Calcutta High Court
Bridge & Roof Co. (I) Ltd vs Skp Buildcon Pvt. Ltd on 9 November, 2017
Equivalent citations: AIR 2018 (NOC) 235 (CAL.)
Author: Sanjib Banerjee
Bench: Sanjib Banerjee, Sabyasachi Bhattacharyya
OD-8
APO No.495 of 2017
GA No.3402 of 2017
GA Nbo.3403 of 2017
In
AP No.656 of 2017
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
ORIGINAL SIDE
BRIDGE & ROOF CO. (I) LTD.
Versus
SKP BUILDCON PVT. LTD.
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
And
The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA
Date : 9th November, 2017.
Appearance:
Mr. Utpal Bose, Sr. Adv.
Ms. Hashnuhana Chakraborty, Adv.
Ms. Neelina Chatterjee, Adv.
Ms. Ankita Mukherjee, Adv.
Mr. Abhrajit Mitra, Sr. Adv.
Mr. Sarvapriya Mukherjee, Adv.
Mr. Chayan Gupta, Adv.
Mr. Ratul Das, Adv.
Mr. Abhijit Sarkar, Adv.
The Court : The delay, partly because of the puja vacation, in preferring the
appeal is condoned in view of the good grounds shown.
It is a matter of regret that despite repeated authoritative pronouncements
of the Supreme Court and of Division Benches of this Court, injunctions interdicting
unconditional bank guarantees appear to be issued for the mere amusement of the
Single Bench.
2
It is elementary that unless an extraordinary case is made out, the Court
does not stand in the way of an unconditional bank guarantee being invoked or payment
thereunder being received. It is equally elementary that a bank guarantee, which is an
independent contract between a bank and the beneficiary thereunder, is quite removed
from the underlying contract between the beneficiary and the other party to the
underlying contract.
At any rate, it amounts to judicial indiscipline if a bank guarantee is
interdicted without adequate reasons being indicated in support thereof. It is also
doubtful whether an injunction against a bank guarantee can be sought in proceedings
to which the bank cannot be a party and no allegation of fraud can be levelled against
the bank or entertained by the Court.
The order impugned dated August 10, 2017 passed in this case is exactly
what an order can never be when an injunction is sought against the invocation or
encashment of a bank guarantee. The order needs to be seen in its entirety:
"The Court : This is a section 9 application challenging the
invocation of the subject bank guarantee by the respondent by their letter
dated 8th August, 2017.
This matter was mentioned in the morning and leave was sought on behalf of the petitioner and granted by this court to move this application as an Un-listed Court Application at 2 p.m. today, upon notice to the respondent.
The situation now is that the bank guarantee has been invoked and the guaranteed amount of Rs.41,58,602/- is credited to the account of the respondent.
Considering the prima facie case and the balance of convenience I think it is fit and proper that this sum be kept with the respondent but in a separate interest bearing account. The respondent will intimate the petitioner of creation of this account and furnish to them quarterly statement of accounts or furnish them the statement of accounts as and when made available by the bank. I order accordingly. 3
Nothing remains in this application. It is disposed of by this order. This court is of the view that in the facts and circumstances of the case the arbitral proceedings should be expedited. The parties may take necessary steps in this behalf."
The order does not indicate what case was made out and why it was convenient for the payment under the bank guarantee to be required to be kept in a separate account and not appropriated by the beneficiary. Reasons are the links between the facts and the conclusion. The conclusion is the basis on which an order is founded.
It would not do by merely paying lip service to jargon such a prima facie case and balance of convenience without the order indicating how the prima facie case is established or how the balance of convenience would lie in favour of the suitor seeking the injunction.
Unfortunately the order impugned is lacking on all counts. Since the order impugned does not indicate why and in what circumstances the beneficiary under the bank guarantee had to be restrained from receiving any payment thereunder, the order cannot be sustained and is set aside in its entirety. The petition under Section 9 of the Arbitration and Conciliation Act stands dismissed.
The respondent says that a request has been made for the constitution of an arbitral tribunal, but no response has been received from the appellant in such regard.
Since the appellant is not averse to the arbitral tribunal being constituted, the appointing authority should ensure that the tribunal is put in place within a fortnight from date.
APO No.495 of 2017, GA No.3402 of 2017 and GA No.3403 of 2017 are disposed of on the above basis. In the event the respondent is found, in course of the 4 arbitral reference, not to have been entitled to the payment received under the bank guarantee by the appellant herein, the respondent will pay costs assessed at Rs.2 lakh in addition to whatever costs may be imposed by the arbitrator in the reference.
Urgent certified website copies of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(SANJIB BANERJEE, J.) (SABYASACHI BHATTACHARYYA, J.) bp.