- (1.) THIS suit has been filed by the plaintiff for a decree of declaration and a decree of permanent injunction against defendants seeking a relief that the Court should declare that the counter guarantee issued by Vijaya bank, defendant no. 1 bearing no. FBG/rfc/01/05 dated 15th January, 2005 in favour of Saudi Hollandi Bank, Riyadh, Saudi Arabia (defendant no. 2) was void and further declaration that the performance guarantee issued by defendant no. 2 dated 19th January, 2005 in favour of defendant no. 3 for a sum of Rs. 12. 50 million Saudi Rials for a period of 45 months was void. Plaintiff sought a permanent injunction against the defendants restraining the defendant from encashing the performance bank guarantee issued by defendant no. 1 and counter bank guarantee issued by defendant no. 2 in favour of defendant no. 3 and restraining defendant nos. 1 and 2 from making any payment to defendant no. 3.
(2.) THE basic plea of the plaintiff is that plaintiff was issued a letter of intent dated 12th December, 2004 by defendant no. 3 whereby plaintiff was to be assigned a contract of performance of civil work in Saudi Arabia, district Jeddah. For this purpose the plaintiff was to establish a company in saudi Arabia and after establishment of such a company, the plaintiff was to get permission of Ministry of Commerce of Jeddah under Commercial Laws of Jeddah. It is pleaded that plaintiff could do business in Jeddah only if it could get a commercial license from Commerce Ministry of Jeddah. The contract to be awarded by defendant no. 3 to the plaintiff could be awarded only if he had obtained a license to do business from Ministry of Commerce, Jeddah. The plaintiff was not granted the requisite license/registration to do the business in Jeddah and plaintiff was therefore not awarded the contract as stated in the letter of intent. However as a pre-condition for the award of contract, the plaintiff was to give performance bank guarantee. The plaintiff had instructed its bankers in india viz. , Vijaya Bank, defendant no. 1 to arrange the performance bank guarantee for amount of Rs. 12. 5 million Saudi Rials hoping that the plaintiff would get a permission of Ministry of Commerce, Saudi Arabia for business. Defendant no. 1, bank had arrangements with defendant no. 2, Bank and through defendant no. 1, bank; a bank guarantee was arranged by the plaintiff in favour of defendant no. 3 for 12. 5 million Saudi Rials in anticipation of getting a contract. Though, the performance guarantee was arranged and given to defendant no. 3 but no contract was awarded to the plaintiff in view of the fact that the plaintiff could not get a registration/license from Ministry of Commerce, Saudi arabia. Since no contract was awarded to the plaintiff, the bank guarantee got issued by the plaintiff in anticipation of receiving the contract could not be encashed and was void.
(3.) IT is further submitted by the plaintiff that defendant no. 3 also entered into a sub-contract dated 9th March, 2005 for a value of Saudi rials 308,000,000/- (308 million) to execute a branch of Sewerage Network, with bhandari Engineers and Builders Saudi Arabia (BEBSA ). BEBSA owned and possessed a valid commercial license issued by Ministry of Commerce, Saudi arabia. Sh. Ajit Singh Bhandari holds 65% capital share in BEBSA. He was the managing director of BEBSA. Sub-contract dated 9th March, 2005 executed between defendant no. 3 company and BEBSA was independent of, and not connected with, the sub-contract intended to be executed between plaintiff and defendant no. 3. Despite not awarding sub-contract to the plaintiff by defendant no. 3, the performance bank guarantee was sought to be invoked by defendant no. 3.;