Delhi High Court
State Bank Of India vs M/S Lucky Exports & Ors. on 22 March, 2021
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 22nd March, 2021.
+ FAO (COMM) 78/2021
STATE BANK OF INDIA ..... Appellant
Through: Mr. Apoorv Sarvaria, Mr. R.P. Vats
and Mr. Tejjas Upmanyu, Advs.
Versus
LUCKY EXPORTS & ORS. ..... Respondents
Through: Mr. Alok K. Aggarwal, Ms.
Anushruti and Ms. Akanksha
Sharma, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
HON'BLE MR. JUSTICE AMIT BANSAL
RAJIV SAHAI ENDLAW, J.
CM No.11464/2021 (for exemption)
1. Allowed, subject to just exceptions and as per extant rules.
2. The application is disposed of.
FAO (COMM) No.78/2021 & CM No.11463/2021 (for stay)
3. The appeal impugns the order dated 2nd March, 2020 of the
Commercial Court, allowing the application of the respondent No.
1/plaintiff under Order XXXIX Rules 1 & 2 of the Code of Civil Procedure,
1908 (CPC) and injuncting encashment of bank guarantee.
4. The respondent No. 1/plaintiff had a contract from respondent No. 3
Syrian Corporation for Spinning and Weaving, an entity incorporated in and
according to laws of Syria, whereunder the respondent No. 1/plaintiff was
required to furnish a bank guarantee. The respondent No. 1/plaintiff
requested its banker namely Syndicate Bank, since amalgamated with
respondent No. 2 Canara Bank, to issue the said guarantee and the
Syndicate/Canara Bank in turn requested the appellant to issue the bank
guarantee. The appellant accordingly issued the bank guarantee in favour of
the respondent No. 4 Commercial Bank of Syria, being the banker of the
respondent No. 3, with which the respondent No. 1/plaintiff had contracted.
5. The respondent No. 1/plaintiff instituted the suit, from interim order
wherein this appeal arises, for declaration, that the contract had become null
and void and that no monies were payable by the respondent No. 1/plaintiff
under the bank guarantees aforesaid. In the said suit, as aforesaid, interim
injunction restraining payment under the bank guarantee has been granted,
taking into consideration the war raging in Syria.
6. The contention of the counsel for the appellant is that the respondent
No. 4 Commercial Bank of Syria, within the period of validity of the
guarantee, had notified the appellant to either make payment under the
guarantee or to extend the term of the guarantee but the Syndicate/Canara
Bank was not willing to extend the corresponding guarantee in favour of the
appellant. It is further argued that the monies claimed by the Commercial
Bank of Syria under the guarantee furnished by the appellant will be
recovered by the Commercial Bank of Syria from the appellant in the
International Clearing House and the appellant would be left with no remedy
against the respondent No. 1/plaintiff or the Syndicate/Canara Bank.
7. As would be evident from the above, the grievance of the appellant is
not on the merits of the dispute, but qua protecting its own interest.
8. The interim order of stay of encashment of bank guarantee cannot be
permitted to lead to a situation where though interim injunction against
payment is granted to the bank issuing the guarantee but no protection is
afforded to such bank. For this reason, ordinarily all such interim orders,
whenever granted, are subject to the condition that the plaintiff keeps the
bank guarantee alive and which condition is found to be missing from the
impugned order.
9. However the appellant, instead of requesting the Commercial Court to
impose such condition on the respondent No. 1/plaintiff, has rushed with
this appeal. It is not the case of the appellant that the monies have already
been recovered from it or that after the notice asking the appellant for
extension of guarantee and in the alternative invoking the guarantee, any
other notice has been served on it, invoking the guarantee. The remedy of
the appellant thus was/is to approach the Commercial Court to impose
condition on the respondent No. 1/plaintiff to keep the guarantee alive.
10. At this stage, the counsel for respondent No. 1/plaintiff appears on
advance notice and has contended that in fact the bank guarantee has lapsed
and the contract never took off and no claim has been made by the ultimate
beneficiary i.e. respondent No.3, under the bank guarantee or on the
respondent No. 1/plaintiff.
11. If the bank guarantee has lapsed and the appellant or the respondent
No.1/plaintiff were no longer liable thereunder, there would have been no
need for the respondent No. 1/plaintiff to seek the interim stay. The very
fact that the respondent No. 1/plaintiff instituted the suit and sought interim
relief, shows that the respondent No.1/plaintiff also considered liability of
the appellant bank to be subsisting and that the appellant bank, unless
restrained, would be liable to pay.
12. That being the position, the respondent No. 1/plaintiff cannot shy
away from keeping the bank guarantee alive till wants to continue with the
interim order granted in its favour.
13. We thus dispose of this appeal, modifying the impugned order dated
2nd March, 2020 of the Commercial Court, only to the extent of making the
interim order granted conditional to the bank guarantee being kept alive by
the respondent No.1/plaintiff, by making its banker namely
Syndicate/Canara Bank, to keep alive the counter guarantee in favour of the
appellant bank.
14. The respondent No. 1/plaintiff is granted time till 31 st March, 2021 to
renew/restore the bank guarantee/counter guarantee in favour of the
appellant bank, by taking all requisite steps.
15. The counsel for respondent No.1/plaintiff, after taking instructions
from Mr. Ashish Oberoi, Mr. Vinay Singh and Mr. Divakar Mishra, partners
of respondent No. 1/plaintiff, states that the said partners of respondent No.
1/plaintiff undertake to this Court to have the bank guarantee/counter
guarantee in favour of appellant renewed/restored on or before 15th April,
2021.
16. The aforesaid Mr. Ashish Oberoi, Mr. Vinay Singh and Mr. Divakar
Mishra have been explained through counsel, consequences of breach of
undertaking given to the Court.
17. Accepting the aforesaid undertaking of the partners of respondent
No.1/plaintiff, time till 15th April, 2021 is granted.
18. It is however made clear that if the bank guarantee/counter guarantee
in favour of the appellant is not renewed/restored by 15 th April, 2021, the
stay order granted by the Commercial Court vide impugned order dated 2 nd
March, 2020 shall stand automatically vacated and the appellant shall be
entitled to take all further steps as may deem appropriate.
19. It is made clear that the aforesaid liability of the respondent
No.1/plaintiff will be besides the liability for consequences of breach if any
of undertaking given to the Court.
20. The appeal is disposed of.
RAJIV SAHAI ENDLAW, J.
AMIT BANSAL, J.
MARCH 22, 2021
SU..
