Rampur Engineering Co. Ltd. vs National Thermal Power ...
1996 Latest Caselaw 1037 Del

JUDGMENT

S.N. Kapoor, J.

(1) The appellant seeks a direction that the respondent No. 1 Ntpc should not realise and respondent No. 2 Canara Bank should not pay the amount under the Bank Guarantee No. 10 of 1990.

(2) The appellant furnished a Bank guarantee of Rs. 20 lakhs in connection with supply of steel with Ntpc on loan/returnable basis, in 1990. The Bank guarantee was valid initially till 30th June, 1990. It appears that subsequently it has been extended from time to time. The relevant terms of the Bank guarantee are as under:

AND where as the owner in order to consider the request of the Contractor insisted to furnish an unconditional Bank guarantee for value of Rs. 20,00,000.00 (Rupees twenty lakhs only) by the contractor. Subject to such, steel being available with the owner, required in the course of and/or for the performance of the above contract, on loan basis, initially upto such quantity as may work out to rupees 20.00 lakhs (Rupees twenty lakhs only) at such rate as may be fixed by the owner and on the condition that the steel so given to the contractor on loan basis/returnable basis shall be returned by the contractor in accordance with the schedule of dates of return of such steel so lend: We, Bank, having its Head Officer at Bangalore (hereinafter referred to as the 'Bank' which expression shall, unless repugnant to the context or meaning thereof, include its successors, administrators, executors and assigns) do hereby guarantee and undertake to pay the owner, on demand any and all monies payable by the contractor to the extent of twenty lakhs as aforesaid at any time upto 30.6.90 without any demur, reservation, contest, recourse or protest and/or without any reference to the Contractor. Any such demand made by the owner on the Bank shall be conclusive and binding notwithstanding any difference between the owner and Contractor or any dispute pending before any Court, Tribunal or any other authority. The Bank undertakes not to revoke this, guarantee during its currency i.e. within 30.6.90 without previous consent of the owner and further agrees that the guarantee herein continue to be enforceable till the owner discharges this guarantee or 30.6.90 whichever is earlier.

WE agree that the guarantee herein contained shall continue to be enforceable till the steel lent by the owner is returned back by the contractor to He owner or till the owner discharges this guarantees. The owner shall I we the fullest liberty without affecting in any way the liabilities the Bank under this guarantee, from time to time vary the quantity of steel issued on loan basis, or extend the time for performance of the works by the contractor. The Bank shall not be released from its liability under ease presents by any exercise of the owner of the liberty with reference to the matter aforesaid.

THE owner shall have the fullest liberty without affecting this guarantee to postpone from time t . time the exercise of any powers vested in them or of any right which they might have against the contractor and to exercise the same at any time in any manner, and either to enforce or to forbear to enforce any covenants or implied in the contract between the owner and the contract or any other course of remedy or security available to the owner and the Bank shall not be released of its obligations under these presents by any exercise by the owner of its liberty with reference to matters aforesaid or any of them or by reason of any commission on the part of the owner or any other indulgence shown by the owner or by any other matter of thing whatsoever which under law would, but for this provision, have the effect of relieving the Bank Guarantee.

(3) The respondent No. 1 supplied steel against account and they were charging interest also as is evident from Annex. 1 at p. 6 in the list of documents. According to the appellants, only a sum of Rs. 3,47,000.00 was due. According to Ntpc, a sum of Rs. 19,07,176.00 was due towards interest and Rs. 10,30,245.00 was due towards the value of the steel.

(4) The learned Single Judge rejected the application moved by the appellants on the ground that there was a dispute with reference to what is the amount due and as the appellant could not pinpoint the exact amount due, there was no prima facie case in favour of the plaintiff-Company.

(5) Learned Counsel for the appellant Mr. Mukul Rohtagi submitted that the respondent could encash the Bank guarantee at the most to the tune of Rs. 10,30,245.00 for, the rate of interest was not mentioned in the Bank guarantee. In the first blush, the argument appeared very plausible. Mr. S.K. Taneja, learned Counsel for the respondent pointed out that the appellant had been paying interest on this amount and referred to Annex. 1, 30th January, 1992 and attached to the Minutes of the meeting of the parties authorised representatives indicating that the interest calculated upto 31st August, 1991 was Rs. 6,92,969.00

-out of which a sum of Rs. 5,39,941 had been paid and the balance outstanding of the special advance and interest thereon was Rs. 17,55,997.48p. This is signed by Mr. Sanjay Gupta, Director (Production) of the plaintiff-Company. He further submitted that the appellant Company had not approached the Court with clean hands and they had extended the Bank guarantee only on 20th September, 1995 though the letter indicated that it was 14th September, 1995.

September, though the letter indicated that it was 14th September, 1995. Mr. Taneja also contended that this Court was not supposed to go into the question of detailed accounting of the matter in view of the settled law on the point.

(6) It appears in the aforementioned circumstances pointed out by learned Counsel for the respondent and apparent from the record filed by the appellant that there is virtually no special equity in favour of the appellant to issue any direction against encashment of the said Bank Guarantee No. 10 of 1990, in terms of the Bank guarantee referred to above.

(7) If any authority is needed, one may refer to Ansal Engineering Projects Ltd. v. Tehri Hydro Development Corporation Ltd. & Anr., . In this judgment, after referring to two earlier cases Hindustan Steel Works Construction Ltd. v. Rarapore & Co. &Anr., and Hindustan Steel Workers Construction Ltd. v. G.S. Atwal & Co. (Engineers) Pvt. Ltd., Jt 1995 (7) Sc, the Apex Court observed as under "6......It is axiomatic that any payment by the Bank, obviously be subject to the final decision of the Court or the Tribunal. At the stage of invocation of Bank guarantee, the need for final adjudication and decision on the amount due and payable by the petitioner, would run contrary to the terms of the special contract in which the Bank had undertaken to pay the amount due and payable by the contractor. Thus we hold that there is no question of making out any prima facie case much less strong evidence or special equity or exceptional circumstances for interference by way of injunction."

(8) In view of the foregoing discussion, we do not find any reason to disagree with the learned Single Judge. The Fao (OS) 457/1996 is accordingly dismissed. Parties are left to bear their own costs.