- (1.) This appeal is at the instance of the plaintiffs in a suit for declaration that the two bank-guarantees, both dated 29th July, 2009, being Annexure 'C' and 'D' to the plaint, are null and void, for mandatory injunction upon the defendants to forthwith make over the aforesaid bank-guarantees dated 29th July, 2009 to the plaintiffs with further prayer for perpetual injunction restraining the defendant No.1 from receiving any payment in respect of those two bank-guarantees, mentioned above, given by the defendant no. 2, the Bank, and for a decree of Rs.1 crore as damages from the defendant no. 1. The other consequential reliefs of interest and injunction were also prayed for. The case made out by the plaintiffs in the aforesaid suit may be summed up thus: (a) The plaintiffs are the owners of an area of 30,419 sq. ft. on lower and upper ground floor, first floor and second floor together with 32 car parking spaces at the building popularly known as "Avani Heights" at Premises No.59A, Chowringhee Road, Kolkata-20. (b) On July 29, 2009, an agreement was entered into by and between the plaintiffs on one hand and the defendant No.1 on the other, for lease of the demised portion for a period of 9 years at the rent of Rs.91/- per sq. ft. plus service tax. The said agreement was entered into at the office of the plaintiffs at 119, Park Street, Kolkata-16 within the jurisdiction of this Court. (c) In terms of the said agreement, the defendant No.1 deposited a sum of Rs.83,04,000/- which is equivalent to the amount of rent for three months as interest-free security-deposit and the plaintiffs furnished two separate bank-guarantees both issued by the defendant No.2 for an aggregate sum of Rs.83,04,000/-. The relevant terms of the said agreement pertaining to furnishing of those bank-guarantees and the security deposit are set out below: "An amount of Rs.83,04,000/- (Rs.2370000/- and Rs.5934000/- to M/s. Pollen Dealcom Pvt. Ltd. and Standard Vinimay Pvt. Ltd. respectively in terms of clause no.5 is payable by the Lessee to the Lessor at the time of signing of this term sheet. This amount will be forfeited totally if India Steamship (A division of Chambal Fertilisers and Chemicals Ltd.) do not take possession of the aforesaid space and starts paying monthly rentals within the aforesaid time of ninety days. However, if the Lessor fails to give possession within October, 09 or fails to make out a good and marketable title of the aforesaid premises to the Lessee on or before 15th October, 2009, the amount will be returned immediately to the Lessee. The refund if any shall be secured by irrevocable bank guarantee." (d) The defendant No.1 by a letter dated August 24, 2009 expressed its willingness to takeover possession of the demised portion and represented that it had already made arrangement for meeting its architects with the object of commencing work in the demised portion for making it usable as its office. The defendant No.1 also agreed to take possession either of the entire demised portion or a part thereof. (e) All of a sudden, on August 31, 2009, the defendant No.1 made a requisition on title and also asked for the various documents i.e. KMC tax receipts, copy of sanctioned plan and occupancy certificate. Even though the defendant No.1 had already received the copies of all the documents mentioned in its letter, the plaintiffs offered immediate inspection of the originals thereof. (f) Subsequently, the defendant No.1 caused further inspection of the demised portion with architects. According to the defendant No.1, necessary additions and alterations had to be made to make it suitable for running an office therefrom. Mainly on this pretext, the possession of the ground floor and the second floor portions were not taken by the defendant No.1. (g) By September 24, 2009, the plaintiffs managed to get the entire demised portion vacated and for this purpose, the plaintiffs had to incur substantial expenditure and all was done with the object of fulfilling the terms of the said agreement and by relying upon the representation of the defendant No.1 that it would complete the deal. The plaintiffs had obtained a loan of Rs.10 crore by securitizing the rentals to be received from the said demised portion. (h) On September 24, 2009, the plaintiffs offered possession of the remaining portion of the first floor which was still in the occupation of one of the erstwhile tenants. As such, the plaintiffs offered vacant possession of the entirety of the demised portion to the defendant No.1 and made repeated requests to the defendant No.1 to take possession thereof. (i) On October 20, 2009, the defendant No.1, for the first time, contended that the change of user of the demised portion is a pre-requisite condition for execution of the lease-deed. With the object of completing the deal with the defendant No.1 and to maintain good relationship with the defendant No.1, the plaintiffs at one stage had even offered to indemnify the defendant No.1 with such fine as might be imposed by the refusal of the KMC for the change of user of the demised portion. The defendant No.1 had accepted such offer of the plaintiffs but thereafter backed out from the same. (j) The defendant No.1 was well aware of the fact that change of user from a showroom to an office is granted as a matter of course by the KMC but that is not so in case of a reverse situation. The defendant No.1 was also well aware of the fact that the KMC as a matter of practice did not stop user as office room from that of a showroom pending an application for conversion. (k) At the meeting held between the parties on November 11, 2009, the defendant No.1 wanted to pull out from the deal and, at that stage, the plaintiffs became entitled to forfeit the said sum of Rs.83,04,000/. This was clearly made known to the defendant No.1 at such meeting and at that stage, the defendant No.1, for the first time, threatened to invoke the bank-guarantees in question. (l) Again the defendant No.1 by an e-mail sent at 10:51 a.m. on November 12, 2009 forwarded a draft agreement and created an impression in the mind of the plaintiffs that it was willing to complete the deal. (m) The two bank-guarantees, mentioned above, are conditional in nature. The relevant terms of the underlying contract, that is to say, the Term Sheet of July 29, 2009 have been expressly incorporated in the bank-guarantees. The defendant No.1 was entitled to invoke the bank-guarantees only on the happening of any of the following two events: (i) If the plaintiffs failed to give possession of the demised portion by end of October, 2009; (ii) If the plaintiffs failed to make out a good and marketable title of the demised portion on or before October 15, 2009. (n) On 12th November, 2009, in the evening, the plaintiffs received by electronic mail a letter of even date from the defendant No.1 making false allegation as to shortfall of area on the first floor to the extent of 300 sq. ft. and on that basis, the defendant No.1 had alleged breach of the terms of the contract by the plaintiffs and demanded refund of the security deposit. (o) The plaintiffs asserted that there was no discrepancy in the total area mentioned in the agreement or in the floor wise measurement. If at all, there is any shortfall of area in the first floor, the same is made up in the second floor and even if, there is a shortfall in the total area, it would also not result in any loss to the defendant No.1 as the rent is determined as "per sq. ft. basis". (p) The defendant No.1 has invoked the bank-guarantees on 12th November, 2009 and by invoking such bank-guarantees, it at all material times intended to commit fraud upon the plaintiffs. The defendant No.1 had perpetrated fraud upon them which is of egregious nature vitiating the underlying transaction and the invocation is also per se fraudulent, certain particulars of which are given below: (i) The Defendant No.1 never intended to take on lease the demised portion and had fraudulently induced the Petitioners into entering into the said agreement of July 29, 2009. (ii) The Defendant No.1 knowing full well from the very inception that the demised portion was being used as a showroom and having agreed to take the demised portion without any change of user was fraudulently raising the plea of permission of KMC to change the mode of user as a pre-requisite condition for the completion of the deal. (iii) The Defendant No.1, knowing full well that the conditions required to be fulfilled for invocation of the bank-guarantees had not been satisfied in the present case, had fraudulently invoked the bank-guarantees. (iv) The Defendant No.1, knowing full well that the Plaintiffs have suffered substantial loss far in excess of the security deposit amount, has invoked the bank-guarantees with the object of causing financial loss. (v) The Defendant No.1 till the end of September, 2009 has fraudulently and intentionally induced the Plaintiffs to believe that it was ready and willing to complete the transaction without in fact even intending to do so. (vi) The Defendant No.1 has fraudulently raised the plea of shortfall in the first floor area with the sole object of invoking the bank-guarantees. (vii) The Defendant No.1 in spite of being well aware of the fact that there was no shortfall in the area of the demised portion or even in the internal dimensions and also knowing full well that the rent was fixed on "per sq. feet" basis has fraudulently raised the plea of shortfall of area with the object of defrauding the Plaintiffs. (viii) Despite the fact that the bank-guarantee could only be invoked on existence of certain conditions, the Defendant No.1 had invoked the bank-guarantee without fulfillment those conditions. (q) Despite the fact that it is mentioned in the bank-guarantees that those could be invoked only for the reason of breach by the plaintiffs of not giving possession within October, 2009 or for not making out clear or marketable title before 15th October, 2009, the defendant No.1 invoked the said bank-guarantees even though those conditions had not been fulfilled. Hence, the suit.
(2.) On the selfsame allegations, as made in the plaint, the plaintiffs came up with an application for temporary injunction for restraining the defendant No.1 from receiving any payment in respect of the two bank-guarantees, mentioned above, and for appointment of a Receiver to take possession of the bankguarantees dated 29th July, 2009. There was also an alternative prayer for attachment before judgement. A learned Single Judge of this Court by an order dated 16th November, 2009 passed an interim order directing that no step should be taken to invoke the bank-guarantees by the defendants on the understanding that a sum of Rs.83,04,000/- would be kept apart by the plaintiffs in a separate account earmarked to the said proceedings by 18th November, 2009. Ultimately, another learned Single Judge of this Court, by order dated November 30, 2009, was pleased to dismiss the application for temporary injunction with costs on the ground that there was no basis for the plaintiffs to seek any of the orders prayed for in the petition as the bank was under obligation to release the payments upon receipt of the letters of invocation and there was no just ground for the bank to dishonour its unconditional commitment. Being dissatisfied, the plaintiffs have come up with the present appeal.
(3.) Mr. Abhrojit Mitra, the learned counsel appearing for the appellant, has strenuously contended before us that the learned Single Judge erred in law in dismissing the application for temporary injunction by totally overlooking the admitted position that the conditions for invoking the bank-guarantees had not been fulfilled by the respondent No.1 as the said respondent in its letter of invocation did not dare to assert breach of the terms of the agreement at the instance of the appellants which is sine qua non for honouring the demand of invocation. Secondly, Mr. Mitra contends that the allegation of fraud pleaded by his client has not at all been taken note of by the learned Single Judge while rejecting the application notwithstanding the fact that the defendant No.1 had not used any affidavit denying the allegations of fraud pleaded by his client. At any rate, Mr. Mitra continues, the learned Single Judge while dismissing the application for temporary injunction did not follow the well-accepted principles which are required to be followed while disposing of an application of this nature. Mr. Mitra, therefore, prays for setting aside the order impugned and allowing the application for temporary injunction. In this connection, Mr. Mitra relied upon the following decisions: 1) U.P. Cooperative Federation Ltd. vs. Singh Consultants and Engineers (p) Ltd., 1988 1 SCC 174; 2) Omega Shelters Pvt. Ltd. vs. Unit Construction, 2009 4 CalHN 22;;