M.S SMS-VISHWA Vs. ICICI BANK LTD

JUDGEMENT

(1.) Defendant No.4 Thane Municipal Corporation awarded the work of providing laying and commissioning of gravity sewers alongwith construction of manholes for sewerage network and design, construction, supply, erection, testing etc. of sewerage pumping stations to the plaintiff company and an agreement dated 27.2.2009 in this regard was executed between them. In terms of Clause 10 of the notice inviting tender, the plaintiff furnished Bank Guarantee to the tune of 2% of the contract value and 3% of the security deposit was to be deducted from the R.A. Bills. The security deposit was to be refunded on successful completion of the defect liability period.

(2.) In one Bank Guarantee, the guarantor bank has, inter alia, undertaken as under:-

(3.) In Hindustan Steelworks Construction Ltd. vs. Tarapore and Co., 1996 5 SCC 34, Supreme Court held that in case of an unconditional Bank Guarantee, the nature of obligation of the bank is absolute and not dependent upon any dispute or proceeding between the party at whose instance the Bank Guarantee is given and the beneficiary, there being only two exceptions fraud and special equities. In that case Special equities were claimed on the basis as to who had committed breach of the contract. Determination of disputes was held not to be a factor, which would be sufficient to make the case as exceptional case justifying interference by the court restraining invocation of the Bank Guarantee.