[Cites 6, Cited by 0]
Gujarat High Court
Idbi Bank Ltd vs Vimal Services Ltd. (Now Known As Vimal ... on 19 January, 2026
Author: Sunita Agarwal
Bench: Sunita Agarwal
NEUTRAL CITATION
C/SCA/360/2026 ORDER DATED: 19/01/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 360 of 2026
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IDBI BANK LTD. & ANR.
Versus
VIMAL SERVICES LTD. (NOW KNOWN AS VIMAL FIRE AND
EMERGENCY SERVICE LTD.)
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Appearance:
NR AKSHAT KHARE for MOSON LE EXPARTS(11071) for the
Petitioner(s) No. 1,2
MRS SUMAN KHARE(2226) for the Petitioner(s) No. 1,2
MR UNMESH SHUKLA, SENIOR ADVOCATE with MS
NANDINI JOSHI(1210) for the Respondent(s) No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MRS.
JUSTICE SUNITA AGARWAL
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 19/01/2026
ORAL ORDER
(PER : HONOURABLE THE CHIEF JUSTICE MRS.
JUSTICE SUNITA AGARWAL)
1. An affidavit dated 17.01.2026 has been filed by the
authorized signatory of the plaintiff to bring on record the
events occurred during pendency of the Commercial Appeal
No.10 of 2023. The said affidavit filed today in the Court is
taken on record.
2. This petition invoking extra ordinary supervisory
jurisdiction of this Court under Article 227 of the Constitution
of India has been filed challenging the judgment and order
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C/SCA/360/2026 ORDER DATED: 19/01/2026
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dated 12.04.2023 passed by the Commercial Judge - 9 th
Additional Senior Civil Judge & Additional Chief Judicial
Magistrate, Vadodara in Commercial Civil Suit No.58 of 2019,
as also the judgment and order dated 27.11.2025 in
Commercial Appeal No.7 of 2023 passed by the Commercial
Appellate Court - Principal District Judge, Vadodara.
3. Before entering into the merits of the contention of the
learned Counsel for the petitioners herein, pertinent is to note
that this petition has arisen out of Commercial Civil Suit
where recovery was sought under various letters of credit
issued by the defendant - Bank on 01.08.2006 for a total sum
of Rs.4,67,50,345/-.
4. The issues framed by the trial Court as to "whether the
plaintiff proved that the defendants have wrongly withheld the
payment under the letters of credit"; and "whether the
plaintiff is entitled to recover the aforesaid amount on account
of letters of credit from the defendants" have been decided
against the defendant / petitioner herein by both the Courts
returning concurrent findings of facts.
5. The suit has been decreed for a total amount of
Rs.3,04,46,354/- alongwith simple interest @ 6% per annum
from the date of filing of the suit, i.e. 01.12.2014 to the date of
the decree, as affirmed by the first appellate Court. We may
also record that the concurrent findings of fact of the two
Commercial Courts cannot be examined by us on
re-appreciation of evidence within the scope of Article 227 of
the Constitution of India.
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6. In order to make out a case of manifest error of law or
manifest jurisdictional error in the findings of the Commercial
Courts, it was argued before us that;
(i) the Commercial Court has erred to consider the letters of
credit as a contract of guarantee and in confusing the same
with the bank guarantee; which according to the learned
Counsel for the petitioners itself is an error of law;
(ii) in case the decree is executed, it would result in
misutilization of the public fund, as the plaintiff would receive
double payment against the same letters of credit, for the
reason that in an arbitration case against the lessee, the
plaintiff has already been awarded a sum of Rs.79,16,000/-,
which the plaintiff has also received from the lessee, namely
M/s. Capsguel Healthcare Ltd and that the said amount has
already been credited in the account of the plaintiff in
Execution Petition No.210 of 2023. The contention is that any
payment against the impugned decree would result in unjust
enrichment of the plaintiff;
(iii) the Commercial Court has modified the terms and
conditions of the letters of credit and hence both the
judgments are without jurisdiction;
(iv) inconsistent findings are recorded on the expiry of the
letters of credit;
(v) the suit was beyond limitation and the Commercial Courts
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have erred in deciding on the question of the cause of action
by addressing itself on a wrong date when the cause of
action stated to have arisen. The suit is, thus, barred by
limitation under Section 14 of the Limitation Act, 1963.
7. Dealing with all the above noted arguments of the
learned Counsel for the petitioners, suffice it to note that it is
neither permissible nor possible for us to re-appreciate the
evidence while exercising the Extra-ordinary supervisory
jurisdiction of the High Court under Article 227 of the
Constitution of India. The supervisory power cannot be
exercised to correct the wrongs or to substitute the opinion or
decision of the competent Court of law. The learned Counsel
for the petitioners has not been able to demonstrate the
present case being a matter of inherent lack of jurisdiction or
where the Commercial Courts have failed to exercise the
jurisdiction vested in them, which has resulted in grave
injustice to the petitioners.
8. We may remind ourselves of the scope of interference
under Article 227 of the Constitution of India by noticing that
the supervisory power can be exercised by the High Court
where the error committed by the competent Court of law
(Commercial Court herein) is such, which goes to the root of
matter and pricks the judicial conscious of the Court; where
the decision has been taken in utter disregard of law and
justice. Reference be made to the decisions in the case of
Waryam Singh and Another Vs. Amarnath and Another
[(1954) 1 SCC 51]; Hari Vishnu Kamath Vs. Syed
Ahmad Ishque and Other [(1954) 2 SCC 881]; Shalini
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Shyam Shetty and Another Vs. Rajendra Shankar Patil
[(2010) 8 SCC 329] and Bawa Paulins Private Limited
Vs. UPS Freight Services (India) Private Limited [(2023)
2 SCC 330].
9. In light of the above legal principles on the issue raised
before us as to whether the letters of credit is a guarantee
given by the bank, suffice it to note that we do not find any
error in the opinion drawn by the commercial Courts that a
letter of credit is an independent contract between the bank
and the beneficiary and the bank is always obliged to honour
its guarantee as long as it is unconditional and irrevocable
one. A bare perusal of page '118' of the paper-book, a copy
of one of the letters of credit issued by the petitioner bank,
indicates that the beneficiary of LC is the plaintiff /
respondent herein.
10. The findings on issue No.1 by the trial Court as to
whether the payment under the letters of credit has wrongly
been withheld by the defendant Bank being a finding of fact
based on the appreciation of evidence on record, cannot be
touched by us. The challenge to the decision of the
Commercial Courts on the ground that the Courts have erred
in considering the letters of credit as contract of guarantee
and confusing it with bank guarantee, is liable to be turned
down.
11. In so far as the other grounds of challenge that the
Court has modified the terms and conditions of LC or the
findings are inconsistent with regard to the expiry of the LC,
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we may say that none of these grounds are borne out from the
judgments impugned passed by the Commercial Court.
12. As regards limitation, suffice it to say that issue No. 4
has been framed by the trial Court, findings on which cannot
be interfered within the scope of Article 227 of the
Constitution of India, which has further been affirmed by the
appellate Court.
13. Lastly, on the question of the misutilization of public
funds or double payment to the plaintiff on account of the
money received by the plaintiff under the arbitral award in
Execution Petition No.210 of 2023, we are required to note
the averments made on behalf of the plaintiff / respondent
herein, in the affidavit dated 17.01.2026 filed in the Court
today. Paragraph '4' of the statement made in the said
affidavit is quoted hereinunder:
"4. I state that as per the pursish Exh-8,
Annexure - B herein, having received an amount of
Rs.79,16,000/- from M/s Capsugel Healthcare Pvt.
Ltd. in Execution Petition No.210 of 2023 preferred
against M/s. Capsugel Healthcare Pvt. Ltd. the said
amount be adjusted against the claim of
Respondent - Vimal Services Ltd. against the
Petitioner Bank arising out of the decree passed in
Commercial Civil Suit No.58 of 19 (old Summary
Suit No.140 / 2014) and confirmed in Commercial
Appeal No.7 of 2023"
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14. In view of the above noted categorical statement made
by the plaintiff, we need not to deliberate on the issue of the
alleged unjust enrichment of the plaintiff on account of the
money received by it as a result of enforcement of the arbitral
award.
15. In view of the above, we do not find any good ground to
interfere with the judgments impugned. The present is
accordingly, dismissed. No order as to costs.
(SUNITA AGARWAL, CJ.)
(D.N.RAY, J.)
siji
