a. Issue a writ in the nature of certiorari to quashing
the order dated 21.12.2020 (Annexure-G) passed by
the 3rd Respondent rejecting the compliant of the
petitioner and consequently, allow the complaint of
the petitioner.
2. The petitioner claims to be engaged in the business
of real estate development. One such project
Karnataka known as 'Nitesh Melbourne Park'. The
dated 27.4.2016. In furtherance of Article 11
Bank of India. On 20.7.2016 for a sum of
'BG-2') were issued. Both these bank guarantees
31.3.2019 and 30.4.2019 respectively.
3. The project work being in progress, the term of the
an end were required to be extended. As per the
and requested for renewal of the bank guarantee. In
4. On 26.4.2019, the Petitioner wrote to Respondent
30.4.2019, with a similar request.
5. The Petitioner followed the matter with the
Respondent No.1-Bank. Respondent No.1 had
6. Contending that the same is an improper stand on
April 2020. However, due to pandemic, the said
acknowledgement came to be issued on 3.10.2020.
does not relate to deficiency of service. It is
consequent reliefs, the Petitioner is before this Court.
7. Sri.Udaya Holla, learned Senior Counsel appearing
7.1. Respondent No.1 - Bank, was duty bound to
honour the bank guarantee. Not having done
so, makes the Respondent - Bank liable for the
consequence thereof. What was required was
only for the Petitioner to inform the Bank about
the invocation. Once the Bank was made
aware of the invocation, the Bank had nothing
more to do but to accept the same and transfer
the amounts to the Petitioner.
NC: 2025:KHC:3734
7.2. He submits that an email correspondence also
creates a contract and in this regard, he refers
to Section 4 of the Information Technology Act,
2000, which is reproduced hereunder for easy
reference.
4. Legal recognition of electronic records.-
Where any law provides that information or any
other matter shall be in writing or in the
typewritten or printed form, then, notwithstanding
anything contained in such law, such requirement
shall be deemed to have been satisfied if such
information or matter is-
(a)rendered or made available in an electronic
form; and
(b)accessible so as to be usable for a subsequent
reference.
7.3. Referring to the aforesaid Section 4, he submits
that, any matter in writing or in the typewritten
or printed form being the requirement of any
law, then, such requirement would also be
satisfied, if the same is made available in
electronic form so long as it is accessible to be
usable for a subsequent reference. In the
NC: 2025:KHC:3734
present matter, he submits that an email which
had been issued by the Petitioner, being in
electronic form and being accessible, for
subsequent use satisfies the requirement of
Section 4 of IT Act and as such, the Bank
cannot insist on a physical copy. The Bank
ought to have acted on an electronic copy.
7.4. He relies upon the decision of this Court in the
case of Sudarshan Cargo Pvt. Ltd., vs.
M/s.Techvac Engineering Pvt. Ltd.,1 more
particularly Paras 14, 15 and 21 thereof, which
are reproduced hereunder for easy reference.
14. Section 18 of the Limitation Act prescribes
that acknowledgement of liability if made in
writing before the expiration of the prescribed
period, a fresh period of limitation has to be
computed from the time when the
acknowledgement was so signed. Thus,
essential requirements of a valid
acknowledgement under Section 18 of the
Limitation Act, 1963 are:
(a) It must be in writing;
2013 SCC Online Kar 5063
NC: 2025:KHC:3734
(b) Must be signed by the party against whom
such right is claimed;
The word 'writing' employed in Section 18
refers to paper based traditional manual
writing.
15. However, the Information Technology Act,
2000 (hereinafter referred to as 'IT Act, 2000'
for brevity) provides for legal recognition for
transactions carried out by means of electronic
data/electronic communication which involve
the use of alternatives to paper based methods
of communication and storage of information.
The IT Act, 2000 came in to force with effect
from 17.10.2000. On account of advanced
technology taking giant steps and the business
transactions being conducted through the use
of digital technology and communication
systems, said Act came into force. It also
requires to be noticed that on account of the
business community as well as individuals
increasingly using computers to create,
transmit and store information in the electronic
form instead of traditional paper documents
and for facilitating e-commerce and e-
governance, the above said Act came into
force. It would be necessary to note the
Statement and Objects of IT Act, 2000 for
better understanding of the said enactment and
the relevancy of its application to the facts on
hand and for answering the point formulated
herein above. It reads as under:
"New communication systems and digital
technology have made dramatic changes in the
way we live. A revolution is occurring in the
way people transact business. Businesses and
consumers are increasingly using computers to
create, transmit and store information in the
electronic form instead of traditional paper
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documents. Information stored in electronic
form has many advantages. It is cheaper,
easier to store, retrieve and speedier to
communicate. Although people are aware of
these advantages, they are reluctant to conduct
business or conclude any transaction in the
electronic form due to lack of appropriate legal
framework. The two principal hurdles which
stand in the way of facilitating electronic
commerce and electronic governance are the
requirements as to writing and signature for
legal recognition. At present many legal
provisions assume the existence of paper based
records and documents and records which
should bear signatures. The Law of Evidence is
traditionally based upon paper based records
and oral testimony. Since electronic commerce
eliminates the need for paper based
transactions, hence to facilitate e-commerce,
the need for legal changes have become an
urgent necessity. International trade through
the medium of e-commerce is growing rapidly
in the past few years and many countries have
switched over from traditional paper based
commerce to e-commerce.
2. xxx
3. There is need for bringing in suitable
amendments in the existing laws in our country
to facilitate e-commerce. It is, therefore,
proposed to provide for legal recognition of
electronic records and digital signatures. This
will enable the conclusion of contracts and the
creation of rights and obligations through the
electronic medium. It is also proposed to
provide for a regulatory regime to supervise the
Certifying Authorities issuing Digital Signature
Certificates. To prevent the possible misuse
arising out of transactions and other dealings
concluded over the electronic medium, it is also
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proposed to create civil and criminal liabilities
for contravention of the provisions of the
proposed legislature.
4. With a view to facilitate Electronic
Governance, it is proposed to provide for the
Use and acceptance of electronic records and
digital signatures in the Government offices and
its agencies. This will make the citizens
interaction with the Government offices hassle
free.
5. It is also proposed to make consequential
amendments in the Penal Code, 1860 and the
Indian Evidence Act, 1872 to provide for
necessary changes in the various provisions
which deal with offences relating to documents
and paper based transactions. It is also
proposed to amend the Reserve Bank of India
Act, 1934 to facilitate electronic fund transfers
between the financial institutions and banks
and the Bankers' Books Evidence Act, 1891 to
give legal sanctity for books of account
maintained in the electronic form by the banks.
6 xxx
7. xxx"
Electronic Mail, most commonly referred to as,
is a method of exchanging digital messages
from one person to another person or from an
author to recipient. Modern e-mail operated
across internet by computer net work and it is
based on store and forward modem. E-mail is
an electronically transmitted correspondence
between two or more persons. Thus, any
communication between the sender and the
recipient would result in privity of transaction.
Some of the provisions which have relevance to
the word 'e-mail' under IT Act, 2000 are
extracted herein below:
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"2. Definitions.-- (1) In this Act unless the
context otherwise requires,--
(b) "addressee"-- means a person who is
intended by the originator to receive the
electronic record but does not include any
intermediary;
(r) "electronic form", with reference to
information, means any information generated,
sent, received, or stored in media, magnetic,
optical, computer memory, micro film,
computer generated micro fiche or similar
device;
(t) "electronic record" means data, record or
data generated, image or sound stored,
received or sent in electronic form or micro film
or computer generated micro fiche.
(v) "information" includes data, message, text,
images, sound, voice, codes, computer
programmes, software and databases or
microfilm or computer generated microfiche.
(za) "originator" means a person who sends,
generates, stores or transmits any electronic
message; or causes any electronic message to
be sent, generated, stored or transmitted to
any other person but does not include an
intermediatery.
4. Legal recognition of electronic records.--
Where any law provides that information or any
other matter shall be in writing or in the
typewritten or printed form, then,
notwithstanding anything contained in such
law, such requirement shall be deemed to have
been satisfied if such information or matter is--
(a) rendered or made available in an electronic
form; and
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(b) accessible so as to be usable for a
subsequent reference.
Section 4 of The IT Act, 2000 provides that if
information or any other matter is to be in
writing or in the typewritten or printed form,
then, not withstanding anything contained in
such law, the requirement is deemed to have
been satisfied if such information or matter is
rendered or made available in an 'electronic
form' and same is accessible to be used for a
subsequent reference.
21. A harmonious reading of Section 4 together
with definition clauses as extracted hereinabove
would indicate that on account of digital and
new communication systems having taken giant
steps and the business community as well as
individuals are undisputedly using computers to
create, transmit and store information in the
electronic form rather than using the traditional
paper documents and as such the information
so generated, transmitted and received are to
be construed as meeting the requirement of
Section 18 of the Limitation Act, particularly in
view of the fact that Section 4 contains a non
obstante clause. Since respondent does not
dispute the information transmitted by it is in
electronic form to the petitioner by way of
message through the use of computer and its
network as not having been sent by it to the
petitioner, the acknowledgement as found in
the e-mails dated 14.01.2010 and 06.04.2010
originating from the respondent to the
addressee namely, petitioner, such e-mails
have to be construed and read as a due and
proper acknowledgement and it would meet the
parameters laid down under Section 18 of the
Limitation Act, 1963 to constitute a valid and
legal acknowledgement of debt due.
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7.5. By relying on the aforesaid judgment, he
submits that the word 'writing' under Section 4
of the IT Act, would also include electronic
form. Thus, an email which had been
addressed by the Petitioner to Respondent No.1
- Bank is in writing, though in electronic form,
and therefore the Bank could not have avoided
the encashment of the bank guarantee on the
make-believe contention that the said
invocation letter was not in the physical form of
writing.
7.6. He relies upon the decision of the Honb'e Apex
Court in the case of Trimex International FZE
Limited, Dubai vs. Vedanta Aluminium
Limited, India2, more particularly Para 60
thereof, which is reproduced hereunder for easy
reference:
(2010) 3 SCC 1
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60. It is clear that in the absence of signed
agreement between the parties, it would be
possible to infer from various documents duly
approved and signed by the parties in the form
of exchange of e-mails, letter, telex, telegrams
and other means of telecommunication.
7.7. By referring to the above, he submits that a
contract can be created even by exchange of
emails, letters, telex, telegrams, and other
means of telecommunication. With the advent
of the IT Act, the same have all been
recognized and the Bank cannot avoid or evade
the reference to an electronic mail.
7.8. He refers to the judgment of the Hon'ble
Allahabad High Court in the case of Rajendra
vs. State of U.P. and another3, more
particularly Para 14 thereof, which is
reproduced here under for easy reference:
14. Therefore, Section 4 of the IT Act very
clearly provides that notwithstanding anything
contained in such law which provides notice in
written form then written will also include the
notice rendered or made available in electronic
form, which should be available for subsequent
reference. The word "electronic form" is defined
2024 SCC OnLine All 2207
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in Section 2(1)(r) of the IT Act, which provides
any information generated, sent, received or
stored in media, magnetic, optical, computer
memory, microfilm, computer generated
microfiche or similar device. Therefore, it is
clear from the provision the notice mentioned
in Section 138 of the NI Act will also include e-
mail or WhatsApp if the same remains available
for subsequent reference.
7.9. By referring to the above, he submits that the
Hon'ble Allahabad High Court has categorically
held that even a notice by way of email would
satisfy the requirement of Section 138 of the
Negotiable Instruments Act and as such would
satisfy the requirement of the contract between
the parties, making the invocation valid.
7.10. He refers to and relies upon the judgment of
the Hon'ble Apex Court in the case of Shakti
Bhog Foods Limited vs. Kola Shipping
Limited4, more particularly Paras 14, 15 and
17 thereof, which are reproduced hereunder for
easy reference:
(2009) 2 SCC 134
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14. In our view, we should give reasons for
dismissing this appeal. We have already noted
that by the charter party agreement dated 18-
7-2005 the appellant agreed to load and the
respondent agreed to carry 13,500 tons of
cargo from Kakinada to the Port of Cotonou.
We have also observed that the said charter
party agreement provided for arbitration in Box
25 and Clause 19 and that the disputes
pertaining to the same were to be referred to
arbitration in London under the English
Arbitration Act. The appellant herein has not
refuted the signature on the front page of the
charter party agreement. We cannot entertain
his claim that such a signature would not
amount to a valid arbitration agreement. For
this purpose, it would be relevant to quote
Section 7 of the Act:
"7. Arbitration agreement.--(1) In this Part,
'arbitration agreement' means an agreement by
the parties to submit to arbitration all or certain
disputes which have arisen or which may arise
between them in respect of a defined legal
relationship, whether contractual or not.
(2) An arbitration agreement may be in the
form of an arbitration clause in a contract or in
the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is
contained in--
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or
other means of telecommunication which
provide a record of the agreement; or
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NC: 2025:KHC:3734
(c) an exchange of statements of claim and
defence in which the existence of the
agreement is alleged by one party and not
denied by the other.
(5) The reference in a contract to a document
containing an arbitration clause constitutes an
arbitration agreement if the contract is in
writing and the reference is such as to make
that arbitration clause part of the contract."
Therefore, it is clear from the provisions made
under Section 7 of the Act that the existence of
an arbitration agreement can be inferred from a
document signed by the parties, or an
exchange of letters, telex, telegrams or other
means of telecommunication, which provide a
record of the agreement.
15. In the present case, the appellant had not
denied the fact that it had signed the first page
of the charter party agreement. Moreover, the
subsequent correspondences between the
parties also lead us to conclude that there was
indeed a charter party agreement, which
existed between the parties. We cannot accept
the contention of the appellant that under
Section 7 of the Act the letter/faxes or mails or
any other communications will have to contain
the arbitration clause in the absence of any
agreement. The expressions of Section 7 do not
specify any requirement to this effect.
17. The appellant contended that the
respondent did not file the original charter
party agreement in any of the proceedings
before any of the lower courts. We would want
to reiterate that as far as the provision of
Section 7 of the Act is concerned, an arbitration
agreement may be in the form of an arbitration
clause in a contract or in the form of a separate
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agreement and furthermore an arbitration is
considered to be in writing if it is contained in a
document signed by the parties or in an
exchange of letters, telex, telegrams or other
means of telecommunication which provide a
record of the agreement or an exchange of
statement of claim and defence in which the
existence of an agreement is alleged by one
party and not denied by the other. So from the
provisions of Section 7, it is clear that a charter
party agreement need not be in writing signed
by both parties and this could as well be made
out from the acts of the parties to the
agreement by way of their exchange of letters
and information through fax, e-mails, etc.
7.11. By referring to the above, he submits that a
contract could also be created and made out
from the act of the parties to the agreement by
way of their exchange of letters, information
through fax, emails, etc.
7.12. When a contract can be so created, a
communication by way of email would satisfy
the requirement of invocation, which has been
illegally and unlawfully denied by the Bank.
7.13. He refers to the decision of the Hon'ble Bombay
High Court in the case of Dr.Madhav
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Vishwanath Dawalbhakta (Decd) through
LRs Dr.Nitin M.Dawalbhakta & ors., vs.
M/s.Bendale Brothers5, more particularly
Para 12 thereof, which is reproduced hereunder
for easy reference:
12. Thus, in sub-rule (i) and (ii), the
substituted service means fixing the copies of
the summons on different place as mentioned
in the Rule. However, the sub-rule (iii) gives
further option that the summons can be served
in such other manner as the Court thinks fit.
Thus, the manner which the Court opts for
should be akin to the earlier mode of service,
which is mentioned in the Rule. For this, the
Court can take into account the modern ways of
service which are available due to internet
connection. It can be served also by courier or
by email or by WhatsApp etc. The Court should
be satisfied about such service. Rule 1A gives a
specific option to the Court to serve the
defendant by an advertisement or notice in the
newspaper which should be daily newspaper
circulated in the locality whether it was known
to have actually or voluntarily residing or
carrying out business. The phrase used in Rule
1A "where the Court acting under sub-rule(1)"
contemplates when the Court passes the order
of service by publication, in fact the court is
using the powers by choosing a mode which is
"such other manner as the Court thinks fit", as
mentioned in sub-rule (1) of Rule 20 Order 5.
The finding given by the learned trial Court
Judge in the present case that after publication
2018 SCC OnLine BOM 2652
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in the newspaper, the copy of the newspaper is
to be affixed at the conspicuous place or at the
residence, is incorrect. No such pasting of the
newspaper is required.
7.14. Placing reliance on the above, he submitted
that a service of notice could be effected by
email and WhatsApp and the email addressed
by the Petitioner to the Bank seeking for either
extension of the bank guarantee or on failure
thereof to treat the letter as invocation of the
bank guarantee is proper and valid.
7.15. He submits that a Writ Petition in relation to
contractual matters is also maintainable. This
he submits on an apprehension that such an
issue would be raised by the Respondents. In
this regard, he relies upon the judgment of the
Hon'ble Apex Court in the case of Zonal
Manager, Central Bank of India vs. Devi
Ispat Limited and others6, more particularly
(2010) 11 SCC 186
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Para 22 thereof, which is reproduced hereunder
for easy reference:
22. In ABL International Ltd. v. Export Credit
Guarantee Corpn. of India Ltd. [(2004) 3 SCC
553] Santosh Hegde, J. has exhaustively dealt
with the maintainability of writ petition under
Article 226 in contractual matters. In the said
case, contract of insurance was executed
between ABL International Ltd. and another
and Export Credit Guarantee Corporation of
India Ltd. and others. Having failed to persuade
the first respondent therein, to adhere to the
contract of insurance between it and the
appellant, the appellant filed a writ petition
before a learned Single Judge of the Calcutta
High Court, inter alia, praying for quashing of
the letters of repudiation issued by the first
respondent. It also consequentially prayed for a
direction to the first respondent to make
payment of the dues to it under the contract of
insurance. The learned Single Judge, after
hearing the parties, came to the conclusion that
though the dispute between the parties arose
out of a contract, the first respondent being
"State" for the purpose of Article 12, was bound
by the terms of the contract, therefore, for such
non-performance, a writ was maintainable and
after considering the arguments of the parties
in regard to the liability under the contract of
insurance, allowed the writ petition and issued
the writ and directions as prayed for by the
appellants in the writ petition.
7.16. By relying on the above, he submits that a
public sector bank discharging public functions
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who has failed to return the title deeds to the
borrower could be issued a mandamus in the
writ jurisdiction.
7.17. He refers to the judgment of Hon'ble Delhi High
Court in the case of DLF Limited vs. Punjab
National Bank7, more particularly Paras 1, 2,
4 and 29 thereof, which are reproduced
hereunder for easy reference:
1. The petition impugns the demand by the
respondent Bank of "pre-payment charges"
without there being a provision therefor in the
Loan Agreement. Notice of the petition was
issued and vide interim order dated 21st
December, 2010, the respondent Bank was
restrained from downgrading the loan account of
the petitioner and/or reporting the default
alleged of the petitioner in payment of pre-
payment charges to the Credit Information
Bureau (India) Limited (CIBIL) or to the Reserve
Bank of India (RBI). The petitioner thereafter
applied for release of the security deposited with
the respondent Bank averring that while the
security was furnished to secure the loan of Rs.
1,000 crores which stands pre-paid and the
demand now remaining and impugned is only of
pre-payment charges of Rs. 20 crores only.
Certain proposals for amicable interim
arrangement to the said effect were discussed
between the parties but without any success.
2011 SCC OnLine Delhi 2465
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During the course thereof, on suggestion of the
senior counsels for the parties, arguments on
the writ petition itself were heard.
2. The challenge by the petitioner is on the
grounds:--
(i) that even though the entire loan amount
together with interest due thereon had been
remitted by the petitioner and received by the
respondent Bank, the respondent Bank was
illegally withholding the security of the petitioner
of over Rs. 1,000 crores for the reason of
alleged default in payment of pre-payment
charges of Rs. 20 crores @ 2% of the loan
amount of Rs. 1,000 crores;
(ii) the respondent Bank in the loan subject
matter of the present petition did not disclose
any such pre-payment charges and is thus not
entitled to claim the same. The said argument is
buttressed from the fact that another Loan
Agreement executed between the petitioner and
the respondent Bank shortly after the Loan
Agreement subject matter of this petition
prescribed pre-payment charges of 1%;
(iii) it is contended that the claim of the
respondent Bank for pre-payment charges
without there being a provision therefor in the
agreement is violative of the RBI guidelines;
(iv) that the RBI guidelines dated 25th
November, 2008 and 12th November, 2010
mandate the Banks to upfront disclose to the
borrower all the information in relation to the
loan including information regarding pre-
payment options and charges;
(v) it is contended that the claim for pre-
payment charges is also violative of the Fair
Practices Code notified by the respondent Bank
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itself requiring pre-payment charges to be
notified at the stage of application for processing
of loan itself;
(vi) that since pre-payment was out of internal
accruals of the petitioner, the levy of pre-
payment penalty was unjustified.
(vii) that the petitioner had notified the
respondent Bank that it was utilizing its own
internal funds for pre-paying the loan;
(viii) the maintainability of the writ is sought to
be justified by relying upon Sardar Associates v.
Punjab & Sind Bank, (2009) 8 SCC 257 laying
down that if in terms of the guidelines issued by
the RBI, a right is created in a borrower, writ of
mandamus could be issued;
(ix) that the action of the respondent Bank was
thus illegal and arbitrary;
4. The senior counsel for the petitioner in
addition to the arguments already noticed above
has contended that the terms of the Loan
Agreement between the parties having been
reduced to writing, no other evidence can be
looked at under Sections 91 & 92 of the Indian
Evidence Act, 1872 and thus the only question
involved is of the interpretation of the Loan
Agreement and the RBI guidelines and Fair
Practices Code aforesaid and no disputed
question of fact requiring any further evidence
can be said to be arising in the matter. Reliance
is placed on ABL International Ltd. v. Export
Credit Guarantee Corporation of India Ltd.,
(2004) 3 SCC 553 laying down that in
appropriate cases the writ court has jurisdiction
to entertain a writ petition involving disputed
questions of fact and that where disputed
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questions of fact pertaining to the
interpretation/meaning of documents are
involved the Courts can very well go into the
same and decide the objections if the facts so
permit; it was further held that merely because
one of the parties wants to dispute the meaning
of a document, would not make it a disputed
fact.
29. The petition therefore succeeds and is
allowed. The demand of the respondent Bank on
the petitioner for pre-payment charges of Rs. 20
crores on the loan subject matter of this writ
petition is found to be without any basis and is
quashed. Resultantly, the respondent Bank also
stands restrained from threatening actions in
pursuance to the said demand. The respondent
Bank is also directed to within six weeks of
today return to the petitioner the security placed
by the petitioner with the respondent Bank for
re-payment of the loan and which loan already
stands re-paid. Upon default by the respondent
Bank in so releasing the security within the time
aforesaid, the petitioner, besides other remedies
shall also be entitled to interest @ 1% per
annum on the value of the security. The
petitioner is also awarded costs of Rs. 20,000/-
of this petition payable by the respondent Bank
within six weeks aforesaid.
7.18. By referring to the above, he submits that the
Hon'ble Delhi High Court has come to a
categorical conclusion, that a Bank is amenable
to a writ jurisdiction.
- 27 -
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7.19. On the basis of the above, he submits that the
action on part of the Respondent - Bank being
contrary to the applicable law, the Banking
Ombudsman who has been set up under the
Banking Ombudsman Scheme was required to
look into these aspects and take action against
the Bank who had violated the applicable law
and/or who had not complied with the
obligation under the bank guarantee, and as
such, he submits that the Writ Petition is
required to be allowed and the relief sought for
be granted.
8. Ms. Divya Purandar, learned counsel appearing for
the Respondent No.1 - Bank, would however submit
that:
8.1. This Court ought not to excise writ jurisdiction
in respect of contractual matters since there is
no infringement of any rights guaranteed under
Part III of the Constitution of India. There are
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disputed questions of fact which cannot be gone
into by this Court in writ proceedings.
8.2. She, however, admits that Respondent No.1 -
Bank had sanctioned credit facilities to M/s.Al
Fara on 11.2.2016 and had also issued the
subject bank guarantees, as indicated supra on
behalf of the said M/s.Al Fara.
8.3. Insofar as BG No.1, which had been initially
issued on 21.6.2016, the same was valid until
30.9.2018, which came to be extended up to
31.3.2019, which was not extended by M/s.Al
Fara and as such, ceased to be valid from the
midnight of 31.3.2019.
8.4. In respect of BG-2, it was valid only until
30.4.2019 and was not renewed by M/s.Al Fara.
8.5. Her submission is that the renewal of the bank
guarantee can only be made by the person who
has availed of the services of the bank
- 29 -
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guarantee by making payment of the bank
guarantee commission. No renewal can be
made at the request of the petitioner. The only
option that the Petitioner had was to invoke the
bank guarantee and seek for payment in terms
of the bank guarantee by submitting a hard
copy of such demand. The same not having
been done, there is no demand and as such,
there was no requirement for the Bank to make
payment of any amounts to the Petitioner.
8.6. She refers to Clause 14 of the Performance
Bank Guarantee agreement and submits that it
is clearly stated therein that any notice by way
of request, demand or other communication
given with or required by the guarantee shall
be made in writing and to be sent by post or
delivered by hand. In that background, she
submits that the invocation of the bank
guarantee in the present case is not in writing
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and has not been sent by post or delivered by
hand. Therefore, there was no requirement for
the Bank to act on the alleged invocation made
by the Petitioner. The hard copy having been
submitted much later by that time the bank
guarantee had expired and therefore there is no
obligation on the Bank to make payment of any
amounts to the Petitioner.
8.7. It is contended that the Bank not being aware
of the official registered email-ID of a third
party beneficiary like the Petitioner, nor there
being any mechanism to verify the authenticity
of the email sent, the email sent by the
Petitioner could not be verified and acted upon
and it is for that reason that a physical copy is
insisted upon by the Bank.
8.8. She further submits that since in the said email,
there was a request made for renewal of the
bank guarantee; such renewal could only be
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sought for by the borrower on whose behalf the
bank guarantee had been issued. The
beneficiary, like the Petitioner, could not seek
for extension or renewal of the bank guarantee.
The borrower not having sought for renewal, no
renewal was granted. Invocation not being in
accordance with the contract, invocation was
not accepted. As such, she submits that there
is nothing wrong in the actions on the part of
the Bank. It is the Petitioner who has not acted
in terms of the agreement and there is no
vested right on the part of the Petitioner to
either approach the Banking Ombudsman or
this Court. The Banking Ombudsman, taking
into consideration the aforesaid facts, has
dismissed the claim of the Petitioner.
8.9. She submits that even the said borrower has
defaulted on the repayment of all credit
facilities and the account of the borrower has
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been classified as NPA on 31.8.2018. The Bank
has moved an application under Section 19 of
the Recovery of Debts and Bankruptcy Act,
1993 (for short, 'RDB Act') as also initiated
proceedings under the Securitization and
Reconstruction of Financial Assets and
Enforcement of Securities Interest Act, 2002
(for short, 'Sarfaesi Act'. The National
Company Law Tribunal has passed an order of
liquidation against the borrower in
C.P.No.4533/2018 on 18.7.2022. Therefore,
there is no obligation on part of the Bank to
make payment of any monies to the Petitioner.
8.10. She submits that Section 4 of the IT Act would
not be applicable to the facts. The agreement
requiring the invocation to be in writing
delivered by post or by hand an email cannot
be read into the agreement of bank guarantee.
The bank guarantee has to be strictly construed
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and invocation contrary to the terms of the
bank guarantee are not binding on the Bank. If
at all the Petitioner had invoked the bank
guarantee in terms of the agreement entered
into, the Bank would have abided by such
invocation and made payment of the due
amounts. Unfortunately, the Petitioner has not
done the needful in accordance with law.
Therefore, the Bank is not duty bound to make
payment of any amounts to the Petitioner.
8.11. She relies upon the decision of the Hon'ble
Kerala High Court in the case of Cochin Port
Trust vs. Bank of India and another8, more
particularly Paras 7, 11 and 14 thereof, which
are reproduced hereunder for easy reference:
7. The 1st respondent contended that the
petitioner cannot have any advantage by the
incorporation of a clause in terms of the said
Exception 3 to Section 28 of the Indian
Contract Act, in the Bank Guarantee. The right
of the petitioner to have the Bank Guarantee
W.P.(C) No.22760/2019 (T) dated 26.4.2021
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NC: 2025:KHC:3734
invoked, is only during the currency of the Bank
Guarantee and not during the extended claim
period of one year. No relief can therefore be
given to the petitioner in this writ petition.
11. Ext.P8 Bank Guarantee Extension reads as
follows:-
"Extension of BG No.00151PEBG140103
dated 21.07.2014 from 01.11.2018 to
31.03.2019 for `19,40,000/- on behalf of
Shrikhande Consultant Pvt. Ltd.
At the request of M/s. Shrikhande
Consultants Pvt. Ltd. we the Bank of
India, Dadar (west) Branch Mumbai 400
028 extend the validity of captioned Bank
Guarantees upto 31.03.2019. All the
other terms and conditions shall remain
unchanged.
We are liable to pay the guarantee
amount or any part thereof under this
Bank Guarantee only if you serve upon us
a written claimer demand on or before
expiry of this renewed guarantee. All
other terms & condition mentioned in the
guarantee as originally issued/renewed
earlier remained unchanged.
The Bank Guarantee shall be valid upto
31.03.2019 with one year claim period
i.e. upto 31.03.2019.
Notwithstanding anything contained here
above our liability under the Guarantee is
restricted to `19,40,000/- (Rupees
Nineteen Lac Forty Thousand Only) and
this guarantee is valid upto 31.03.2019.
We shall be released and discharged from
all liabilities hereunder unless a written
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claim for payment under this guarantee is
lodged/claimed on or before 31.03.2020
irrespective of whether or not the original
guarantee is returned to us."
It is evident that the validity of the said
guarantee is only up to 31.03.2019. Even
according to the petitioner, demands were
made only on 28.06.2019, 29.06.2019 and
01.07.2019 which dates are subsequent to the
period of validity of Bank Guarantee.
14. The extended period of claim provided for
under Exception 3 to Section 28 of the Contract
Act is therefore intended for extinguishment of
the rights or discharge of any party from any
liability under a Bank Guarantee/agreement. To
arise a right under the Bank Guarantee
Agreement, a demand has to be made within
the period of validity of the Agreement. Having
not made any demand within the validity period
of the Bank Guarantee, the petitioner is not
entitled to invoke the Guarantee during the
claim period after the expiry of the validity
period of the Bank Guarantee.
8.12. By referring to the above, she submits, the
right for invocation of the bank guarantee can
only be exercised, during the currency of the
bank guarantee, and not after the expiry. To
give rise to a right under a bank guarantee, a
demand is required to be made within a period
of validity of the agreement. In the present
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case, the invocation being made subsequent to
the expiry of the bank guarantee, there is no
obligation on the part of the Bank to make
payment of any monies.
8.13. She relies upon the decision of the Hon'ble
Apex Court in the case of Hindustan
Construction Co. Ltd., vs. State of Bihar
and others9, more particularly Paras 8 and 9
thereof, which are reproduced hereunder for
easy reference:
8. Now, a bank guarantee is the common mode
of securing payment of money in commercial
dealings as the beneficiary, under the
guarantee, is entitled to realise the whole of the
amount under that guarantee in terms thereof
irrespective of any pending dispute between the
person on whose behalf the guarantee was
given and the beneficiary. In contracts awarded
to private individuals by the Government, which
involve huge expenditure, as, for example,
construction contracts, bank guarantees are
usually required to be furnished in favour of the
Government to secure payments made to the
contractor as "advance" from time to time
during the course of the contract as also to
secure performance of the work entrusted
under the contract. Such guarantees are
encashable in terms thereof on the lapse of the
(1999) 8 SCC 436
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NC: 2025:KHC:3734
contractor either in the performance of the
work or in paying back to the Government
"advance", the guarantee is invoked and the
amount is recovered from the bank. It is for
this reason that the courts are reluctant in
granting an injunction against the invocation of
bank guarantee, except in the case of fraud,
which should be an established fraud, or where
irretrievable injury was likely to be caused to
the guarantor. This was the principle laid down
by this Court in various decisions. In U.P. Coop.
Federation Ltd. v. Singh Consultants &
Engineers (P) Ltd. [(1988) 1 SCC 174] the law
laid down in Bolivinter Oil SA v. Chase
Manhattan Bank [(1984) 1 All ER 351 (CA)]
was approved and it was held that an
unconditional bank guarantee could be invoked
in terms thereof by the person in whose favour
the bank guarantee was given and the courts
would not grant any injunction restraining the
invocation except in the case of fraud or
irretrievable injury. In Svenska Handelsbanken
v. Indian Charge Chrome [(1994) 1 SCC 502] ,
Larsen & Toubro Ltd. v. Maharashtra SEB
[(1995) 6 SCC 68] , Hindustan Steel Workers
Construction Ltd. v. G.S. Atwal & Co.
(Engineers) (P) Ltd. [(1995) 6 SCC 76] ,
National Thermal Power Corpn. Ltd. v.
Flowmore (P) Ltd. [(1995) 4 SCC 515] , State
of Maharashtra v. National Construction Co.
[(1996) 1 SCC 735] , Hindustan Steelworks
Construction Ltd. v. Tarapore & Co. [(1996) 5
SCC 34] as also in U.P. State Sugar Corpn. v.
Sumac International Ltd. [(1997) 1 SCC 568]
the same principle has been laid down and
reiterated.
9. What is important, therefore, is that the
bank guarantee should be in unequivocal
terms, unconditional and recite that the amount
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would be paid without demur or objection and
irrespective of any dispute that might have
cropped up or might have been pending
between the beneficiary under the bank
guarantee or the person on whose behalf the
guarantee was furnished. The terms of the
bank guarantee are, therefore, extremely
material. Since the bank guarantee represents
an independent contract between the bank and
the beneficiary, both the parties would be
bound by the terms thereof. The invocation,
therefore, will have to be in accordance with
the terms of the bank guarantee, or else, the
invocation itself would be bad.
8.14. By referring to the above, she submits that the
Courts normally would not involve themselves
in aspects of commerce; bank guarantee being
an aspect of commerce, this Court ought not to
intercede in the present matter. The terms of
the bank guarantee are to be read stricto sensu
and any invocation would have to be strictly in
accordance with the said terms. In the present
matter, the invocation not being made in terms
of the agreement, the invocation could be made
accepted by Respondent No.1 - Bank.
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8.15. She relies upon the decision of the Hon'ble
Calcutta High Court in the case of Besco Ltd.,
vs. State Bank of India 7 Anr.,10 the relevant
portions being as under:
In terms of the aforesaid Bank Guarantee (s)
we hereby call upon you to extend the said
bank guarantee(s) for a period of 6 (six)
months from the date of expiry since the
requirement of these bank guarantee(s) is/are
yet to be fulfilled. In case, we do not receive
any extension, this may be treated as our claim
against the said bank guarantee".
The second defendant has stated at paragraph
20 of its said affidavit that not only did the
bank act contrary to the beneficiary's demand
of March 10, 2008, it also failed to adhere to
the beneficiary's subsequent instructions of May
8, 2008 and August 2, 2008. The later letters
had been issued in furtherance of the first.
As has been noticed above, notwithstanding the
bank guarantee being unconditional to the
extent of the bank's liability thereunder and
further to the extent that the bank could not
have relied on any dispute between the plaintiff
and the beneficiary for the purpose of refusing
payment thereunder, the beneficiary's
entitlement to receive payment was only upon
the strict compliance of the terms of the
guarantee. The opening clause required an
assertion to be made by the beneficiary that
there was a default committed by the
"contractor". It also required the beneficiary to
2009 SCC OnLine Cal 2406
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NC: 2025:KHC:3734
assess in money terms the extent of the
default.
Since the two subsequent letters that the
second defendant relies on were issued after
March 31, 2008, it is not necessary to consider
such letters at all. However, it would appear
from the copies of the such subsequent letters
of May 8, 2008 and August 2, 2008 that the
beneficiary had merely complained to the bank
that the bank had failed to extend the validity
of the guarantee. But, nothing in the bank
guarantee entitled the beneficiary to either
demand any extension thereof or obliged the
bank to accede to a request by the beneficiary
for extending the validity thereof.
8.16. Referring to the above extracted portions, she
submits that the bank guarantee being
unconditional, the beneficiaries' entitlement to
receive payment was only upon the strict
compliance of the terms of the guarantee. In
the present case, the invocation not being in
terms of the agreement, the Refusal to make
payment is proper and correct.
8.17. In the above circumstances and on the basis of
the above arguments, she submits that the
order passed by the Banking Ombudsman is
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NC: 2025:KHC:3734
proper and correct and the present petition as
filed is required to be dismissed.
9. Heard Sri.Udaya Holla, learned Senior Counsel
appearing for the Petitioner, Smt.Divya Purandar,
learned counsel appearing for Respondent No.1 and
Sri.S.R.Kamalacharan, learned counsel appearing for
Respondent No.3 and perused papers.
10. The points that would arise for consideration by this
Court are:
1) Whether the invocation of the bank
guarantee made by the Petitioner by email
can be said to be in writing and thus as per
the terms of the bank guarantee?
2) If the invocation were to be proper, is the
Respondent Bank justified in not making
payment of the monies?
3) Whether the order passed by the Banking
Ombudsman is proper and correct?
4) What order?
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11. Before answering the above points the relevant
clauses and correspondence in regards thereto would
have to be looked into which are as under:
11.1. The arguments of both the counsel having been
extracted hereinabove, what is required to be
seen is the relevant Clauses of the bank
guarantee relating to invocation.
11.2. Insofar as BG-1 dated 20.07.2016, the relevant
clause relating to invocation is Clause 14, which
is reproduced hereunder for easy reference:
14. Any notice by way of request, demand or other
communication given in connection with or required
by this Guarantee shall be made in writing (entirely
in the English language) may be sent by hand or
post to the Bank addressed as aforesaid.
11.3. BG-1 was renewed on 31.12.2018. The
relevant Clause is Clause 3 thereof, which is
reproduced hereunder for easy reference:
Date: 31.12.2018
To:
Nitesh Housing Developers Private Limited
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NC: 2025:KHC:3734
7th Floor, Nitesh Times Square,
No-8, M.G Road
Bangalore-560001 India
Subject: Our Bank Guarantee No. 408101GL0001716
Dated 21 June. 2016 for INR 2.78.75.127/- favoring
yourselves issued on account of M/s. Alfara'a Infra
Projects Private Limited.
At the request of our principal Alfara'a Infraprojects
Pvt. Ltd., 101/102,157 Floor, Baba House, Near
Cinemax Theatre, Chakala, Andheri (East) Mumbai-
400093 the above mentioned performance guarantee
is extended as follows:
1. Extend the validity of the captioned guarantee upto
31st March, 2019.
2. Extend the Claim period of the captioned guarantee
upto 31st March, 2019.
All other terms and conditions remain unchanged.
This extension is an integral part of the above
referred guarantee and should be read with the
original Bank Guarantee issued on 21 June, 2016.
Notwithstanding anything contained herein above:
1. Our maximum liability under this Bank Guarantee
shall not exceed INR 2,78,75,127/- (Rupees Two
- 44 -
NC: 2025:KHC:3734
Crores Seventy Eight Lakhs Seventy Five Thousand
One Hundred Twenty Seven Only)
2. This Bank Guarantee shall be valid only up to 31
March, 2019.
3. We are liable to pay the guaranteed amount or any
part thereof under this Bank Guarantee only and only
if we receive a written claim or demand on or before
31 March, 2019.
For Union Bank of India
Authorised Signatory
11.4. Insofar as BG-2 dated 20.7.2016, the relevant
clause relating to invocation is Clause 14, which
is reproduced hereunder for easy reference:
14. Any notice by way of request, demand or other
communication given in connection with or required by
this Performance Guarantee shall be made in writing
(entirely in the English language) may be sent by
hand or post to the bank addressed as aforesaid.
11.5. The invocation email sent on 29.3.2019 at 7.01
p.m. is reproduced hereunder for easy
reference:
- 45 -
NC: 2025:KHC:3734
Dear Sir,
We are enclosing BG extension request for BG bearing
No.4081101GL0001716 dated 20.07.2016 expiring
on 31.03.2019 or Rs. 2,78,75,127-00 of M/s Alfaraa
Infraprojects Pvt. Ltd. Hard Copy is being sent to
your bank by speed post/courier today.
Kindly do the needful.
Thanks & Regards
Santhosh Kumar B.R.
DGM-Finance, Banking & Treasury
11.6. The letter dated 19.3.2019 which had been
attached to the email dated 29.3.2019 is
reproduced hereunder for easy reference:
" 19 March 2009
The Manager
Union Bank of India,
10th Road, JVPD Scheme Branch,
Shiva Shakti, 11, Vithal Nagar Co-op. Hsg. Soc.
Vile-Parle (West)
Mumbai-400 049
Sub: Revocation of Bank Guarantee against
Mobilisation Advance.
Ref: BG No-408101GL0001716 Issued Date-
20.07.2016-Expired on 31.03.2019
- 46 -
NC: 2025:KHC:3734
Dear Sir
We refer to our request letter dated 29-03-2019 (Copy
attached regarding extention or revocation of above
mentioned bank guarantee in the event bank
guarantee is not extended we have not received
extended Bank Guarantee till date. Under the
circumstances our instructions to invoke the bank
guarantee become operative
Kindly Share with us the bank advise as a confirmation
that you have credited our below mentioned bank
account on account of invocation
Account No. 002281400002792
Bank Name Yes Bank
Branch Kasturba Road Branch
IFS Code yesb0000022
On getting your bank advise that money has been
credited to our account, Original Bank Guarantee will
be returned to you
Yours truly,
For Nitesh Housing Developers Pvt Ltd
Sd/-
DGM- Finance, Banking & Treasury"
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NC: 2025:KHC:3734
11.7. The reply of the Bank sent on 30.3.2019 at
5.33pm is reproduced hereunder for easy
reference:
"Sir,
It is to inform you that any renewal/extension of the
Bank guarantee can be done only after the original
letter for the same is received by the bank through
post/courier.
Thank you"
11.8. Thereafter, the Petitioner has followed up with
emails dated 5.04.2019, 9.4.2019, 16.4.2019,
17.4.2019, 30.4.2019, 3.5.2019, and
13.5.2019, which shockingly have not invoked
any response from the Bank.
11.9. The subsequent letter dated 29.3.2019
attached to the email dated 29-3-2019 is
reproduced hereunder for easy reference:
"29th March 2019
The Manager,
Union Bank of India,
10 Road, JVPD Scheme Branch,
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NC: 2025:KHC:3734
Shiv Shakti, 11, Vithal Nagar Co-op. Hsg. Soc.,
Vile-Parle (West) Mumbai-400 049.
Dear Sir,
Sub: Extension Bank Guarantee against Mobilization
Advance.
Ref: BG No-40810IGL0001716 Issued Date-
20.07.2016 - Expiry on 31.03.2019
We refer to the Bank Guarantee issued by you in our
favour for Rs. 2,78,75,127/- (Rupees Two Crores
Seventy Eight Lakhs Seventy Five Thousand One
Hundred and Twenty Seven only) on behalf of M/s
Alfaraa Infraprojects Pvt Ltd having its registered office
at 101/102, Baba House, Near Cinemax Theatre,
Chakala, Andheri (East), Mumbai 400 093. The Bank
Guarantee is expiring on 31.03.2019. Kindly arrange to
renew the same and send us the renewal letter.
In the event if the BG is not renewed we here by
invoke the BG and we request you to kindly transfer
the amount to below mentioned account.
Account No. 002281400002792
Bank Name Yes Bank
Branch Kasturba Road Branch
IFS Code yesb0000022
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NC: 2025:KHC:3734
In case the BG is renewed before the date of expiry,
request you to kindly send the original renewed BG to
us.
Yours truly,
For Nitesh Housing Developers Pvt Ltd
Sd/-
DGM Banking & Treasury"
11.10. Insofar as BG-2 is concerned, the email in
relation thereto addressed on 26.4.2019, is
reproduced hereunder for easy reference:
"From: Santhosh Kumar BR
Sent: 26 April 2019 11:08 AM
To: BH Vile Parle West (vileparlew@unionbankof
india.com)
Cc. [email protected];
[email protected];
[email protected]; Elangovan Subbiah; Kamal
Daluka; Arun Kumar J
Subject: Renewal of BG 40810IGL0001816 Dated
20.07.2016 expiring on 30.04.2019
Kind Attn: Mr. Bhavye Sehgal
Dear Sir,
We are enclosing BG extension/Invocation request for
BG bearing No.40810IGL0001816 dated 20.07.2016
expiring on 30.04.2019 for Rs. 5,57,50,254-00 of M/s
Alfaraa Infroprojects Pvt. Ltd. Hard Copy is being sent
to your Bank by speed post/courier today.
Kindly to the needful.
Thanks & Regards
Santhos Kumar B.R.
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NC: 2025:KHC:3734
DGM-Finance, Banking & Treasury"
11.11. A reminder was issued thereto, on 13.5.2019,
both of which did not evoke any response.
11.12. The document attached to the email dated
26.4.2019 is reproduced hereunder for easy
reference:
"26th April 2019
The Manager,
Union Bank of India,
10 Road, JVPD Scheme Branch,
Shiv Shakti, 11, Vithal Nagar Co-op. Hsg. Soc.,
Vile-Parle (West) Mumbai-400 049.
Dear Sir,
Sub: Extension Bank Guarantee against Performance.
Ref: BG No-40810IGL0001816 Issued Date-
20.07.2016 - Expiry on 30.04.2019
We refer to the Bank Guarantee issued by you in our
favour for Rs. 5,57,50,254/- (Rupees Five Crores Fifty
Seven Lakhs Fifty Thousand Two Hundred and Fifty
Four only) on behalf of M/s Alfaraa Infraprojects Pvt
Ltd having its registered office at 101/102, Baba
House, Near Cinemax Theatre, Chakala, Andheri
(East), Mumbai 400 093. The Bank Guarantee is
- 51 -
NC: 2025:KHC:3734
expiring on 30.04.2019. Kindly arrange to renew the
same and send us the renewal letter.
In the event if the BG is not renewed we here by
invoke the BG and we request you to kindly transfer
the amount to below mentioned account.
Account No. 002281400002792
Bank Name Yes Bank
Branch Kasturba Road Branch
IFS Code yesb0000022
In case the BG is renewed before the date of expiry,
request you to kindly send the original renewed BG to
us.
Yours truly,
For Nitesh Housing Developers Pvt Ltd
Sd/-
DGM Banking & Treasury"
11.13. It is these documents and the contents thereof
which have been extracted hereinabove which
would have to be appreciated by this Court in
order to answer the above points.
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12. Answer to Point No.1 : Whether the invocation
of the bank guarantee made by the Petitioner
by email can be said to be in writing and thus
as per the terms of the bank guarantee?
12.1. The submission of Mr. Udaya Holla, learned
Senior Counsel appearing for the Petitioner is
that an email would qualify to be a
correspondence in writing in terms of Section 4
of the IT Act. The submission of Ms. Divya
Purandar, however, is that writing would mean
physical writing and the document would have
to be delivered physically to the Bank.
12.2. Section 4 of the IT Act has been reproduced
hereinabove, which would clearly indicate that a
document in the electronic form would also
satisfy the requirement of a document to be
made physically available. It is rather shocking
that the Bank has taken such a stand in the
present matter, refusing to accept an email and
is insisting on a physical copy. In today's time
and age, all Banks, including the Respondent
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NC: 2025:KHC:3734
No.1 - Union Bank of India, have resorted to
electronic clearance and electronic
correspondence. All the details pertaining to
debits and credits to a particular account are
informed through SMS, by email; a statement
of account is forwarded by the Bank by way of
email. Of course, the Bank even charges for
these services, and the same are not free.
When the Bank charges for SMS, email,
Statements which are transmitted
electronically, either by SMS or email and now
by the latest methodology of WhatsApp, as also
by way of utilization of AI chatbots, it is rather
incongruous and dishonest on part of the Bank
to contend that any correspondence would have
to be done only physically and the document of
invocation of the bank guarantee has to be
physically handed over to the Bank at the office
so designated, either by hand or by post.
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NC: 2025:KHC:3734
12.3. The reason for the same is not too far to see.
The pleadings by the Respondent - Bank clearly
and categorically establish the reason why such
a stand has been taken by the Bank. Even as
stated by the Bank, the bank account of the
borrower was classified as NPA on 31.8.2018;
proceedings have been initiated by the Bank
under Section 19 of the RDB Act; Notices had
been issued under Sub-section (2) of Section
13 of the SARFAESI Act. The NCLT has passed
an order of liquidation against the borrower on
18.7.2022. Subsequently, on 18.7.2022, the
Bank apparently had come to a conclusion that
if the bank guarantee had been permitted to be
invoked and the amounts paid to the Petitioner,
there is no manner and methodology of the
Bank being able to recover the amounts
covered under the bank guarantee from the
borrower, since the borrower's account had
already been classified as a NPA.
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NC: 2025:KHC:3734
12.4. It is apparently for this reason that the Bank
has acted in such a dishonest manner and
refused to accept the invocation of the bank
guarantee and has sought to contend that the
invocation had to be made by way of a physical
document.
12.5. As held by this Court in Sudarshan Cargo Pvt.
Ltd.'s, case (supra), new communication
system and digital technology having made a
dramatic change, an electronic mail is a method
of exchanging digital messages from one
person to another person or from an author to
a recipient and in terms of Section 4 of the IT
Act, if information or any other matter is to be
in writing or in the typewritten or printed form,
then notwithstanding anything contained in
such law, the requirement is deemed to have
been satisfied if such information or matter is
rendered or made available in an electronic
- 56 -
NC: 2025:KHC:3734
form. Thus, even though the agreement
speaks of in writing to be delivered by post or
at the office of the Bank, an email would also
satisfy the said requirement, and an email is
also one in writing. When an email would
satisfy the requirement of law, the same would
also satisfy the requirement of an agreement.
12.6. The Hon'ble Apex Court in Trimex
International FZE Limited, Dubai's case
(supra) has also held that an agreement can be
inferred from the exchange of emails, letters,
telex, telegrams. When an agreement itself can
be inferred from emails, a communication
issued by email, would also, in my considered
opinion, satisfy the requirement of the request
to be in writing. Similar is the finding by the
Allahabad High Court in Rajendra's case
(supra).
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NC: 2025:KHC:3734
12.7. The Hon'ble Apex Court in Shakti Bhog Foods
Limited's case (supra) has held that an
arbitration agreement can also be in the form of
an email. The Hon'ble Bombay High Court in
Bendale Brothers' case (supra) has held that
service of notice can be effected by courier or
by email or WhatsApp. These decisions would
categorically indicate that email is a recognized
mode of communication; typing being a form of
writing and an email being in a typed format,
the email addressed by the petitioner is in
writing and cannot be contended to be
otherwise as sought to be done by the Bank in
the present case.
12.8. The reference by Ms.Divya Purandar on Cochin
Port Trust's case (supra) to contend that the
invocation of the bank guarantee has to be
made strictly in terms of the bank guarantee to
contend that writing will have to be in physical
writing, therefore cannot be accepted. So long
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as the invocation is in writing, an email being in
writing, the same would be in conformity with
the bank guarantee. Similar is the situation in
respect of the decision in a Hindustan
Construction Company Limited's case
(supra) and Besco Limited's case. It
therefore cannot be said that the invocation
made by the petitioner of the bank guarantee is
not in terms of the bank guarantee.
12.9. The other submission made by Ms. Divya
Purandar, learned counsel for the Bank, is that
the Petitioner could not have sought for
renewal of the bank guarantee. Such a renewal
would have been granted only on a request
made by the borrower upon the borrower
making payment of the bank guarantee
commission. In this regard, if the above
extracted letters dated 29.3.2019 in respect of
BG1 and the letter dated 26.4.2019 in respect
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of BG2 are seen, it can be clearly made out that
the Petitioner has informed the date of expiry of
the bank guarantee and sought for renewal of
the same by issuing a renewal letter and has
categorically stated that, if in the event BG is
not renewed, the BG would stand invoked and
requested the transfer of the amount to the
bank accounts which have been furnished in the
said letter.
12.10. Thus, the letters dated 29.3.2019 and
26.4.2019 are not letters for renewal of the
bank guarantee but are optional inasmuch as
the Bank could either renew the bank
guarantee or make payment of the amounts
covered under the bank guarantee by treating
the said letter as an invocation of the bank
guarantee. Thus, again a dishonest stand has
been taken by the Bank to contend that the
letters dated 29.3.2019 and 26.4.2019 were
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not for invocation but were only for renewal.
These are proved to be otherwise, even on the
basis of exfacie reading of the aforesaid letters.
12.11. Though initially a contention was raised by the
Counsel for Respondent No. 1 that the
documents now produced along with the
petition dated 29.3.2019 and 26.4.2019 were
not the ones which were attached with the
email, the bank itself has produced the very
same documents along with the memo dated
19.12.2024. Thus, the existence of these
documents and the contents of the documents
are clearly established, thereby establishing the
dishonest stand on part of the Bank. In that
view of the matter, I hold that Clause 14 of
both the agreements extracted hereinabove,
requiring any notice by way of request, demand
or other communication, given with or required
by the guarantee, shall be made in writing, may
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be sent by hand or post to the Bank addressed
as aforesaid would include an email addressed
by the beneficiary of the bank guarantee, in
this case the Petitioner, to the Bank and such
an email would be sufficient compliance with
Clause 14 of both BG1 and BG2.
12.12. Insofar as BG1 is concerned, which has been
renewed, Clause 3 of the renewal dated
31.12.2018 which has been extracted
hereinabove makes a very simple requirement
of a written claim or demand being received on
31.3.2019 and the earlier requirement of it
being sent by hand or post to the Bank is not
reiterated in the renewal. This would
categorically indicate that even the Bank did
not place much relevance as on that date on a
physical copy.
12.13. Thus, I answer Point No.1 by holding that the
invocation made by the Petitioner, by issuing an
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email with the invocation letter attached
thereto, the said letter making it clear that if
the bank guarantee was not renewed; the letter
was to be treated as invocation of the bank
guarantee is in compliance with Clause 14 of
both BG1 and BG2.
13. Answer to Point No.2: If the invocation were to
be proper, is the Respondent Bank justified in
not making payment of the monies?
13.1. In view of my answer to Point No.1, that the
Petitioner had invoked the bank guarantee in a
proper manner, in terms of Clause (1) of BG-1
and Clause (1) of BG-2 which have been
extracted hereinabove, it is clear that upon
receipt of a first written demand or demands,
the Bank, without further proof of conditions,
without demur, reservation, contest, recourse
or protest, and without any enquiry of the
beneficiary or the contractor, shall make
payment of the amounts without any deduction.
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13.2. There being a categorical undertaking given by
the Bank, which is unconditional, it was
required of the Bank to have complied with the
invocation of the bank guarantee and make
payment of the due amounts. As aforesaid and
observed, the Bank has chosen not to do so
since the account of the borrower had been
designated as a NPA and proceedings had been
initiated by the Bank against the borrower.
13.3. This is also shocking for the reason that the
correspondence which have been addressed by
the Petitioner to the Bank have remained
unanswered. The contention ofcourse of Ms.
Divya Purandar, learned counsel for the Bank,
is that the email ID of a third party like the
Petitioner not being available, there is no
manner of verification of the invocation by the
Bank and it is for that reason that the bank
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guarantee was not honoured. Such a
submission, to my considered opinion, is an
afterthought and again completely dishonest.
The Bank is expected to be an independent
third party, and plays a very important role in
commercial matters. If the Bank itself were to
act in such an untrustworthy manner, and the
Bank would not comply with the obligations
vested with it, which are relied upon by
contractual parties, the very fulcrum of
business and commerce would collapse. The
invocation being proper, there being an
obligation on part of the Bank to pay, whether
the borrower's account had become NPA,
whether the Bank had initiated proceedings
against the borrower or not, is of no
consequence and in terms of Clause (9) of both
the BGs, which is reproduced hereinabove, the
Bank would not stand discharged by insolvency,
winding up, reorganization, amalgamation, or
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liquidation of the contractor, (including any
appointment of a receiver, administrator,
administrative receiver, or supervisor, or any of
its assets).
13.4. The fact that the Bank has chosen to plead the
above facts in the present objection would
clearly, categorically, and unimpeachably
establish the conduct on part of the Bank to be
completely malafide and the failure on part of
the Bank to honour the bank guarantee is not
on the basis of the alleged improper invocation
of the right of the beneficiary, but apparently
on the fear of the Bank not being able to
recover the monies from the borrower.
13.5. Thus, I answer point No.2 by holding that the
invocation made by the Petitioner being proper
and correct, the Bank had no other alternative
but to make payment of the monies covered
under the Bank Guarantee.
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14. Answer to Point No.3: Whether the order
passed by the Banking Ombudsman is proper
and correct?
14.1. The Petitioner had invoked the provisions of the
Banking Ombudsman Scheme 2006 and filed a
complaint with the Banking Ombudsman.
Though ofcourse there is a delay in registering
the same and assigning a number, the same
being during the COVID times, I am of the
considered opinion that those aspects need not
be looked into by this Court in these
proceedings.
14.2. What would have to be looked into is the order
passed by the Banking Ombudsman at
Annexure-G to the petition, which is reproduced
hereunder for easy reference:
"Date 21/12/2020
Mahesh A S
9739466740
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No. 18. Chitrakoot, 1st Cross, high Grounds
Bangalore 560001
Dear Sir/Madam
The Banking Ombudsman Scheme 2006 (BOS-2006)
2 Complaint No: 202021013006130 dated 03/10/2020
against UNION BANK OF INDIA
Please refer to your captioned complaint.
2. It is observed that the complaint is not on grounds
of deficiency under clause 8(1)/8(2) of BOS 2006. We
therefore, regret our to deal with your complaint and
close the same under Clause 8 of the Banking
Ombudsman Scheme 2006.
3. This communication is sent to you as per the orders
of the Banking Ombudsman.
4. Details of BOS-2006 are available at our website
www.rbi.org.in/commonman.
Yours faithfully,
p. Banking Ombudsman
BO Mumbai"
14.3. The only reason given by the Banking
Ombudsman is that the complaint is not on
grounds of deficiency under Sub-Clause (1) of
Clause 8 or Sub-Clause (2) of Clause 8 of the
Banking Ombudsman Scheme 2006 and a
regret has been made out by the Banking
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Ombudsman, expressing inability to deal with
the complaint and the complaint has been
closed.
14.4. Before doing so, there is no opportunity which
has been granted by the Ombudsman to the
Petitioner to make out its case. Clause 8 of the
Banking Ombudsman Scheme 2006 comes
under Chapter 4 relating to procedure for
redressal of grievance and is reproduced
hereunder for easy reference:
"CHAPTER IV
PROCEDURE FOR REDRESSAL OF GRIEVANCE
8. GROUNDS OF COMPLAINT
(1) Any person may file a complaint with the Banking
Ombudsman having Jurisdiction on any one of the
following grounds alleging deficiency in banking
Including internet banking or other services.
(a) non-payment or inordinate delay in the payment or
collection of cheques, drafts, bills etc.
(b) non-acceptance, without sufficient cause, of small
denomination notes tendered for any purpose, and for
charging of commission in respect thereof:
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(c). non-acceptance, without sufficient cause, of coins
tendered and for charging of commission in respect
thereof;
(d). non-payment or delay in payment of inward
remittances;
(e). failure to issue or delay in issue of drafts, pay
orders or bankers' cheques.
(f). non-adherence to prescribed working hours:
(g). failure to provide or delay in providing a banking
facility (other than loans and advances) promised in
writing by a bank or its direct selling agents;
(h). delays, non-credit of proceeds to parties'
accounts, non-payment of deposit or non-observance
of the Reserve Bank directives, if any, applicable to
rate of interest on deposits in any savings, current or
other account maintained with a bank;
(i). complaints from Non-Resident Indians having
accounts in India in relation to their remittances from
abroad, deposits and other bank- related matters;
(j). refusal to open deposit accounts without any valid
reason for refusal;
(k). levying of charges without adequate prior notice to
the customer;
(l). non-adherence to the instructions of Reserve Bank
on ATM /Debit Card and Prepaid Card operations in
India by the bank or its subsidiaries on any of the
following:
i. Account debited but cash not dispensed by ATMs
ii. Account debited more than once for one withdrawal
in ATMs or for POS transaction
iii. Less/Excess amount of cash dispensed by ATMs
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iv. Debit in account without use of the card or details
of the card
v. Use of stolen/cloned cards
vi. Others
(m). non-adherence by the bank or its subsidiaries to
the instructions of Reserve Bank on credit card
operations on any of the following:
i. Unsolicited calls for Add-on Cards, insurance for
cards etc.
ii. Charging of Annual Fees on Cards issued free for life
iii. Wrong Billing/Wrong Debits
iv. Threatening calls/ inappropriate approach of
recovery by recovery agents including non-observance
of Reserve Bank guidelines on engagement of recovery
agents
v. Wrong reporting of credit information to Credit
Information Bureau
vi. Delay or failure to review and correct the credit
status on account of wrongly reported credit
information to Credit Information Bureau.
vii. Others
(n). non-adherence to the instructions of Reserve Bank
with regard to Mobile Banking / Electronic Banking
service in India by the bank on any of the following:
i. delay or failure to effect online payment/ Fund
Transfer,
ii. unauthorized electronic payment/ Fund Transfer,
(o). non-disbursement or delay in disbursement of
pension (to the extent the grievance can be attributed
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to the action on the part of the bank concerned, but
not with regard to its employees);
(p) refusal to accept or delay in accepting payment
towards taxes, as t by Reserve Bank/Government:
(q) refusal to issue of delay in issuing, or failure to
service or delay in servicing or redemption of
Government securities:
(r) forced closure of deposit accounts without due
notice or without sufficient reason:
(s) refusal to close or delay in closing the accounts;
(t) non-adherence to the fair practices code as adopted
by the bank;
(u) non-adherence to the provisions of the Code of
Bank's Commitments to Customers issued by Banking
Codes and Standards Board of India and as adopted by
the bank;
(v) non-observance of Reserve Bank guidelines on
engagement of recovery agents by banks;
(w) non-adherence to Reserve Bank guidelines on
para-banking activities like sale of insurance /mutual
fund /other third party investment products by banks
with regard to following:
i improper, unsuitable sale of third party financial
products
ii. non-transparency /lack of adequate transparency in
sale
iii. non-disclosure of grievance redressal mechanism
available
iv. delay or refusal to facilitate after sales service by
banks
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(x) any other matter relating to the violation of the
directives issued by the Reserve Bank in relation to
banking or other services.
(2) A complaint on any one of the following grounds
alleging deficiency in banking service in respect of
loans and advances may be filed with the Banking
Ombudsman having jurisdiction:
(a) non-observance of Reserve Bank Directives on
interest rates;
(b) delays in sanction, disbursement or non-
observance of prescribed time schedule for disposal of
loan applications;
(c) non-acceptance of application for loans without
furnishing valid reasons to the applicant; and
(d) non-adherence to the provisions of the fair
practices code for lenders as adopted by the bank or
Code of Bank's Commitment to Customers, as the case
may be;
(e) non-observance of Reserve Bank guidelines on
engagement of recovery agents by banks; and
(f) non-observance of any other direction or instruction
of the Reserve Bank as may be specified by the
Reserve Bank for this purpose from time to time.
(3) The Banking Ombudsman may also deal with such
other matter as may be specified by the Reserve Bank
from time to time in this behalf."
14.5. Sub-sub-clause (a) of Sub-Clause (1) of Clause
8, as aforesaid, deals with non-payment or
inordinate delay in the payment or collection of
cheques, drafts, bills, etc. It is therefore clear
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that even a bank guarantee would come under
this Clause, the invocation of a bank guarantee
having been made for collection of payment.
14.6. Clause (t) reproduced hereinabove deals with
non-adherence to the Fair Practices Code to be
adopted by the Bank and Clause (u) deals with
non-adherence to the provision of the Code of
Bank's commitment to customers.
14.7. The above, in my considered opinion, would
cover the non-payment of amounts on a bank
guarantee. A bank guarantee also being a
commercial service rendered by the Bank, it is
required for the Bank to act in a fair manner
and discharge its obligation in relation thereto
in a proper manner. The Banking Ombudsman,
having established with the object of enabling
resolution of complaints relating to certain
services rendered by Banks and to facilitate the
satisfaction of settlement of such complaints,
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could not have in such a lackadaisical manner
indicated that the complaint of the Petitioner
would not come under sub-clause (1) of Clause
8 or sub-clause (2) of Clause 8 and dismissed
the same, without even providing an
opportunity to the Petitioner to make known as
to how the complaint of the Petitioner would
come under those clauses.
14.8. Be that as it may, as I have come to a
conclusion that non-payment of the amounts
under bank guarantee issued by a particular
Bank, where the Bank has undertaken to
honour the bank guarantee, is being also a
service rendered by the said Bank, which has
been relied upon by the Petitioner in advancing
huge amounts of money to the borrower; the
borrower being the customer of Respondent
No.1 - Bank, the Bank has not acted in a proper
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manner but has in fact acted in a dishonest
manner, as indicated above.
14.9. Thus, I answer point No.3 by holding that the
order of the Banking Ombudsman suffers from
various legal infirmities as aforesaid and is
required to be quashed. The banking
ombudsman would be well advised to
implement the BOS scheme in its true letter
and spirit and not dismiss any complaint filed
on technical grounds so as to favour the bank
against whom a complaint has been filed.
15. Answer to Point No.4: What order?
15.1. In view of all the above, I pass the following:
ORDER
i) The Writ Petition is allowed.
ii) A certiorari is issued, the order dated
21.12.2020 passed by Respondent No.3-
Banking Ombudsman rejecting the complaint of
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the Petitioner at Annexure-G is quashed.
Consequently, the complaint filed by the
Petitioner is allowed.
iii) A mandamus is issued to Respondent No.1
directing it to make payment of the amounts
covered under a Bank Guarantee bearing
No.408101GL0001716 dated 20.7.2016 (BG-1)
and a Bank Guarantee bearing
No.408101GL0001816 dated 20.7.2016 (BG-2)
within a period of seven days from the date of
receipt of a copy of this order.
iv) The Respondent No.1-Bank shall also make
payment of interest at the rate of 18% on the
amounts covered under BG-1 calculated from
29.3.2019 till date of payment.
v) The Respondent No.1-Bank will also make
payment of interest at the rate of 18% on BG-
2, calculated from 26.4.2019 till date of
payment.
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vi) On account of the dishonest stand of the Bank,
the Bank is also directed to make payment of a
sum of Rs.5 lakhs as costs to the Karnataka
State Legal Services Authority, which shall be
so paid within 15 days from date of receipt of a
copy of this order. If the said amounts are not
paid by then, the KSLSA will be entitled to
initiate proceedings against the Respondent
No.1 - Bank for recovery of the above amounts
as arrears of land revenue.
Sd/-
(SURAJ GOVINDARAJ)
JUDGE
PRS
