ALLAHABAD LAW JOURNAL Vs. CANARA BANK

JUDGEMENT

(1.) THIS appeal has impugned the judgment and decree dated 6.5.2004 which had endorsed the finding of the trial judge whereby the suit filed by the plaintiff i.e.Canara Bank seeking recovery of Rs.50,400.40 against the defendants had been decreed against the defendants no.1 and 2 along with interest @ 12 % per annum.

(2.) THE plaintiff is a banking company. Defendant no.1 is a body corporate. Suit amount was claimed from it on account of the fact that the plaintiff had furnished a bank guarantee on behalf of the defendant in favour of the Court of Sh.Ravi Kumar, Additional District Judge, Delhi. Defendants no.2 and 3 are severally liable along with defendant no.1. Contention was that the first defendant had availed several credit facilities from the plaintiff such as overdrafts and other credit facilities. A consolidated letter of guarantee had been executed by defendants no.2 and 3 undertaking to pay to the plaintiff all amount due from the first defendant. This letter of guarantee executed by the second and third defendant was a continuing guarantee and their liability was joint and several along with the first defendant. Plaintiff bank at the request and on behalf of the defendant no.1 issued bank guarantee dated 13.6.1982 in the sum of Rs.33,000.00 in favour of Court of Mr.Ravi Kumar, Additional District Judge, Delhi in suit No.12/1982 . This bank guarantee was in addition to another bank guarantee of Rs.5000.00 which had been executed by the plaintiff on behalf of the defendant. The first defendant had also executed a deed of counter guarantee undertaking to hold itself responsible for the due performance of all obligations as specified in the said bank guarantee. Plaintiff bank had thereafter issued the bank guarantee No.24/82 dated 13.7.1982. On 24.8.1987 an order was received from Sh.S.R.Goel, ADJ, Delhi in Execution Case No.80/87 to pay the amount of Rs.33,000.00 under the two bank guarantee issued in favour of the court. On receipt of this order the plaintiff bank paid the aforestated amount under the two bank guarantees. Before payment plaintiff tried to contact the first defendant whose office was already closed. Defendants no.2 and 3 were also not available on their given addresses. On 22.9.1987 plaintiff bank in compliance of the order of the court deposited two cheques in the sum of Rs.38,000.00being the amount guaranteed under the aforestated bank guarantees. This amount has now been claimed by way of the present suit along with interest.

(3.) TRIAL judge had framed four issues. Three witnesses were examined on behalf of the plaintiff. One witness was examined on behalf of the defendant no.2. Trial judge examined the oral and documentary evidence holding that the plaintiff is entitled to the decree as prayed for. PW-3, the Senior Manager of the plaintiff had proved the letter of request sent by defendant no.1 for issuance of a bank guarantee of Rs.33,000.00; this document was proved as Ex.PW-3/1; counter guarantee had been proved as Ex. PW-3/2; the guarantee bond was Ex.PW-3/3; letters sent by the plaintiff to the defendant which had come back unserved had been proved as Ex.PW-3/5 toEx.PW-3/14; their postal receipts and A.D.Cards are Ex.PW-4/15 to Ex.PW-3/23. DW-1 had admitted that a bank guarantee Ex.PW-3/3 had been executed on his written request; counter guarantee had also been admitted. Court had returned a positive fact finding that the plaintiff had issue a bank guarantee dated 13.7.1982 in the sum of Rs.33,000.00 on the request of the defendant no.2 which was made on behalf of defendant no.1. Thereafter the plaintiff bank had paid this amount to the court in terms of the request made by the executing court vide order dated 24.8.1987. This amount was thus liable to be compensated to the plaintiff. Document Ex.PW-3/1 was the guarantee bond. This judgment of the trial judge was endorsed in appeal by the first appellant court vide the impugned judgment dated 06.5.2004. Vehement contention of the appellant is that this document states that the guarantee will expire on 12.7.1983; honouring of the guarantee after the aforenoted period is clearly an illegality and has raised a substantial question of law. Attention has been drawn to Section 145 of the Indian Contract Act, 1872, it reads as follows: