Decided on October 12,2007

Yog Systems India Ltd Appellant
Su-Kam Power Systems Ltd Respondents


SANJIV KHANNA,J - (1.) THE present appeal is directed against the Order dated 29th August, 2006 passed by the learned Single Judge restraining the appellant-M/s. Yog Systems India Limited from encashing the bank guarantee and confirming ex-parte ad-interim injunction dated 6th July, 2006 till disposal of the suit. The said suit has been filed by the respondent-M/s.Su-Kam Power Systems Limited. Learned Single Judge accepted the case of the respondent that the appellant had played fraud inasmuch as he had attempted to invoke the bank guarantee on a false pretext without supplying the goods.
(2.) ON 26th May, 2006, the appellant had sent quotation to the respondent for supply of 5000 transformers. The quotation records that the supply would be made on Free on Board basis at Baddi, Himachal Pradesh within one week from the date of the purchase order. The place of delivery mentioned in the purchase order was Baddi, Himachal Pradesh, where the factory of the respondent is located. It is further stated in the quotation that local transport at Baddi, Himachal Pradesh would be on buyer's account. The quotation required that payment for the material shall be made within 7 days and secured against a bank guarantee. Thereafter, a purchase order dated 26th May, 2006 was placed on the appellant by the respondent for supply of 5000 transformers on various dates stipulated therein. The supply order specifically mentions that the delivery was to be made at Baddi, Himachal Pradesh and mode and time of payment was stipulated as against delivery. The total value of the supply order was Rs. 57,20,000/-. There is also another Purchase Order dated 26th May, 2006 for the same number of transformers i.e. 5000 pieces, for the same value. The said Purchase Order, however, in supplier's reference refers to Rev-01 dated 12th June, 2006. As per the said Purchase Order delivery was to be made at Baddi, Himachal Pradesh and the mode and terms of payment as stipulated required payment within ten days from the date of lorry receipt.
(3.) A bank guarantee dated 26th May, 2006 for Rs. 60,00,000/- was issued by Standard Chartered Bank at the request of the respondent in favour of the appellant. The said bank agreed to pay to the appellant in case of default, refusal, denial, disputes raised due to failure of the buyer to make the payment as per agreed terms. The relevant recital in the bank guarantee reads as under:- "WHEREAS M/s Yog Systems India Ltd. having its Registered office at DELHI at 4A, Ramchandra Lane, Civil Lines, Delhi - 110054 hereinafter for the sake of brevity referred to as "the SELLER" (which expressions shall include its successors in interest and assigns) AND M/s Su-Kam Power Systems Ltd., a public Limited Company and having its Registered Office at WZ-1401/2, Nangal Raya, New Delhi-110046 and Corporate Office of Business at Plot No.196-C, Udyog Vihar Ph- VI, Sector-37, Gurgaon hereinafter for the sake of brevity referred to as ?the Buyer? (which expressions shall include all its existing Partners/Directors and there respective successors in interest and heirs and executors as the case may be) have agreed to trade transformer worth Rs. 60,00,000/- (Rs.Sixty Lakhs over a period of time in staggered delivery schedule for which necessary Purchase Orders will be placed on the Seller from time to time, the Seller is agreeable to accept Bank Guarantee for Rs. 60,00,000/- (Rupees Sixty Lakhs Only) as security for the Buyer's obligation to make the payments as per the agreed terms and at the request of the Buyer we Standard Chartered Bank, H-2, Connaught Place, New Delhi-110001 (hereinafter referred to as ?THE BANK?) have agreed to issue a guarantee in favour of the Seller." ;

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