EMCO LIMITED Vs. MALVIKA STEEL LIMITED

JUDGEMENT

(1.) THIS suit filed by the plaintiff M/s EMCO Ltd. essentially seeks two reliefs, one of recovery of Rs. 1,10,91,347/ - alongwith interest against the defendant no.1 on account of latter's breach of contract in failing to lift the manufactured transformers which were especially made for the defendant no.1, and second of injunction to restrain the defendant no.3 from making payment under the bank guarantee dated 24.4.1998 on the ground that the demand made by the defendant no.2/beneficiary for payment under the bank guarantee is defective i.e not in accordance with the terms of bank guarantee. The bank guarantee was given by the plaintiff as a performance guarantee. This bank guarantee instead of being given in favour of the buyer/defendant no.1, was at the request of the defendant no.1 issued in favour of the defendant no.2 as the beneficiary.

(2.) (i) The facts of the case are that by a purchase order dated 31.10.1996, the defendant no.1 placed an order on the plaintiff for design, engineering, manufacture, supply supervision of erection, testing and commissioning of 9 numbers 12.5/15 MVA, 33/6.9 KV Transformers alongwith mandatory spares. Originally, the transformers were to be supplied in lots of two on or before April, 1997, May, 1997, June, 1997 and December, 1997, however subsequently, the purchase order was amended qua the delivery period by an Amendment No.1 dated 19.4.1997 and by an Amendment No. 3 dated 26.2.1998 whereby the delivery period was extended to 31.12.1998. One more amendment to the purchase order was dated 30.3.1998 whereby the delivery schedule was extended for supply of two units by 30.5.1998, another two units by 31.7.1998 and finally last two units by 31.12.1998. (ii) Two transformers out of the first lot were delivered by the plaintiff to the defendant no.1 on 31.3.1998. (iii) Thereafter, by an Amendment no.4 dated 15.6.1998, the delivery period of the second and third lots was extended to 28.2.1999 and 31.3.1999 respectively. (iv) One more transformer was sold and delivered to the defendant no.1 on 16.9.1998 out of the second lot and on 30.9.1998, one more transformer out of the same second lot was further supplied. (v) The original bank guarantee dated 24.4.1998 was extended on 3.11.1998 to 31.3.1999 with a claim period till 30.9.1999. (vi) A final amendment was made to the contract delivery period by the letter dated 18.11.1998 of the defendant no.2 for date of completion of delivery of equipment for lot nos.2 and 3 by 31.3.1999. (vii) The defendant no.1 by its letter dated 6.4.1999 stated that they would like to cancel the order for the supply of transformers, however, the plaintiff had already informed the defendant no.1 by its letter dated 6.4.1999 asking the defendant no.1 to depute their officers for inspection of the transformers at the Jalgaon works of the plaintiff so that delivery could thereafter take place.

(3.) THE subject suit has thereafter come to be filed because the plaintiff claimed that the transformers which were made were specifically and especially designed for the defendant no.1 and hence were useless for any other buyer. The plaintiff in paras 9 and 10 of the plaint avers that there is no ready buyer in the market for the specialized transformers which were manufactured as per the specifications of the defendant no.1. The plaintiff has accordingly claimed damages as also injunction to restrain the defendant no.2 from claiming payment and the defendant no.3 from making payment under the subject bank guarantee dated 24.4.1998.