Calcutta High Court (Appellete Side)
Omega Shelters Pvt. Ltd vs Unit Construction Co. Pvt. Ltd. & Ors on 2 September, 2009
Author: Bhaskar Bhattacharya
Bench: Bhaskar Bhattacharya
Form No. J(2)
IN THE HIGH COURT AT CALCUTTA
Appellate/Revisional/Civil Jurisdiction
Present:
The Hon'ble Mr. Justice Bhaskar Bhattacharya
And
The Hon'ble Mr. Justice Prasenjit Mandal
F.M.A. No. 628 of 2009
Omega Shelters Pvt. Ltd.
Versus
Unit Construction Co. Pvt. Ltd. & Ors.
For the Appellants: Mr. S.P. Roychowdhury,
Mr. Pratap Chatterjee,
Mr. Samral Sen,
Mr. Paritosh Sinha,
Mr. Mainak Bose,
Ms. Chaitali Chatterjee,
Mr. Amitava Mitra,
Ms. Dolon Dasgupta.
For the Respondents: Mr. Anindya Kumar Mitra,
Mr. P.K. Ghosh,
Mr. Abhrajit Mitra,
Ms. Rajshree Kajaria,
Mr. Jishnu Chowdhury.
Heard on: 07.07.2009, 09.07.2009 & 14.07.2009.
Judgment on: 2nd September, 2009.
Bhaskar Bhattacharya, J.:
This first miscellaneous appeal is at the instance of the defendant No. 1 in a suit for declaration and injunction and is directed against Order No.9 dated 9th April, 2009 passed by the learned Civil Judge (Senior Division), First Court, Alipore, in Title Suit No.7 of 2009 thereby allowing an application under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure filed by the plaintiff and dismissing the one under Order 39 Rule 4 of the Code filed by the defendant No.1 thereby restraining the defendant No.1 from invoking bank guarantee being Annexure 'W' and 'X' of the injunction application and at the same time, restraining the defendant Nos.2 and 4 from permitting the invocation of the said bank guarantees and from making any payment in respect thereof to the defendant No.1 in any manner whatsoever. The defendants were further restrained from giving any effect or act in terms of the notice dated 31st January, 2009 vide Annexure 'Y' of the injunction application or any notice of the like nature in any manner till the disposal of the suit.
Being dissatisfied, the defendant No.1 has come up with the present first miscellaneous appeal.
The plaintiff, respondent No.1 before us, filed in the First Court of Civil Judge (Senior Division), Alipore a suit being Title Suit No.7 of 2009 thereby praying for the following relief:
"(a) Perpetual injunction restraining the defendant No.1 from invoking the Bank Guarantees being Annexure "W" and "X" hereinabove or from receiving any payment in respect thereof from the defendant Nos.2 to 4;
(b) Perpetual injunction restraining the defendant Nos.2 to 4 from permitting invocation of the Bank Guarantees being Annexure "W" and "X" hereinabove or from making any payment in respect thereof to the defendant No.1 in any manner whatsoever;
(c) Perpetual injunction restraining the respondents from giving any effect or further effect or act in terms of or in furtherance to the notices dated 31st January, 2009 being Annexure "Y" hereof or any notice of like nature in any manner whatsoever;
(d) The Bank Guarantees mentioned in Annexure "W" and "X"
hereinabove and notices dated 31st January, 2009 mentioned in Annexure "Y" hereinabove be adjudged null and void and be delivered up and cancelled;
(e) Mandatory injunction perpetually restraining the defendant No.1 from interfering with the removal of the plaintiff's plant and machinery lying at the site of the work;
(f) Decree be passed against the defendant No.1 form such sum as may be found due and payable for any plant and machinery belonging to the plaintiff and/or any damage caused to such plant and machinery or removal of any components thereof;
(g) Decree for Rs.8 crore against the defendant No.1 as pleaded in paragraph 34 hereof;
(h) Decree for Rs.2,62,65,507/- against the defendant No.1 as pleaded in paragraph 35 hereof;
(i) Interim interest and interest upon judgment at the rate of 18% p.a.;
(j) Receiver;
(k) Injunction;
(l) Attachment;
(m) Costs;
(n) Further and/or other relief."
The case made out by the plaintiff may be summed up thus:
(a) The plaintiff is engaged in the business relating to construction of infrastructure, real estate, etc. and performed various contracts of national importance in the past including those of various government agencies.
(b) The defendant No.1 was in requirement of construction of 166 villas at Gundia, District - Ronga Reddy, Andhra Pradesh and accordingly, invited tenders from interested parties. The plaintiff had registered office at P-40, Block B, New Alipore, Kolkata-700 053, within the jurisdiction of the Court.
(c) The defendant No.1 intimated the plaintiff at its aforesaid registered office at New Alipore that the plaintiff had been successful in the tender floated by the defendant No.1 and subsequently, the plaintiff signed and made over formal contract-document to the defendant No.1. The defendant No.1 by its letter dated 13th January, 2007 requested the plaintiff to take up preliminaries and for mobilization- action.
(d) The plaintiff thereafter by its letter dated 18th January, 2007 recorded that in furtherance of the confirmatory signature on the formal contract-
agreement, the plaintiff would be able to fruitfully arrange for mobilization with the banker and fulfil other statutory obligations and accordingly, requested the defendant No.1 for recording formal contract-document.
(e) The defendant No.1 requested the plaintiff to immediately take step for performing the contract and assured that the contract- document would be submitted within time. The defendant No.1 also assured that the bank- guarantee-format would also be finalized soon.
(f) The plaintiff had mobilized men, materials, and equipments at the site at Hyderabad and also engaged sufficient number of labourers for the purpose of performance of the contract.
(g) It was agreed that the defendant no. 1 would make over to the plaintiff the interest-free mobilization advance to the extent of Rs.89 lakh and Rs.1 crore 39 lakh as interest aggregating to Rs.2 crore 28 lakh against bank guarantees. Accordingly, the plaintiff furnished the bank guarantees from time to time of a total value of Rs.2 crore 28 lakh towards mobilization advance.
(h) Apart from the aforesaid bank guarantees, the plaintiff also furnished a performance guarantee for Rs.30,49,999/- and a sum of Rs.5 lakh which was deposited by the plaintiff towards earnest money in the form of demand draft.
(i) The bank guarantees were caused to be issued by the plaintiff through the defendant Nos.2, 3 and 4 from the office at Unit House, P-40, Block B, New Alipore, within the jurisdiction of the Court.
(j) From the inception of the performance of the contract, the defendant No.1 had caused various delay, obstruction and impediments but in spite of that the plaintiff had duly performed the contract and there had been no breach or lapse on its part.
(k) The outstanding amount payable by the defendant No.1 to the plaintiff had also grown substantially and thus, it became difficult for the plaintiff to continue to perform the terms of the agreement by reason of the breach committed by the defendant No.1. Apart from that, the plaintiff would bring labourers from outside the State of Andhra Pradesh, from distant places and those persons required immediate payment, as a result, it was not possible to make such payment in view of default committed by the defendant No.1.
(l) In those circumstances, the plaintiff intended to avoid further complication and suggested that the contract should be foreclosed and the amount due and payable by the defendant No.1 should be paid to the plaintiff.
(m) It was agreed by and between the parties that the letters should be issued to each other recording the proposal and the due payment for all the works done by the plaintiff for which payment remained outstanding and accordingly, the plaintiff issued a letter dated 26th November, 2008 which was sent by fax.
(n) The defendant No.1 also issued a letter dated 26th November, 2008 where, however, the defendant No.1, with mala fide motive, unnecessarily made an allegation about the failure of the plaintiff in not adhering to the scheduled program of completion. The defendant No.1 also required the plaintiff to submit its bills with the closing measurement within seven days so that the same might be processed by the defendant No.1
(o) Before the plaintiff could submit its final bill with the measurements, it was necessary for the defendant No.1 to at least release the balance payment due against the 13th running account bill and accordingly, the plaintiff called upon the defendant No.1 to convene a meeting so that the queries of the defendant No.1, if any, regarding the balance part of the 13th running account bill might be dealt with.
(p) By November 26, 2008, against the 13th running account bill for the certified value of Rs.76,61,531/-, the defendant No.1 had paid only Rs.30 lakh.
(q) A meeting between the parties was, thus, convened on 28th November, 2008 at Hyderabad, where the representatives of the defendant No.1 assured the plaintiff that the amount still outstanding against the 13th and 14th running account bills would be released. At the said meeting, it was informed by the representatives of the defendant No.1 that the 13th running account bill had been substantially processed and certified to the extent of Rs.76,61,531/- and the outstanding amount would be paid shortly. The defendant No.1 also assured that, in the meantime, Rs.30 lakh would be released immediately on ad hoc basis.
(r) The defendant No.1 did not intimate any date for joint measurement and on one pretext or the other, the defendant No.1 postponed the joint measurement. Left with no option, the plaintiff carried out the measurement of the work not measured and included in the previous bills and submitted 20th December, 2008.
(s) The defendant No.1 through its Director and the person-in-control, by electronic mail, dated 22nd December, 2008, alleged that the bills would be settled only if the bills were accompanied by proper measurement through proper channel. Even though, the defendant No.1 had not denied and disputed its obligations to pay the outstanding dues of the plaintiff, the defendant No.1 was withholding such payment on the frivolous pretext of the final bill not being accompanied with proper measurement through proper channel.
(t) The defendant No.1 was well aware of the fact that if the joint measurement had been carried out at the relevant time, it would have matched with the measurement submitted with the final bill and for that reason, the defendant No.1 refused to carry out the joint measurement. (u) With the foreclosure of the contract on 26th November, 2008, while on one hand, the defendant No.1 had been in exclusive possession and control of the site, on the other hand, the defendant No.1 was not allowing the plaintiff to remove its plaint and machinery worth over Rs.1,09,00,000/- lying at the site.
(v) The plaintiff, on enquiry, came to learn that the defendant No.1 had no intention of completing the development-work at the site and was dismantling and removing the work already carried out by the plaintiff at the site in a phased manner.
(w) The defendant No.1 was, thus, invading or threatening to invade the plaintiff's right to remove its plant and machinery at the site of the work by the plaintiff and as such, the plaintiff was entitled to get Rs.2,62,65,507/- with interest @ 18 percent per annum.
(x) The plaintiff had come to learn that the defendant No.1 had invoked three bank guarantees aggregating to a sum of Rs.30 lakh and other bank guarantees had not yet been invoked. Out of the two bank guarantees, only one is valid and subsisting.
(y) The plaintiff had received letters dated 31st January, 2009, served by facsimile on the same day, by the defendant No.1 in respect of the three bank guarantees which have been invoked. As regards the bank guarantee worth Rs.50 lakh, there has been no reason or cause for invocation of such bank guarantee. No money is payable by the plaintiff to the defendant No.1 and as such, right to invoke bank guarantee had been extinguished for the reason of foreclosure of the contract but in spite of that the defendant No.1 was fraudulently attempting to invoke the bank guarantees.
(z) Invocation of the bank guarantees is fraudulent and such fraud is detailed below:
"(a) The defendant no.1, knowing very well that no money is due and payable by the plaintiff to the defendant and on the other hand a substantial sum of money is due and payable by the defendant No.1 to the plaintiff, is in the process of invoking the bank guarantees and release payment therefor.
(b) The defendant No.1 is acting in breach of its obligation under the contract and has delayed performance of the contract after which it is not entitled to invoke the bank guarantees.
(c) Invocation of the mobilization bank guarantees would be per se fraudulent since infrastructure of a sum of Rs.89 lakh has already been mobilized by the plaintiff.
(d) Inasmuch as there has been already incurred expenditure of Rs.89 lakh in connection with mobilization resources and further inasmuch as substantial amount of mobilization advance has been recovered for the plaintiff from the first 13 RA bills, the attempt on the part of the defendant No.1 to invoke the mobilization advance bank guarantees is per se fraudulent.
(e) Inasmuch as there has been no default in connection with the performance of the contract by the plaintiff, invocation of the performance bank guarantees is per se fraudulent. There has been no loss or damage suffered by the defendant No.1 and there has been no breach by the plaintiff of any terms or conditions contained in the agreement and furthermore, there has been no failure on the part of the plaintiff to perform the agreement, despite which the bank guarantees are attempted to be fraudulently invoked.
(f) The defendant No.1 cannot possibly have any claim against the plaintiff and on the other hand, the plaintiff has subsisting claims against the defendant No.1, despite whereof the bank guarantees are being sought to be illegally invoked.
(g) There has been no failure to observe or perform or fulfil the terms of the contract by the plaintiff, despite which the defendant No.1 is invoking the bank guarantees fraudulently.
(h) The contract has been amicably foreclosed, despite which the defendant No.1 is attempting to illegally invoke the bank guarantees fraudulently." Hence the suit.
On the selfsame allegations made in the plaint, the plaintiff/respondent No.1 came up with application for temporary injunction restraining the defendant No.1 from invoking the bank guarantees being Annexure 'W' and 'X' mentioned therein or from receiving any payment in respect thereof from the defendant Nos.2 to 4 and also for injunction restraining the defendant Nos.2 to 4 from permitting invocation of the bank guarantees being Annexure 'W' and 'X' and from making any payment in respect thereof or giving any effect or further effect or act in terms of or in furtherance to the notices dated 31st January, 2002 being Annexure 'Y'.
On such application, the learned Trial Judge granted an ad interim order of injunction in terms of the prayer of the plaintiff.
The defendant No.1 entered appearance and filed written objection to the aforesaid application for injunction and the defence of the defendant No.1 may be summed up thus:
(1) The suit filed by the plaintiff was not maintainable and was barred by Sections 5 and 8 of the Arbitration and Conciliation Act.
(2) The subject-matter of the suit related to an agreement between the plaintiff and the defendant No.1 dated 9th January, 2007 which contained a forum selection clause where parties had mutually agreed to submit themselves to the exclusive jurisdiction of the Courts at Hyderabad.
(3) The plaintiff had deliberately not annexed the said agreement along with the application for injunction in order to ensure that the learned Court did not have any occasion to consider the forum selection clause contained therein. The entire cause of action as pleaded in the plaint arose within the local limit of the territorial jurisdiction of the Courts at Hyderabad or different Courts in the state of Andhra Pradesh.
(4) A bank guarantee must be honoured in accordance with its terms and the bank guarantee being an independent contract between the Bank and the beneficiary, irrespective of any dispute between the beneficiary and the party at whose instance the Bank had given the guarantee, the Bank is obliged to honour its guarantee so long the guarantee is unconditional and irrevocable.
(5) As the final relief sought for by the plaintiff in the suit seeking perpetual injunction from invoking the bank guarantees was contrary to the well-
established principle of law, the question of granting interim relief in the form of temporary injunction did not arise.
(6) In the application for injunction, the plaintiff having prayed for injunction restraining the defendant No.1 from invoking the bank guarantee being 'W' and 'X' to the application, the same was not at all maintainable. As indicated earlier, the learned Trial Judge by the order impugned herein has allowed the application for temporary injunction thereby making the ad interim order of injunction, earlier granted, absolute till the disposal of the suit.
Being dissatisfied, the defendant No.1 has come up with the present first miscellaneous appeal.
Mr. Roy Chowdhury, the learned senior advocate appearing on behalf of the appellant has made twofold submission. First, according to Mr. Roy Chowdhury, the three bank guarantees having already been invoked, the learned Trial Judge, erred in law in restraining the bank from making any payment by not following the settled principles of law laid down by the Apex Court in that behalf.
Secondly, Mr. Roy Chowdhury contends that there could not be any order of injunction restraining his client from invoking the fourth bank guarantee for Rs.50 lakh which had not yet been invoked at the time of passing the order of injunction as the same was unconditional. Mr. Roy Chowdhury thus prays for setting aside the order impugned and rejection of the application for temporary injunction.
Mr. Mitra, the learned senior advocate appearing on behalf of the respondent has on the other hand opposed the aforesaid contention of Mr. Roy Chowdhury and has contended that so far as the first three bank guarantees of Rs.10 lakh each are concerned, the condition precedent for invoking such bank guarantees had not been complied with and as such, the learned Trial Judge rightly granted the order of injunction. As regards the fourth bank guarantee for Rs.50 lakh, Mr. Mitra contends that his client having already extended the said bank guarantee, the alleged right of the defendant is well protected and as such, this Court should not interfere as the plaintiff by practising fraud is trying to invoke the guarantees notwithstanding the fact that his client is entitled to get huge amount of money from the defendant No.1. Mr. Mitra, therefore, prays for dismissal of the appeal. In support of such contention, Mr. Mitra relied upon the decision of the Supreme Court in the case of Hindustan Construction Co. Ltd. vs. State Bank of Bihar reported in AIR 1999 SC 3710.
After hearing the learned counsel for the parties and after going through the terms of the bank guarantees, we find that the Bank had undertaken in the following terms to comply with the demand of the defendant No.1:
"We, the Bank, do hereby undertake to pay the amounts due and payable under this guarantee without any demur, merely on a demand from the employer stating that the amount clamed is due by way of loss or damage caused to or would be caused to or suffered by the employer by reason of any breach by the contractor(s) of any of the terms and conditions contained in the said Agreement or by reasons of the contractor's failure to perform the said Agreement. Any such demand made on the Bank shall be conclusive as regards the amount due and payable by the Bank under this guarantee."
It appears from the letter of invocation of the first three guarantees that the appellant made following demand to the bank:
"Since the applicants M/s. Unit Construction Company Private Limited has not extended the guarantee as requested by us, we hereby give notice for invocation of the said Bank Guarantee. Therefore, please invoke the Bank Guarantee and arrange to remit the proceeds to us in our bank account No: 141150310875059 with Tamilnad Mercantile Bank Ltd., Secenderabad Branch."
From the aforesaid demand of the appellant, it is clear that the invocation was not in terms of the Bank Guarantee and thus, the Bank was not obliged to honour the same. The learned Trial Judge was justified in passing an order of injunction restraining the Bank from making payment on the basis of the demands which were not in conformity with the terms of invocation because there was no assertion of the appellant "that the amount claimed is due by way of loss or damage caused to or would be caused to or suffered by the employer by reason of any breach by the contractor (s) of any of the terms and conditions contained in the said agreement or by reasons of the contractor's failure to perform the said agreement".
We, therefore, find no reason to vary the order of injunction in respect of the first three bank guarantees invoked by the appellant for a total sum of Rs.30 lakh although we do not approve the reasons assigned by the learned Trial Judge in support of such injunction.
However, as regards the fourth one for Rs.50 lakh, it appears that the learned Trial Judge granted injunction even before the same was invoked by the appellant on the basis of prima facie case of the plaintiff in the suit on merit.
The law relating to grant of injunction in respect of unconditional bank guarantee is now well settled. A bank guarantee is a suitable method of securing payment of money in commercial dealings because the beneficiary, under the guarantee, is entitled to realize the whole of the amount under that guarantee in terms thereof irrespective of any pending dispute between the person on whose behalf the guarantee was given and the beneficiary. In contracts which involve huge expenditure, as for example, contracts for construction, bank guarantees are usually required to be furnished by the contractor in favour of the owner to secure payments made to the contractor as advance from time to time during the course of the contract as also to secure performance of the work entrusted under the contract. Such guarantees are enforceable in terms thereof on the lapse of the contractor either in the performance of the work or in paying back to the advance given to it, and on such invocation, the amount is recovered from the Bank. It is for this reason that the Courts are reluctant in granting an injunction against the invocation of Bank Guarantee except in the case of fraud, which should be an "established fraud" and not a mere allegation of fraud, or where irretrievable injury was likely to be caused to the Guarantor. This was the principle laid down by the Supreme Court in various decisions. In the case of U. P. Co-operative Federation Ltd. vs. Singh Consultants and Engineers Pvt. Ltd., (1988) 1 SCC 174, the law laid down in Bolivinter Oil SA vs. Chase Manhattan Bank, (1984) 1 All ER 351 was approved and it was held that an unconditional Bank Guarantee could be invoked in terms thereof by the person in whose favour the Bank Guarantee was given and the Courts would not grant any injunction restraining the invocation except in the case of fraud or irretrievable injury. In Svenska Handelsbanken v. Indian Charge Chrome (1993 AIR SCW 4002 : AIR 1994 SC 626), Larsen and Toubro Ltd. vs. Maharashtra State Electricity Board, (1995 AIR SCW 4134 : AIR 1996 SC 334), Hindustan Steel Works Construction Ltd. vs. G.S. Atwal and Co. (Engineers) (P) Ltd., (1995 AIR SCW 3821 : AIR 1996 SC 131), National Thermal Power Corporation Ltd. vs. Flowmore (P) Ltd., (1995 AIR SCW 430 : AIR 1996 SC 445), State of Maha-rashtra vs. National Construction Co., (1996) 1 SCC 735 : (1996 AIR SCW 895 : AIR 1996 SC 2367), Hindustan Steel Works Construction Ltd. vs. Tarapore and Co., (1996 AIR SCW 2861 : AIR 1996 SC 2268) as also in U.P. State Sugar Corporation vs. Sumac International Ltd., (1997 AIR SCW 694 : AIR 1997 SC 1644 : 1997 All LJ 638), the same principle has been laid down and reiterated. In a recent case of Reliance Salt Limited vs. Cosmos Enterprises and another reported in (2006) 13 SCC 599, it was further pointed out that Bank Guarantee constitutes an agreement between the banker and the principal, albeit, at the instance of the promisor and when a contract of guarantee was sought to be invoked, it was primarily for the bank to plead a case of fraud and not for a promisor to set up a case of breach of contract. It was further held therein that the fraud, which vitiates the contract, must have a nexus with the acts of the parties prior to entering into the contract and subsequent breach of contract on the part of a party would not vitiate the contract itself. (See paragraphs 17 and 19 of the judgement).
Bearing in mind the aforesaid principles laid down by the Apex Court, we find that in this case, the plaintiff has neither disputed the existence of the bank guarantees nor its terms. All that has been alleged is that in spite of the fact that nothing is due and payable to the defendant No.1 but it is the plaintiff who is entitled to huge amount of money from the defendant No.1, the latter is trying to invoke the bank guarantee by practising fraud. As pointed out above, in order to avoid enforcement of an unconditional bank guarantee by taking the plea of fraud, such fraud must have a nexus with the acts of the parties prior to entering into the contract and subsequent breach of contract on the part of the party would not vitiate the contract of bank guarantee. Thus, the plea of fraud taken by the plaintiff in the plaint is not sufficient to overcome the agreement of unconditional bank guarantee. It is needless to mention that the Bank has not alleged any fraud. The plaintiff having already filed a suit for recovery of the alleged dues against the defendant No.1, there is no question of any irretrievable injury to the plaintiff for refusing the prayer of injunction and if the fourth bank guarantee is invoked by the defendant and the plaintiff is of the view that such invocation had no basis, it can enhance its claim further for the alleged wrongful invocation.
Mr. Mitra, the learned senior advocate appearing on behalf of the plaintiff/respondent, as a last resort, tried to impress upon us that the bank guarantee involved in this case is not an unconditional one and in support of such contention placed strong reliance upon the decision of the Supreme Court in the case of Hindustan Construction Co. Ltd. vs. State of Bihar reported in AIR 1999 SC 3710.
In the said case of Hindustan Construction Co. Ltd., the Bank, in the guarantee against mobilisation-advance which was to be provided by State/employer from time to time to the contractor, a construction company, no doubt, had used the expression "agree unconditionally and irrevocably" to guarantee the payment to the Executive Engineer on his first demand without any right of objection, but these expressions were immediately qualified by the condition which clearly referred to the original contract between the parties and postulated that if the obligations, expressed in the contract, were not fulfilled by contractor giving to the employer/State, the right to claim recovery of the whole or part of the "Advance Mobilisation Loan," then, the Bank would pay the amount due under the guarantee to the Executive Engineer. According to the Apex Court, by referring specifically to said clause, the Bank had qualified its liability to pay the amount covered by the guarantee relating to "Advance Mobilisation Loan" to the Executive Engineer only if the obligations under the contract were not fulfilled by contractor or the contractor had misappropriated any portion of the "Advance Mobilisation Loan" and it was in these circumstances that the aforesaid clause would operate and the whole of the amount covered by the "Mobilisation Advance" would become payable on demand. The Apex Court thus concluded that the bank guarantee could be invoked only in the circumstances referred to in aforesaid clause where the amount would become payable only if the obligations were not fulfilled or if there was misappropriation. That being so, according to the Supreme Court, the bank guarantee could not be said to be unconditional or unequivocal in terms so that the employer/State could be said to have had an unfettered right to invoke that guarantee and demand immediate payment thereof from the Bank and invocation itself being bad, the High Court was not justified in interfering with the order of injunction granted by the single Judge, by which the defendants were restrained from invoking the bank guarantee.
In the case before us, as quoted above, the Bank has unequivocally agreed to pay the amount "merely on a demand from the employer stating that the amount claimed is due by way of loss or damage caused to or would be caused to or suffered by the employer by reason of any breach by the contractor (s) of any of the terms and conditions contained in the said agreement or by reasons of the contractor's failure to perform the said agreement" and has further agreed that "any such demand made on the bank shall be conclusive as regards the amount due and payable by the bank under the guarantee." We are, therefore, left with no other alternative but to hold that the terms of the guarantee were unconditional and the principles laid down in the case of Hindustan Company Ltd. (supra) has no application to the facts of the present case.
We, therefore, modify the order impugned by affirming the order of injunction in respect of the first three bank guarantees on the ground that the invocation was not in accordance with the conditions mentioned therein but vacate the injunction in respect of the other one on the ground that there was no occasion to pass an order of injunction restraining the appellant from invoking the guarantee as the exceptions pointed out by the Apex Court, for grant of temporary injunction in this type of a case, have not been proved.
The appeal is, thus, allowed to the extent indicated above. The order impugned is modified as above.
In the facts and circumstances, there will be, however, no order as to costs.
(Bhaskar Bhattacharya, J.) I agree.
(Prasenjit Mandal, J.)