GUJARAT HOUSING BOARD Vs. CHETAS CORPORATION

JUDGEMENT

(1.) This appeal under Sec.96 of the Code of Civil Procedure by the appellant-original defendant No.1 has been filed against the judgment and decree dated 21-2-1986 passed by the learned Judge, City Civil Court No.5, Ahmedabad, in Civil Suit No.1378 of 1980 whereby action of the appellant in enforcing bank guarantee was held to be illegal and invalid and a permanent injunction was granted restraining the appellant from invoking the bank guarantee. The suit was thus decreed against the present appellant-defendant No.1.

(2.) The facts in short are in pursuance of invitation to tender for construction of 212 lower income group tenements in Sector No.27, Gandhinagar, plaintiff applied to the same. As its tender was accepted, a work order was issued and contract entered into by the defendant No.1 with the plaintiff for completion of the work within 15 months. A bank guarantee of Rs.42,000/- was furnished by the plaintiff on 20-1-1979 from the defendant No.2 in this regard. It was alleged by the plaintiff that as the contract work did not go smoothly, the defendant No.1 committed breach of the contract and hence, a statutory notice was issued by the plaintiff asking the defendant No.1 to pay an amount of Rs.2,50,000/- or refer the matter to arbitration. Without replying to the said notice, defendant No.1 invoked the bank guarantee. Hence, the present suit was filed by the plaintiff to declare the action of defendant No.1 in demanding the payment of guarantee money from defendant No.2 as being illegal and invalid. The plaintiff also prayed for permanent injunction against invocation of said bank guarantee.

(3.) The defendant No.1 filed its written statement contending inter alia that suit was hit by Section 71 of the Gujarat Housing Board Act, 1961. It was further contended that the plaintiff did not show the desired progress of work stipulated in the contract, it committed breach of the contract. It sought dismissal of the suit. Though defendant No.2 was served with notice, it did not appear.