JAGDISH SINGH KHEHAR, J. - (1.) Leave granted.
(2.) The appellant ­ M/s Adani Agri Fresh Ltd. (hereinafter referred to as 'M/s AAFL') is a supplier of fruit and vegetables. It entered into a contractual agreement with M/s RMS Fruits and Company (hereinafter referred to as 'M/s RMSFC'), a wholesale dealer in fruits, whose proprietor is one Mahaboob Sharif (respondent No.1 herein). For securing payment in lieu of the products supplied by the appellant to respondent No.1 - M/s RMSFC, the appellant required respondent No.1 to furnish bank guarantees, whereby the appellant would be entitled to recover the proceeds of the products, transported by it to M/s RMSFC. Three such registered bank guarantees constitute the basis of the controversy in hand. The said bank guarantees were executed by the State Bank of Mysore on 24.12.2010, 09.02.2011 and 10.02.2011. The terms of the bank guarantees being identical, reference to one will be sufficient for all intents and purposes. Relevant clauses of the first bank guarantee are being extracted hereunder: "NOW THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDIOTIONALLY GUARANTEES as follows, irrespective of the validity and legal effects of the agreement, if any entered between the parties and waiving all rights of objection and defense arising there from, that the Guarantor shall pay any amount up to the maximum amount of guarantee mentioned herein below, upon the AAFL first demand to the AAFL in the event that the whole seller fails to perform its understanding under any agreement or terms and conditions contained in the consignment order and/or sale invoice, or by any reason of whole seller failure to make the reimbursement thereof to the AAFL, in time. 1. The Guarantee shall come into effect upon offer of delivery by the transport agent of AAFL to whole seller at the invoiced address, to the whole seller account any consignment and/or sale order after the date of execution of this guarantee deed. 2. The Guarantor shall immediately pay at Gurgaon, Haryana(India) favouring M/s.Adani Agri Fresh Limited at the request of AAFL, without any demur and without any recourse merely on demand standing that the amount demanded is due and payable by the whole seller to AAFL. 3. Notwithstanding any dispute or difference at any time subsisting between whole seller and yourself concerning the supply of product mentioned above or otherwise, however and notwithstanding any suit or other proceedings that may have been instituted by either party, a sum of Rs.15,00,000/ - or such lower sums or sums as may demand in writing if the said whole seller fails to pay to you the amounts due as per your record. We irrevocably agree that a certificate issued by AAFL that the said sum or any part thereof if payable to you shall be accepted by us as a conclusive evidence and binding on us by such amount having become payable to you and that immediately, such a certificate is furnished by you duly signed by any of your official of Senior Manager or above grade payment of such demand shall be made to you by us. 4. The guarantee shall not be impaired or discharged by any changes that may hereafter take place in your constitution or in the constitution of whole seller. This guarantees shall be in addition to and without prejudice to any other securities or remedies, which AAFL may now have or hereafter possess and you shall be under no obligation to marshal in our favour any such security or any funds or assets that you may be entitled. 5. We, the guarantor hereby waive the necessity of the AAFL demanding the said debt from the whole seller before presenting us with the demand. 6. AAFL shall have the fullest liberty under the guarantee deed to extend, from time to time of the performance by the whole seller and that the guarantor also waives any right of notice etc., in this regard. 7. Notwithstanding anything contained herein: a) Our liability under this bank guarantee shall not exceed Rs.15,00,000/ - (Rupees Fifteen Lakhs only); b) This bank guarantee shall be in full force until 23.12.2011. c) We are liable to pay the guaranteed amount or any part thereof under this bank guarantee only and only if the AAFL seves upon us a written claim, either by way registered letter, courier, fax copy of delivered by hand by an authorized agent of the AAFL and make demand there under on or before 23.12.2011. d) We further undertake and agree that this guarantee shall not be revoked during its currency except with your previous consent in writing. Signature and seal of the guarantor" (Emphasis is ours) A perusal of the terms of the bank guarantee reveals, that the same was an unconditional guarantee, and that, the guarantor expressly waived off rights of any objection and defence, irrespective of the disputed positions adopted by the contracting parties, or even, the validity and legal effects of the contractual agreement. Under the bank guarantees, the appellant ­ M/s AAFL would first make a demand/claim for the payment in lieu of fruits transported to respondent No.1, and in case respondent No.1 failed to reimburse the consideration, the appellant had the right to make a demand from the guarantor, for the above payment. Actually the above stated claim of consideration from M/s RMSFC in the first instance, was also unnecessary, in view of paragraph 5 of the bank guarantee extracted above, which clearly provides that it would not be necessary for M/s AAFL for demanding the consideration from the wholesaler ­ M/s RMSFC, before presenting the demand to the guarantor ­ State Bank of Mysore. The aforesaid demand in terms of the bank guarantee was to be made on the basis of a demand/claim at the hands of M/s AAFL indicating the despatch of goods, and the amount payable in lieu thereof. Thereupon, the guarantor was to make the payment of the amount claimed, immediately without any demur, and without any recourse. On the receipt of such a certificate of the outstanding amount(s), the bank guarantee(s) would stand invoked forthwith, notwithstanding any suit or proceedings, that may have been instituted by one or the other party, with reference to the contractual obligations.
(3.) It is the case of the appellant, that the appellant issued an "Outstanding Certificate" seeking payment, on account of despatch of fruit to M/s RMSFC. The outstanding debt indicated therein was, for a sum of Rs.62,32,328/ - (Rupees sixty two lakhs thirty two thousand three hundred and twenty eight only). Consequent upon the aforesaid demand being not honoured by respondent No.1, the bank guarantee was sought to be invoked, through the aforesaid "Outstanding Certificate" dated 31.05.2011, which is being extracted hereunder: "Outstanding Certificate This is to certify that M/s. R.M.S. Fruit and Co., Mysore has the outstanding debit balance of Rs.62,32,328/ - (Sixty Two Lakhs Thirty Two Thousand Three Hundred Twenty Eight Only) in our books towards supply of Fruit to them during last year. Thanking you, Yours truly, For Adani Agrifresh Limited Sd/ - Authorized Signatory" ;