HORIZON TRAVELS Vs. PAN AMERICAN WORLD AIRLINES

JUDGEMENT

(1.) I have heard the arguments for deciding the application for grant of interim injunction and, vide this order, I shall dispose of the said application.

(2.) The plaintiff has filed the suit seeking a permanent injunction restraining defendant No. 1 from making any demand for payment of or from encashing or enforcing the bank guarantee No. 170 of 1988 dated August 26, 1988, issued by defendant No. 2 and restraining defendant No. 2-Canara Bank from making any payment to defendant No. 1 on the basis of the said bank guarantee. Similar relief is sought in this application till the disposal of the suit.

(3.) Defendant No. 1, Pan American World Airlines Inc., admittedly had appointed the plaintiff as a general sales agent initially for the territories of Jalandhar and Phagwara located in the State of Punjab as per agreement dated April 1, 1988. A bank guarantee in the sum of Rs. 15,00,000 (fifteen lakhs only) dated August 26, 1988, was given by the plaintiff to defendant No. 1 In order to transact the business on behalf of defendant No. 1, permission from the Reserve Bank of India was required and, admittedly, the Reserve Bank of India had declined such permission to the plaintiff and the parties then entered into an amendment of the agreement dated July 19, 1988, by which the plaintiff was appointed a general sales agent even in respect of territory of Panipat (Haryana). The bank guarantee was got extended by the plaintiff and forwarded to defendant No. 1, vide letter dated August 8, 1989. The bank guarantee was to expire on August 25, 1990. On July 8, 1989. The bank guarantee was to expire on August 25, 1990. On July 8, 1990, defendant No. 1 cancelled the agency of the plaintiff in respect of the territories of Jalandhar and Phagwara as no permission had been granted by the Reserve Bank of India to the plaintiff for transacting the business on behalf of defendant No. 1 in the said territories. The plaintiff had got renewed the aforesaid bank guarantee on August 24, 1990, and got it extended up to August 25, 1991. Vide notice dated September 15, 1990, the agency agreement of the plaintiff had been terminated on the expiry of 90 days. In the plaint, the plaintiff has pleaded that the bank guarantee had not been given in respect of any business transaction at Panipat and had been given only in respect of the business which was to be transacted at Jalandhar and Phagwara and as no business could be transacted at those places on account of refusal by the Reserve Bank of India to grant permission, thus, the bank guarantee remained inoperative and defendant No. 1 has no right to invoke the said bank guarantee on demand. It is pleaded that as no amount is due from the plaintiff to defendant No. 1 in respect of any transaction of any business at Jalandhar and Phagwara, the question of defendant No. 1 having any right to invoke the bank guarantee does not arise. It was also pleaded that defendant No. 1 has illegally terminated the agency agreement of the plaintiff even in respect of Panipat territory causing loss to the plaintiff.