AXIS BANK LIMITED Vs. VIDESH SANCHAR NIGAM LTD.

JUDGEMENT

(1.) Issue notice. Mr. Rishi Aggarwalla, Advocate accepts notice on behalf of first respondent - Videsh Sanchar Nigam Ltd. (name of which was changed to Tata Communications Ltd.). It is stated that the other respondent, i.e., M/s Srishti Videocorp Ltd. at whose behest the bank guarantee was issued, is facing winding up proceedings and have been served in the suit. However, at the stage when the suit was decided, it was not represented. In any event, in view of the orders that this Court proposes to make, it is not necessary to hear the said respondent/defendant. Furthermore, no relief was claimed against the said respondent.

(2.) The defendant - earlier known as UTI Bank Ltd. - had on 20.07.1996 issued a guarantee, the beneficiary of which was the first respondent, i.e., Tata Communications Ltd., limited to the extent of '4.2 crores. It was issued at the instance of the second respondent, in respect of an agreement between that party and the first respondent, for the use of Intelsat Satellite IS-704 at 66 Degrees East with a guaranteed 36 Mhz bandwidth transponder for ten years effective from 1.4.1995. The plaintiff, i.e., the Tata Communications Ltd. partially invoked the bank guarantee by its letter dated 7.2.1997 (Ex.PW-1/6) to the extent of Rs.1,62,43,650/- which was honoured by the appellant. It appears that the plaintiff subsequently issued another letter invoking the balance amount on 12.7.1997 (Ex.PW-1/12). The appellant bank refused to honour its demand. The plaintiff consequently filed the suit.

(3.) The main defence of the appellant was that there could be no repeated invocation of the bank guarantee. Another defence is such is its not being liable to pay the amount in view of subsequent agreement arrived at between the parties on 31.7.1996 as was also specifically contended in the written statement. The parties went to trial, therefore, on the following issues: -