N.N. Bhattacharjee, J. - (1.) In this appeal preferred by the Plaintiff impugning an interlocutory order No. 26 May 29, 1992, passed by dated learned Assistant District Judge, Second Court, Alipore, in Title Suit No. 32 of 1991, the only question that arises for consideration is how far a Bank guarantee in the wake of alleged novation of the contract and the averred fraud and suppression of material fact is enforceable at the instance of the beneficiary.
(2.) On the, factual score, it appears that the Calcutta based Plaintiff company entered into an agreement with Defendant No. 1, a Bombay based engineering company for supply of conveyor components valued at Rs. 22,40,000 (Rupees twenty two lac forty thousand) to be effected between 1st week of December 1989 and 3rd week of May 1990 on an expressed stipulation that the Defendant company would pay 5 % of the total supply value as advance against Plaintiff company's submission of a Bank guarantee for the same. Accordingly, the Plaintiff received Rs. 1,31,310 (Rupees one lac thirty one thousand three hundred ten) as advance after furnishing the Bank guarantee dated March 17, 1989, for the said amount through the Defendant No. 2, the State Bank of India, Ballygunge Branch, in favour of the Defendant No. 1. The Bank guarantee is set out below: STATE BANK OF INDIA BALLYGUNGE BRANCH Off Veer Savarkar Marg Guarantee No. 35/SIB/38 Amount of Guarantee: Rs. 1,31,310/ -. Guarantee cover from: 17.3,89 to 31.3.90 Last date for lodgment of claim: 30.6.90 This Guarantee is issued subject to the condition that the liability of the Bank under this Guarantee is limited to a maximum, of Rs. 1,31,310 (Rupees one lakh thirty -one thousand three hundred ten only) and the Guarantee shall remain in full force upto 3,1st March, 1990 and, cannot be invoked otherwise than by a written demand or claim under this Guarantee served on the Bank on or before 30.6.1990. In consideration of the purchaser having placed an order on the Contractor vide order No. VLK/8807 -3/C/RBK dated 3.3.1989 (hereinafter referred to Contract') and having agreed to pay as advance the sum of Rs. 1,31,310 (Rupees one lack thirty one thousand three hundred and ten only) being 5 % of the contracted value of the order on production of Bank Guarantee for an equal amount, the Bank do hereby undertake to pay to you an amount not exceeding Rs. 1,31,310 (Rupees one lac thirty one thousand three hundred ten only) claimed by you irrespective of whether any loss "or damage has been caused to or suffered by you by reason of any default or defaults on the part of. the Contractor in the due supply of any plant, machinery of equipment or carrying out any works under the said contract in respect of which such advance payments as aforesaid is td be made by you to the Contractor or otherwise in the observance and performance of any of the terms and conditions relating thereto in accordance with the true intent and meaning thereof and in the vent of any defaults on the part of the Contractor as aforesaid we shall forthwith on demand without protest or demur pay to you any sum or/ sums not exceeding in total the said sum of Rs. 1,31,310 (Rupees one lac thirty one thousand three hundred ten only) as may be claimed by you to be due from the Contractor by way of refund of such advance payment or any portion or portions thereof. We, the State Bank of India, undertake not to revoke this Guarantee during its currency except with the previous consent of the purchaser in writing' and agree that any change in the Constitution of the said Contractor or the said Bank shall not discharge our liability hereunder. Notwithstanding anything to the contrary we agree that your decision as to whether the Contractor has made any such default or defaults and the amount or amounts to which you are entitled by reason thereof shall be binding on us and we shall not be entitled to ask you to establish your claim or claims under this Guarantee but shall pay the same forthwith without objection or excuse. We undertake to pay to you any money as demanded notwithstanding any dispute or disputes raised by the Contractor in any suit or proceeding pending before any Court or Tribunal or Arbitrators relating thereto our liability under these presents being absolute and unequivocal. The payment so made by us under this Guarantee shall be valid discharge of our liability for payment hereunder. We, State Bank of India, Ballygunge, further agree with the purchaser that the purchaser shall haye the fullest liberty without our consent and without affecting in any manner our obligations hereunder 'to vary any of the terms and conditions of the said Contract or to extend time of performance by the said Contractor from time to time or to postpone for any time or from time to time of the powers exercisable by the Purchaser against the said Contractor and to forebear or enforce any of the terms and conditions from our liability by reasons of any such variation or forbearance act or omission on the part of the Purchaser or any indulgency by the Purchaser to the said Contractor or by any such matter or things whatsoever which under the law relating to sureties would but for this provision have effect; of $o relieving us. NOTWITHSTANDING anything hereinbefore contained, our liability under this Guarantee is restricted to Rs. 1,31,310 (Rupees one lac thirty one thousand three hundred ten only) shall remain in force until 31.3.90 unless an action to enforce a claim under the Guarantee' is filed against us within 30.6.90, all rights under the Guarantee shall be forfeited and we shall be relieved and discharged from all liabilities hereunder. We lastly undertake not to revoke this Guarantee during it currency except with the previous consent of the Beneficiary in writing. The Bank has the power to issue this Guarantee under the State Bank of India Act and the undersigned being the Manager (SJB) of the Bank has full power to sign this Guarantee on behalf of the Bank. Seal & Signature of the Bank For State Bank of India Sd/ - Manager (SIB) Ballygunge60 -A Gariahat RoadCalcutta -700 016 Place : CalcuttaDated: 17 Mar. 1989
(3.) It is both parties' case that various amendments and modifications of the technical terms and specifications of the ordered goods were effected by the Defendant No. 1 with, the consent of and acceptance by the Plaintiff that resulted in both qualitative and quantitative changes in the original purchase order. The total value of the ordered goods were enhanced from Rs. 22,48,000 to Rs. 56,12,000 (Rupees Fifty six lac twelve thousand). Instead of supply of conveyor component the contract now envisages supply of entire conveyor components the contract now envisages supply of entire conveyor system. There is no denying that for the subsequent increase in the value of the purchase order, the Plaintiff furnished indemnity bonds for due performance of the new purchase order, and in course of time, the Plaintiff effected a part delivery which was also accepted by the Defendant No. 1. Again, admittedly, various differences of views and attempts to impose new terms and conditions arose between the parties resulting in conflict of interests between them and ultimately by a telex message dated March 7, 1991, to the Plaintiff, the Defendant No. 1 cancelled the contract allegedly as suggested by you (Plaintiff) earlier. It is the Plaintiff's case that by changing the scope of the earlier contract, the designs, period of performance, terms of' payment etc. and asking for indemnity bonds which were not part and parcel of the original contract, the Defendant No. 1 created an impression that the earlier contract and the purported Bank Guarantee, already furnished by the Plaintiff, had become extinguished and substituted by the new purchase order and the new indemnity bond and in such circumstances the Bank Guarantee which was of the nature of an indemnity bond became invalid and unenforceable in law. Plaintiff alleges that the Defendant No. 1 fraudulently and with motive did not intimate the Bank, Defendant No. 2, about the changes in the original contract and about entering into the new contract and by wrongfully and unilaterally terminating the contract without prior notice to the Plaintiff, the Defendant ho. 1 caused huge loss to the Plaintiff. The Plaintiff came to know that the Defendant No. 1 had communicated with the Bank, Defendant No. 2, intimating that they would enforce the Bank Guarantee. This, according to the Plaintiff, amounts to fraud. Plaintiff, therefore, had no other alternative but to file the Title -Suit wherein a petition under p. 39 rr. 1 & 2 read with Sec. 151 of the Code of Civil Procedure was moved for an order of temporary injunction restraining the Defendant No. 1 from claiming any amount on the basis of the Bank Guarantee and/or from receiving any amount from the Bank in respect thereof. Also an order was prayed for restraining the Defendant No. 2 from dealing, encashing or remitting any amount in relation to or arising out of the said Guarantee. And an ad interim, order in terms of the aforesaid prayers was also sought for. The learned Assistant District Judge after hearing the parties passed an ad interim order directing that status quo be maintained. Against that order, Defendant No. 1 moved a Revisional Application before this Court and in CO. No. 4083/1991 the Division Bench after hearing both sides directed the Court below to hear out the application for temporary injunction and modified the injunction order to the extent that the cheque which had been drawn rjy the Bank should not be handed over to ". Defendant No. 1 till the injunction application is disposed of. Thereafter the learned Assistant, District Judge upon hearing the matter rejected Plaintiffs application for temporary injunction. And hence is this Miscellaneous Appeal preferred by the Plaintiff, having been aggrieved' and dissatisfied with the said order.;