- (1.) This appeal is directed against the judgment and order dated 26.10.1999 of the High Court of Delhi at New Delhi in FAO (OS) No.81 of 1999.
(2.) The learned Single Judge of the High Court has taken the view that the invocation of bank guarantee was within the validity period of the bank guarantee and the bank cannot decline to make the payment. The Division Bench in the impugned judgment while dismissing the appeal has clearly observed that the bank guarantee was invoked on 19th May, 1989 within the validity period of the guarantee. The bank guarantee was merely renewed under orders of the court as there was a stay order against encashment of the bank guarantee. Once the stay order was vacated there was no question of any invocation of the bank guarantee. In the instant case, the invocation had already taken place within the validity period. Thereafter, all that was to be done was to intimate the Bank that the stay has been vacated and that now payment had to be made under the bank guarantee.
(3.) The Division Bench in great anguish has observed thus: "It is surprising that a nationalized bank, which has given an unconditional on demand bank guarantee takes up such a contention. No ground to refuse payment was shown to the Lower Court or to us. It is surprising that Nationalized Bank wants to use delays of law in order not to comply with its unconditional obligations under a bank guarantee. The nationalized bank should know that it is such conduct which is adversely affecting the faith of the public in banking institutions and in transaction of bank guarantee." The Court dismissed the appeal with costs.;