KALPAVRIKSHA ENGINEERS AND MANAGEMENT CONSULTANTS PRIVATE LIMITED Vs. NATIONAL PROJECT CONSTRUCTION CORPORATION LIMITED

JUDGEMENT

(1.) A contract was entered into between the petitioner and the respondent after the petitioner had been award the work of "providing project management consultancy services for Lower Periyar Hydro-electric Project in Kerala". The work was allotted through letter dated 23.5.1989. One of the terms of the agreement required the respondent to pay to the petitioner 10% of the total fee amounting to Rs.2.25 lakhs as initial amount against the petitioner furnishing a bank guarantee. The initial payment was to be adjusted from out of the running payments of the work on pro rata basis. The bank guarantee was furnished which was issued on 23.5.1989 by New Bank of India, Nehru Place Branch, New Delhi (hereinafter referred to as 'the Bank') for a sum of Rs.2.25 lakhs in favour of the respondent. The respondent invoked the bank guarantee for the balance amount of Rs.2,13,130.27, which remained due and unadjusted from the running account bills of the petitioner. A dispute at that stage arose. The petitioner in terms of the agreement filed an application under Section 20 of the Arbitration Act (Suit No.2154/91) seeking the filing of arbitration agreement in court and for referring the disputes mentioned therein for adjudication by an arbitrator. An application for interim relief was also made restraining the respondent from invoking and encashing the bank guarantee. On such interim application (IA 8462/91) an injunction was issued restraining the respondent from encashing the bank guarantee. On 20.2.1992 the interim injunction was vacated. It is a case of the respondent that after the interim injunction was vacated, a request was made to the bank for making the payment of the amount due under the bank guarantee but in spite of having written number of letters, the bank has failed to honour its commitment under the terms of the bank guarantee. Reliance is placed on correspondence which was exchanged between the respondent and the Bank. As per the averments made in the application the Branch Manager of the respondent bank through his letter dated 5.5.1992 has declined to make the payment for the reasons stated in the said letter. This act of the bank in not making payment to the respondent, according to the stand taken by the respondent amounts to disobeying the orders of the court and in this background the respondent has filed IA 8689/92 praying that the bank be directed to make payment of the balance amount of Rs.2,13,130.27, as per the terms of the bank guarantee. CCP 58/92 has been moved by the respondent for initiating proceedings for contempt against the bank and the Senior Manager and other officials of the bank who, according to the respondent, have disobeyed the orders of the court.

(2.) I have heard learned counsel for the respondent at length, who has contended that on the vacation of order of injunction the bank was bound to make the payment of the amount due under the bank guarantee to the respondent, who is a beneficiary named in the Bank Guarantee. According to the submissions made by the learned counsel for the respondent, mandatory injunction in the facts and circumstances can be issued against the bank for making the payment on the principle that he who seeks equity must do equity and also to avoid unjust enrichment by the bank as a result of the order of injunction. Reliance has been placed on few decisions, viz., U.P. Co-operative Federation Ltd. v. Singh Consultants and Engineers (P) Ltd. (1988 - 1 - SCR 1124; Mrs. Vijay Srivastav, R. Adm. Sood v. Mirahul Enterprises (1988 RLR 7); United States of Amercia v. Master Builders (1991 - 1 Delhi Lawyer 206); and Smt. Maya v. Brij Nath (AIR 1982 Del. 240). After having considered the submissions made and having gone through the decisions, I do not find any relevancy of the said decision to the facts and circumstances of the instant case.