DELHI LOTTERIES Vs. RAJESH AGGARWAL

JUDGEMENT

(1.) This petition under Article 227 of the Constitution of India has been preferred by Delhi Lottery (hereinafter referred to as the petitioner in order to facilitate the reference) against the judgment and order dated March 9, 1995 whereby defendant Bank/respondent No. 3 (hereinafter referred to as the respondent No. 3 for the sake of convenience) was restrained from allowing the encashment of the bank guarantees. (LG No. 1/94 dated January 18, 1994 and LG No. 2/94 dated February 4, 1994). It was further ordered that the securities furnished against the said bank guarantees be released.

(2.) Brief facts which led to the presentation of the present petition are as under: that the plaintiff respondent No. 2 (hereinafter referred to as respondent No. 2 for the sake of brevity) filed a suit (No. 34/95) for perpetual injunction on February 8, 1995, with the allegations that the respondent No. 2 is the Sales Manager of M/s Hanumant Sales Corporation. Inderpuri, New Delhi. He is as such fully competent to sign and verify the plaint for and on behalf of the firm. The defendant No. 2 in the said suit (petitioner herein) was holding the lotteries till the month of December 1994 when the same was finally closed. The petitioner in connection therewith used to appoint stockists in Delhi and other parts of the country. The petitioner as per their practice used to supply lottery tickets to their stockists for selling the same in the market. M/s Hanumant Sales Corporation was appointed a stockist for the State of Punjab in the month of February 1993 on the condition that the abovesaid firm would furnish a conditional bank guarantee. The said firm furnished two bank guarantees for a sum of Rs. 10 lacs and Rs. 20 lacs. As per the said conditions the same were to expire on January 18, 1995 and February 3, 1995 respectively. Except the above bank gurantee no other agreement undertaking was executed by the firm. In case of failure on the part of the petitioner to deposit the winning tickets no lottery tickets for the next day were to be given to them. On account of protests and objections raised by the members of the public the Delhi Government was forced to close the lottery business in the month of December 1994. The respondent No. 2 till date has not been served with any notice in regard to the arrears, if any, due from the firm since the closure of the business. In fact, nothing is due from the respondent No. 2. The bank guarantees furnished by respondent No. 2 through respondent No. 3 are conditional. Hence, the same cannot be encashed by the petitioner till they show fulfilment of the said condition. The respondent No. 2 has never been served with any notice of default and as such the petitioner cannot encash the bank guarantees in the absence of the default. Furthermore, the period of the said guarantees has expired and the same as such cannot be invoked. After the closure of the lotteries the respondent No. 2 made all possible efforts for the return of the securities furnished against the said bank guarantees, but to no avail. All his efforts ended in fiasco. The petitioner extended threat on February 7, 1995 for encashment of the bank guarantees. The respondent No. 2 would, suffer irreparable loss and damage in case the petitioner are not restrained from encashing the said bank guarantees. Hence, arose the necessity for the institution of the present suit.

(3.) Respondent No. 2 alongwith the suit moved an application before the learned lower Court for ad interim injunction restraining the petitioner from encashing the bank guarantees, alluded to above. Respondent No. 2 also moved an application dated March 7, 1995 under Section 151 of the Code of Civil Procedure for the release of the securities furnished against the said bank guarantees.