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J U D G M E N T (arising out of S.L.P. (C) No. 20062/2004) SRIKRISHNA, J.

Leave granted.

This is one more instance of an injunction being sought against a beneficiary seeking to enforce his/her rights under a bank guarantee, albeit with a novel averment that "lack of good faith" or "enforcing with an oblique purpose" constituted further exceptions to the general rule against intervention.

The Facts M/s Godavari Sugars Ltd. awarded a contract for a captive power plant to M/s BSES Ltd. (now Reliance Energy Ltd.) (hereinafter "the Appellant"). The Appellant, in turn, awarded a part of that work to M/s Fenner India Ltd. (hereinafter "the First Respondent"). In connection with this, the Appellant issued to the First Respondent, four work orders/ purchase orders, as follows:

On 10.5.2000, the Appellant and the First Respondent entered into a "wrap-around agreement", under which it was agreed that the First Respondent would perform its contractual obligations on a turnkey basis viz. as a composite one. This principle was also made applicable to the bank guarantees. Thus, Clause (4) of this agreement in terms says:

"In case of any material breach of any or all the Contracts, BSES shall have the right to embark upon the retentions and encashment of Bank Guarantees of all the contracts."

"It is specifically agreed between the parties that CONTRACTOR is not only responsible and liable for its scope of supplies in Contract No. I and for its scope of services in the Contract Nos. II, III and IV, but also to perform and take care of all such works which though are not specifically mentioned in these four contracts, but are essential to complete the "BAGASSE HANDLING SYSTEM PACKAGE" as a whole in its true intent and requirement unless the exclusion(s) are specifically agreed by BSES. Contract-III shall also include unloading of plant and equipment supplied under Contract-I consequent to receipt at site, movement within site to stores and/or to intermediate location and/or to final location, co- ordination with Owner for entry in their store documents, issue of Store Issue Voucher, etc."

The agreement further provides vide Clause (2):

"The successful and timely completion of the 'BAGASSE HANDLING SYSTEM PACKAGE' by CONTRACTOR and its performance thereof under Contract-I, Contract-II, Contract- III and Contract-IV shall be jointly and severally bound by the terms of the "Contract" and shall be jointly and severally liable to BSES for the performance of all obligations under the "Contract".

Clause (3) of the agreement declares:

"CONTRACTOR agrees that if liquidated damages for delay and/or performance guarantees, claim on warranty/workmanship, punch lists and any breach of contract by CONTRACTOR are applied under the provisions of any of the four "Contracts", it automatically shall be construed that the same provision can be applied on all the four contracts as read together. BSES shall have the right to treat the contracts jointly as turnkey contract and money can be recovered by BSES including but not limited to liquidated damages, fines or penalties of whatever nature as per the "Contract" and any excess costs and expenses associated with the completion of the job by BSES for the "BAGASSE HANDLING SYSTEM PACKAGE"."