TaxTMI 
TaxTMI 
1982 (10) TMI 134
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....the Maharashtra State Electricity Board (hereinafter referred to as "the Electricity Board"). Cochin Malleables (P.) Ltd. (in liquidation) (hereinafter referred to as "the company in liquidation"), used to enter into contracts with the Electricity Board before it was ordered to be wound up by the High Court of Kerala to supply goods to the Electricity Board pursuant to tenders which were being issued from time to time. One of the terms usually found in such tenders was that the intending supplier of goods should pay as earnest money and/or security to the Electricity Board along with every tender a sum approximately equivalent to 10% of the estimated price of the goods in question. There was, however, a provision for exempting payment of su....
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....who had made it on demand, provided that, there was no other subsisting liability towards which the said balance could be adjusted and on such refund being made the person ceased to enjoy the exemption from the requirement of making an earnest deposit in respect of any future tender. Any bank guarantee given by any such intending tenderer in lieu of the cash deposit of Rs. 50,000 was deemed to be equivalent to the cash deposit made on the date of the guarantee and the Electricity Board could realise the bank guarantee amount or any part of it at its will on any day irrespective of whether any tender had been made by the person concerned during the period or not. On such realisation of the bank guarantee amount, the Electricity Board could d....
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...., extended from time to time and the guarantee was in force in the year 1973. On August 27, 1973, the Electricity Board called upon the bank to pay the guarantee amount of Rs. 50,000. Thereafter reminders were sent and a final demand was made on May 23, 1974. In the meanwhile, Company Petition No. 14 of 1973, was filed on July 30, 1973, on the file of the High Court of Kerala for the winding-up of the company (in liquidation). By an order dated September 16, 1974, the High Court ordered the winding up of the company (in liquidation) and directed the official liquidator to take charge of its affairs. In view of these proceedings the bank wrote to the official liquidator on November 4, 1974, stating that the company in liquidation was liable ....
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....re the Division Bench of the High Court was dismissed. This appeal is filed by the Electricity Board against the order of the Division Bench. After the petition for special leave was filed in this court in July, 1979, notice was issued to the official liquidator. He has written a letter to this court stating that the High Court of Kerala has since sanctioned a scheme for the reconstruction of the company in liquidation by an order dated November 6, 1979, subject to certain conditions and that the winding-up proceedings are directed to be kept in abeyance till December 31, 1982. He has further stated that he has handed over all the assets of the company in liquidation to the new management as per the directions of the High Court and that he....
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....iz., (1) the bank guarantee executed by the bank in favour of the Electricity Board, (2) the contracts of supply entered into between the Electricity Board and the company in liquidation, and (3) the document under which the company in liquidation had given a fixed deposit receipt and certain quantity of zinc ingots as security to the bank for executing the letter of guarantee in favour of the Electricity Board, are independent of each other in so far as their legal incidents are concerned. Under the bank guarantee in question the bank has undertaken to pay the Electricity Board any sum up to Rs. 50,000 and, in order to realise it, all that the Electricity Board has to do is to make a demand. Within forty-eight hours of such demand the ban....
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....age of the letter of guarantee, no reliance can be placed by the company in liquidation on the decision of this court in Punjab National Bank Ltd. v. Shri Vikram Cotton Mills [1970] 40 Comp. Cas. 927 ; [1970] 2 SCR 462; AIR 1970 SC 1973, in which the surety's liability was limited to the "ultimate balance" found due from the principal debtor and the said balance had not been ascertained before the institution of the suit. The facts of this case are distinguishable from the facts in the case before us. As mentioned earlier, the liability of the bank to pay the amount as per the letter of guarantee did not depend upon prior proof of any default on the part of the company in liquidation. Whether the whole of Rs. 50,000 should be demanded or an....