TaxTMI 
TaxTMI 
1995 (9) TMI 389
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.... (4) Citi Bank, N.A., branch Bombay and (5) Bank of Baroda, branch Bombay. The first respondent invited tenders for supply and commission of Coal Handling Plant. The appellant's tender, which was accepted, culminated in a contract, executed between the parties, dated 9.3.1989. The value of the contract was ₹ 61,11,07,200/-. The appellant furnished the following five Bank Guarantees : Name of Bank No of the Bank Guarantee Nature of Bank Guarantee Amount of the Bank Guarantee in Rs. Last the the extended date 1. Standard Chartered Bank/Respondent No. 2 529/88/153 Security against advance payment 5,50,30,000 31.5.94 2. ANZ Grindlays Bank, PLC Respondent No. 3. 1101/88/384/G Performance 6,17,28,000 31.3.95 3.Citi Bank, N.A. Respondent No. 4 26247 Partial release of retention money 2,72,39,850 19.11.94 4. Bank of Baroda Respondent No. 5 73/309 Security against liquidated damage 6,13,40,978 26.9.94, 5. Standard Chartered Bank Respondent No. 2. 529/92/380 Partial release of retention money 1,12,00,000 31.12.94 (Vol.II page 4 of Paper Book) The completion of the Plant seems to have been delayed. The parties are blaming each other for the delay. Aft....
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....Inc. v. Punj Sons (P) Ltd. and anr., 1991 (4) SCC 230 and the decision of the Court of Appeal in England in Elian and Rabbath v. Matsas and Matsas, 1966 (2) Lloyd's Report 495 and a few American decisions, this Court in Svenska Handelsbanken v. M/s. Indian Charge Chrome And Others, 1994 (1) SCC 502, laid down the law thus :- "...... in case of confirmed bank guarantes/irrevocable letters of credit, it cannot be interfered with unless there is fraud and irretrievable injustice involved in the case and fraud has to be an established fraud. ......" (p.523) "....... irretrievable injustice which was made the basis for grant of injunction really was on the ground that the guarantee was not encashable on its terms......." (p.524) "...... there should be prima facie case of fraud and special equities in the form of preventing irretrievable injustice between the parties. Mere irretrievable injustice without prima facie case of established fraud is of no consequence in restraining the encashment of bank guarantee." (pp.526- 527) In the order appealed against the learned Judge has referred to the decisions aforesaid and has held thus:- "...... only i....
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....h the various items in seriatim : ITEM NO. 1: Security against advance payment (Advance Bank Guarantee). The Guarantee given on this count by the Standard Chartered Bank for a sum of ₹ 5,50,30,000 is contained in paper book Volume II at pages 109 to 113. It was agreed at the bar that the Bank Guarantee has not been invoked for the entire sum of ₹ 5.50 crores but is limited to a sum of ₹ 8 lakhs only. We find that dispute exists with regard to the said subject matter, as is evident from the relevant papers -- (Volume II pages 312 and 316). It is seen from the communication dated 10.5.1994 addressed by the first respondent to the appellant, with an endorsement to the Standard Chartered Bank, that a request was made to extend the validity of the Bank Guarantee for a further period of 6 months, i.e., 30.11.1994 and in case the extension is not received before that date, the communication be treated as notice for encashment (Vol.II pages 33 to 34 of the paper book). We are of the view that the invocation of the Guarantee is in time. We hold that in the light of the dispute pending before the Arbitrator, the Court below was justified in declining to grant an injunctio....
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....-system and supporting equipment as a complete plant. 70.2 TRIAL OPERATION: i) After satisfactory initial operation, the Plant shall then be put on trial operation. The period of trial operation shall be 30 days from the date of completion of initial operation. During the period of trial operation, all the necessary adjustments in the plant/equipments shall be made by the Contractor and make ready the same in all respects for performance and guarantee test. Out of the total period of 30 days of trial operation, the plant shall run for atleast a period of 100 hours at the rated capacity. Out of these 100 hrs. a minimum of 20 hours of operation at the rated load shall be established for the mode of operation from wagon tippler to the bunker. 70.3 PERFORMANCE TESTS AT SITES: i) The performance test shall be conducted at site by the Contractor, after successful completion of trial operation. The duration of the performance test of the plant at the rated capacity shall be of 2 hours. Performance Guarantee test shall in any case be conducted within 45 days of successful completion of trial operation or within the extended period as can be mutually agreed. In case the performance tes....
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.... Court below was in error in not doing so. We hereby restrain respondents 1 and 4 from invoking the Bank Guarantee aforesaid. But item No. 5 partial release of retention money, for which the second respondent, Standard Chartered Bank has given a Bank Guarantee for ₹ 1,12,00,000 (Rs. 1.12 crores) stands on a different footing. The relevant Guarantee is contained in paper book Volume II at pages 134 to 138. The first respondent made an ad hoc payment of ₹ 1.11 crores out of the total retention amount for which the Guarantee was furnished by the Standard Chartered Bank. It is an unequivocal and unconditional Guarantee. We hold that no fraud or irretrievable injustice has been made out by the appellant. The court below was justified in declining to issue an order of injunction on this count. The last item is covered by the Guarantee specified as No. 4 hereinabove. It was furnished by the Bank of Baroda as a security against 'liquidated damages'. The Guarantee is contained in paper book Volume II at pages 129-131. The Bank has given Guarantee for ₹ 6.13 crores against the liquidated damages recoverable by the first respondent Board, from the appellant. The relevant....