Spml Infra Ltd vs Hitachi India (P) Ltd. And Anr
2021 Latest Caselaw 2329 Del

                              $~20
                              *    IN THE HIGH COURT OF DELHI AT NEW DELHI
                              +     FAO (COMM) 129/2021
                                    SPML INFRA LTD                                       ..... Appellant
                                                       Through:     Mr. Sayan Ray & Mr. Parag
                                                                    Chaturvedi, Advocates.

                                                       versus

                                    HITACHI INDIA (P) LTD. AND ANR            ..... Respondents

Through: Mr. Prasouk Jain with Ms. Rabiya Thakur, Advocates.

                                                             Mr. Ateev Mathur, Advocate for
                                                             Respondent No.2 ( SCB)

                              %                          Date of Decision: 27th August, 2021
                              CORAM:
                              HON'BLE MR. JUSTICE MANMOHAN
                              HON'BLE MR. JUSTICE NAVIN CHAWLA

                                                        J U D G ME N T

                              MANMOHAN, J: (Oral)

The hearing has been done by way of video conferencing. CM APPL.28298/2021 Exemption allowed, subject to all just exceptions. Accordingly, application stands disposed of. FAO (COMM) 129/2021 & CM APPL. 28297/2021

1. Present appeal has been filed challenging the order dat ed 23 r d Ju ly, 2021 passed by Learned District Judge, Commercial Court-02, South East District, Saket District Courts ("Trial Court") in OMP(I) (Comm) No. 192/2021 whereby the Trial Court has passed an ex parte ad-in terim st atus

Signature Not Verified Digitally Signed By:JASWANT

Signing Date:28.08.2021 22:49:41 quo order as regards the encashment of Respondent's No. 2 Bank Guarantees for Rs.16,20,000/- in an application filed by Respon dent No. 1 under Section 9 of the Arbitration and Conciliation Act, 1996.

2. Learned counsel for the appellant states that the Bank Guarantee was invoked as the Respondent no.1 had not extended the said Ban k Guarantee up to 31st March, 2022.

3. Issue notice. Mr. Prasouk Jain, Advocate accepts notice on behalf of Respondent no.1 and Mr. Ateev Mathur, Advocate accepts notice on beh alf of Respondent no.2.

4. Learned counsel for the respondents state that the Bank Guarantee in question has been extended till 31st March, 2022. Let the original extended Bank Guarantee be furnished to the learned counsel for the appellant wit hin a week.

5. In view of the aforesaid statement, this Court was inclined to dispose of not only the appeal but also the Section 9 petition filed by the respon dent no.1. However, Mr. Jain, learned counsel for respondent no.1, states t hat h e would like to press for an injunction order before the trial court restraining the appellant from encashing the Ban k Guarantee in qu estion du ring it s validity period. In support of his contention, he draws this Court's attention to learned Single Judge's order dated 22nd July, 2021, passed in a sim ilar matter between the same parties.

6. Prima facie this Court is of the opinion that Bank Guarantees are n ot furnished for being photo framed and kept in a drawing room . Th e learned Single Judge in the order dated 22nd July, 2021, has advisedly used the expression that 'the order has been passed in view of the consensus arrived at between the parties'. There is no judicial finding that a Ban k Gu arantee

Signature Not Verified Digitally Signed By:JASWANT

Signing Date:28.08.2021 22:49:41 cannot be encashed during its validity.

7. In our view, the Court cannot injunct encashment of a bank guarantee during its validity if a cause of action arises in future. Bank guarantee h as a meaning and legal sanctity attached to it. The Supreme Court in U.P. Cooperative Federation Ltd. vs. Singh Consultants and Engineers (P) Ltd., (1988) 1 SCC 174, has held that bank guarantees m ust be h onoured free form interference by Courts, otherwise, trust in commerce internal an d international would be irreparably damaged. Recently, in Andhra Pradesh Pollution Control Board vs. CCL Products (India) Limited, 2019 SCC OnLine SC 985, the Supreme Court has held as under:

"23. The settled legal position which has emerged from the precedents of this Court is that absent a case of fraud, irretrievable injustice and special equities, the Court should not interfere iwth the invocation or encashment of a bank guarantee so long as the invocation was in terms of the bank guarantee."

8. However, learned counsel for the respondent no.1 insists on arguing the matter and showing some documents. Respondent no.1 is given an opportunity to file whatever documents he wishes to rely upon within a week.

9. List on 13th September, 2021.

10. The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e-mail.

MANMOHAN, J

NAVIN CHAWLA, J AUGUST 27, 2021/AS

Signature Not Verified Digitally Signed By:JASWANT

Signing Date:28.08.2021 22:49:41