- (1.) S. K. Phaujdar, J. The matter was heard in presence of the revisionist and the caveator - opposite party. This is an ap plication under Section 115 C. P. C. chal lenging an order dated 20-8-96 recorded by the Ilnd Civil Judge (Senior Division) at Meerut. In a suit under Section 20 of the Arbitration Act for appointment of an ar bitrator for determining the dispute be tween the parties, an application was filed for an injunction to restrain the present caveator from invoking two bank guarantees issued by the State Bank of India in favour of the caveator during the pendency of the suit. This application was rejected by the Court concerned by the impugned order, after hearing both the parties.
(2.) IT was submitted by the learned counsel that the Court below had failed to exercise the jurisdiction bestowed on him and in fact he did not apply his mind at all and he simply noted the arguments of the parties and recorded the order without any discussion of the facts and circumstances alleged. IT was contended that the learned Court below failed to take note of the allegation of fraud made in the injunction application and he had simply observed that there was no averments of fraud in the plaint. The learned counsels engaged them self in argument on these points only. There had been an agreement be tween the parties for supply of certain machinery by the plaintiff to the caveator defendant No. 1. Under the agreement the plaintiff had furnished bank guarantee to secure the advance payment made to them and also to secure the guarantee of perfor mance of the contract. It was agreed that in case of invocation of any bank guarantee by the defendant No. 1 the same would be signed by their Managing Director. As regards arbitration, the parties agreed that if at any time there should be a question, dispute or difference between the parties in respect of any matter arising out of or in relation to the agreement then any of the parties would give a notice in writing to the other and make a reference to arbitration. By their letter dated 31-10-95 defendant No. 1 had intimated the plaintiff that they would enforce all the penalty provisions in the agreement if the materials as per the contract did not reach the site by 6- 11-95. It was contended in the plaint that the cause of action arose be cause of this letter as there was a dispute as to completion of work. It was further stated in course of argument here that by a letter dated 16-11-95 the defendant No. 1 had extended the time of performance up to 28-11-96 and in fact the contract was performed within that time. It was further contended that in the injunction petition itself fraud was definitely alleged and that was sufficient to record an order of injunc tion.
(3.) THE respondent contended that the liability under the bank guarantee was ab solute and no injunction could be issued against their invocation. He read out the terms of the bank guarantee in this con nection. In reply, it was contended by the revisionist that even according to the respondent the agreement was completed on 5-12- 1995 and there was a delay for seven days only and allowing invocation of the bank guarantee will entail an undue enrichment of the respondent. It was con tended in reply that there was no calcula tion of loss and there was no discussion on the merits of the claim of injunction and in fact and there was no application of mind. It was contended that in terms of the clauses in the bank guarantee maximum liability amounts were fixed which were subject to proportionate adjustment in ac cordance with the terms of the agreement. Clause 15 of the agreement was relied upon to say that the liability of the bank guarantee shall get diminish progressively in the same proportion in which the amount covered under the said guarantee is adjusted by the seller in each of his invoices and shall get finally extinguished on sellers adjusting the full amount of advanced guarantee provided by. The learned counsel also drew my attention to the several documents of the plaintiff firm allegedly showing such adjustments.;