Summary
Suit under Order 37 of the Code of Civil Procedure, 1908 (CPC), has
been reiterated in the Judgments cited by the parties and ultimately,
4 2016 (6) Bom. C.R. 335
5 AIR 2016 SC 5321=(2016) 8 MLJ 390
6 AIR 1984 SC 1579
7 (2000) 6 SCC 385
8 (2007) 6 SCC 470
9 Civil Appeal No. 14015 of 2015 (Arising out of SLP (C) No.9506/2014 dated 2/12/2015
ssm 14 app947.03-Judgment.sxw
following are the basic principles/points, which required to be kept in
mind while passing the order on merits in such Summary Suits,
covering the aspect of grant of unconditional and/or conditional
leave.
12 This Court (Coram:- Anoop V. Mohta,) in IAL Logistics
India [A Division of IAL Container Line (India) Ltd. Vs. Quantum
International10, while dealing with the scheme and object of Order 37
of the CPC, has observed in paragraph No.10 that:-
"10. The scheme and purpose of Order XXXVII of the
Code of Civil Procedure (CPC) can be summarised as
under:-
The purpose and the basic of summary suit:-
(a) A plaintiff, if chooses to invoke the provisions of
Order XXXVII for recovery of amount, the basic
obligations and elements as required need to be
fulfilled. The summary suit so filed must fall within
the four corner of Order XXXVII for getting
judgment/decree summarily.
(b) As per Rule 227 of the Bombay High Court
(Original Side) Rules, 1980, the plaintiff must take
out an appropriate proceeding within six months
once such Suit is instituted, though it is subject to
condonation of delay, if case is made out.
(c) The object of Order XXXVII is to recover the
crystallised dues, liquidated, admitted,
acknowledged debt/monetary claim by a summary
procedure, without long trial, principally based
10 2011 (5) Mh.L.J. 931
ssm 15 app947.03-Judgment.sxw
upon a written document executed in the course of
business, in accordance with law. It is a supportive
measure for recovery of unpaid debt/amount
covering all the negotiable instruments as
contemplated under the Negotiable Instruments Act,
apart from a valid, written
contract/receipt/acknowledgment. It may be an
express term or an implied term, based upon facts
and circumstances of the case, considering the
practice, trade and usage of the commerce and the
trade. This also covers apart from principal amount,
express or implied terms of the interest.
The plaintiff's and defendant's respective obligations:
(d) A plaintiff having once instituted a summary suit is
under obligation firstly, to serve the defendant, a
summons for appearance by providing copy of
plaint and annexures. The defendant, upon such
service, needs to appear within 10 days from the
date of the service either in person or through an
Advocate. If the appearance is made, either in
person or through the Advocate, the plaintiff is
required to serve the summons for judgment on the
given address.
(e) The defendant is entitled to file a reply and/or an
application for grant of leave to defend the Suit,
within 10 days of service of summons with the
averments and the supporting documents entitling
him leave to defend the Suit. Such application or
affidavit reply shall be supported by an affidavit.
(f) If the defendant fail to enter appearance in spite of
the service, the plaintiff's averments/allegation, if
supported by due documents/ material, shall be
deemed to be admitted and entitled for a
judgment/decree for the amount so prayed. The
defendant though filed appearance but failed to file
reply or defence or remained absent in spite of filing
of service, the Court may pass judgment/decree as
prayed in accordance with law.
ssm 16 app947.03-Judgment.sxw
The Court needs to exercise the discretion judicially:
(g) Though basic burden lies upon the plaintiff to prove
and satisfy the Court that the claim so raised and
prayed for decree falls within the ambit and scope of
the summary procedure in question. Once the Court
comes to a conclusion that plaintiff has made out a
case for summons for judgment or the defendant has
made out a case for unconditional or conditional
leave, after considering the facts and circumstances
of the case, need to exercise discretion in either way
based upon the settled position of law.
(h) The defendant is able to demonstrate through the
affidavit in defence and/or averments made in
application/affidavit for leave to defend that the
plaintiff has not made out a bona fide and clear
case and on the contrary the defence so raised is
bona fide reasonable and good defence and raises
the plausible/triable issues the defendant is entitled
to unconditional leave to defend.
(i) But, after the defence so raised by the defendant and
the Court is satisfied that the defendant may at the
trial able to establish a defence and/or there is
material placed on record, though not fully
supportive, the Court may grant conditional leave,
directing the defendant to deposit the amount in the
Court in full and/or in part and/or to furnish the
security by possible permitted modes pending the
trial.
The grant of Decree or Summons for Judgment with
agreed interest:
(j) The Court, if, comes to a conclusion that there is no
defence and/or it is sham, bogus, illusory and
moonshine, the Court may refuse to grant leave to
defend and pass/grant summons for judgment or
decree as prayed by the plaintiff.
The Interest:
(k) The Court needs to consider the aspect of agreed
ssm 17 app947.03-Judgment.sxw
rate of interest on the principal amount so claimed
and the future interest also. The condition should be
reasonable, practicable and not be onerous or
burdensome:
The condition should be reasonable, practicable and not
be onerous or burdensome:-
(l) It is also necessary for the Court while exercising a
jurisdiction to see that while granting leave to
defend, contention should not be unduly onerous
that results into depriving and/or unable to defend
the defence so raised. The Court, therefore, needs to
exercise discretion cautiously and carefully while
passing the conditional or any such order in
summary suits."
13 The Apex Court, recently in IDBI Trusteeship Services Ltd.
(Supra), has observed in paragraph No. 17 that:-
"17. Accordingly, the principles stated in
paragraph 8 of Mechelec's case will now stand
superseded, given the amendment of Order 37 Rule 3 and
the binding decision of four judges in Milkhiram's case,
as follows:
17.1. If the defendant satisfies the court that he
has a substantial defence, that is, a defence that is likely
to succeed, the plaintiff is not entitled to leave to sign
judgment, and the defendant is entitled to unconditional
leave to defend the suit.
17.2 If the defendant raises triable issues
indicating that he has a fair or reasonable defence,
although not a positively good defence, the plaintiff is not
entitled to sign judgment, and the defendant is ordinarily
entitled to unconditional leave to defend.
17.3 Even if the defendant raises triable issues, if a
doubt is left with the trial judge about the defendant's
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good faith, or the genuineness of the triable issues, the
trial judge may impose conditions both as to time or
mode of trial, as well as payment into court or furnishing
security. Care must be taken to see that the object of the
provisions to assist expeditious disposal of commercial
causes is not defeated. Care must also be taken to see
that such triable issues are not shut out by unduly severe
orders as to deposit or security.
17.4 If the defendant raises a defence which is
plausible but improbable, the trial Judge may impose
conditions as to time or mode of trial, as well as payment
into court, or furnishing security. As such a defence does
not raise triable issues, conditions as to deposit or
security or both can extend to the entire principal sum
together with such interest as the court feels the justice of
the case requires.
17.5 If the defendant has no substantial defence
and/or raises no genuine triable issues, and the court
finds such defence to be frivolous or vexatious, then leave
to defend the suit shall be refused, and the plaintiff is
entitled to judgment forthwith.
17.6 If any part of the amount claimed by the
plaintiff is admitted by the defendant to be due from him,
leave to defend the suit, (even if triable issues or a
substantial defence is raised), shall not be granted unless
the amount so admitted to be due is deposited by the
defendant in court."
14 The Apex Court in, State Bank of Hyderabad Vs. Rabo
Bank11 in paragraph 17 and 18 has recorded as under, while granting
unconditional leave to defend:-
"17. An analysis of the above principles makes it clear
that in cases where the defendant has raised a triable
11 (2015) 10 SCC 521
ssm 19 app947.03-Judgment.sxw
issue or a reasonable defence, the defendant is entitled to
unconditional leave to defend. Leave is granted to defend
even in cases where the defendant upon disclosing a fact,
though lacks the defence but makes a positive impression
that at the trial the defence would be established to the
plaintiff's claim. Only in the cases where the defence set
up is illusory or sham or practically moonshine, is the
plaintiff entitled to leave to sign judgment.
18. Insofar as the question of maintainability of the
suit in question under Order 37 CPC is concerned, this
Court has in Neebha Kapoori v. Jayantilal Khandwala12
observed that where the applicability of Order 37 itself is
in question, grant of leave to defend may be permissible.
The court before passing a decree is entitled to take into
consideration the consequences therefor. The courts
dealing with summary trials should act very carefully
taking note of the interests of both the parties. Merely on
the ground that the defendant may resort to prolonged
litigation by putting forth untenable and frivolous
defences, grant of leave to defend cannot be declined. At
the same time, the court must ensure that the defendant
raises a real issue and not a sham one. The court cannot
reject the defence on the ground of implausibility or
inconsistency. Before recording a finding of granting
leave to defend, the Court should assess the facts and
come to the conclusion that if the facts alleged by the
defendant in the affidavit are established, there would be
a good or even a plausible defence on those facts."
15 In the case in hand, we are inclined to interfere with the
order passed by the learned single Judge dated 13 January 2003, by
accepting the case and submissions of the Appellant and the grounds
so raised, which are undisputed on the findings and the facts so
12 (2008) 3 SCC 770 : (2008) 1 SCC (Civ) 929
ssm 20 app947.03-Judgment.sxw
referred in the respective documents, which are part of the record.
16 This undisputed position on record itself makes the
defence plausible and raises various issues, which required due trial.
The learned Single Judge failed even to decide the issue of jurisdiction
by giving specific reason to the defence so raised in the background of
the disputes and differences between the parties and its partners.
17 The law of guarantee though cleared, but it is also
necessary for the concerned Bank to verify and confirm the beneficiary
and the amount to be paid in whose account and in whose instance,
specifically in the background of disputes between the partners of the
firm/company in question. The Banks are under obligation to verify
the terms and conditions of the Bank Guarantee, if everything is same
or not as per the terms. The issue and/or conflict, if any, based upon
the correspondences entered into and/or referred and/or addressed
by the parties to the Bank showing the reasons for not invoking the
bank guarantee and/or same be cancelled and specifically when the
concerned objector (Defendant No.3) was partner of the original
Plaintiffs. The doubts, therefore, so raised by the Bank and asked for
ssm 21 app947.03-Judgment.sxw
the clarification, in no way can be stated to be intentional and/or in
breach of terms and conditions. It is clear that both the parties are
under obligation to fulfill and complied with the formalities as per the
terms. Any change and/or circumstances other than the terms and
conditions, if cropped up, as happened in the matter, the Bank's action
of not invoking the bank guarantee in case in hand and raising the
defence, in no way, should be stated to be sham and bogus and/or
intentional to deny the claim flowing from the bank guarantee. The
undertaking given by Defendant No.1, Appellant to make the payment
to Plaintiff No.1 in the facts and circumstances for the reasons so
recorded above and specifically, reference to communication dated 12
January 2000, 25 December 1999, 21 December 1999, 23 December
1999 and Bank Guarantee dated 4 March 1999, including the Dubai
Court of first instance order dissolving the company, goes to the root
therefore, impugned order dated 13 January 2003 required to be
interfered with. We are doing accordingly. The defence and issues
so raised by the Appellant-original Defendant No.1, are not sham and
bogus and/or intent to delay the payment. The substantial defence
and triable issues are raised, which cannot be decided in such fashion,
except in due trial.
ssm 22 app947.03-Judgment.sxw
18 Resultantly, the Appellant is entitled to an unconditional
leave to defend the Suit. The Appellant-original Defendant to file
written statement within thirty days from the date of receipt of copy
of this order. The Summons for Judgment is disposed of accordingly.
19 Pursuant to the order passed by this Court on furnishing
the Bank Guarantee, Respondent Nos. 1 to 3 decree-holders,
permitted to withdraw the amount by order dated 26 September
2006. However, in view of the above observations and the reasons so
given, we are inclined to interfere with the impugned judgment and
decree. The amount, therefore, so withdrawn by Respondent Nos. 1
to 3, required to be re-deposited in the Court within six weeks with
interest at the bank rate as of today. The liberty is granted to the
Appellant to apply for appropriate order on this issue, including
withdrawal of the amount from the Court account, if deposited.
20 Resultantly, the following order:-
ORDER
a) Appeal is allowed.
b) Impugned order dated 13 January 2003, is quashed
ssm 23 app947.03-Judgment.sxw
and set aside.
c) Appellant is entitled for unconditional leave to
defend the Suit.
d) The Appellant-Original Defendant to file written
statement within thirty days from the receipt of
copy of this order. Affidavit, list of documents to be
filed within four weeks, thereafter. Inspection be
made within four weeks, thereafter.
e) The Suit be placed on the board of learned Judge,
who is taking the commercial causes suits, as the
same is transferred to the list of commercial causes.
f) The amount withdrawn by Respondent No.1 to 3 be
deposited in the Court within a period of six weeks
with interest at the bank rate as of today. Liberty is
granted to the Appellant to apply for withdrawal of
the re-deposited amount, with due notice to the
parties.
g) No costs.
21 This Judgment shall not take effect for six weeks from
today, in the interest of justice.
(P.R. BORA, J.) (ANOOP V. MOHTA, J.)
