GUJARAT SIDHEE CEMENT LTD. Vs. CALDYN APPARETABAU GMBH

JUDGEMENT

(1.) THE present appeal from order arises out of the orders passed by the learned Chamber judge, City Civil Court, Ahmedabad, on the Notice of Motion in Civil Suit No. 1133 of 1997 dated March 11, 1997, and March 14, 1997.

(2.) THE appellant before me happens to be original defendant No. 1. Respondent No. 1 happens to be the original plaintiff. The rest of the respondents happen to be original defendants Nos. 2 and 3. The parties shall be referred to as per their nomenclature before the court below. The plaintiff, which can for the sake of brevity could be referred as 'Caldyn' has filed Civil Suit No. 1133 of 1997, against the three defendants, namely Gujarat Cement Limited, State Bank of India, Commercial Branch, Ahmedabad and SGZ Bank, Germany. According to the plaintiff, they are a company registered under the German laws at Germany and happen to be the manufacturers and suppliers of Caldyn Systems, which are used for quenching of hot gases in a variety of industries. According to the plaintiff, somewhere in the early part of year 1995 defendant No. 1 formerly known as Cement Corporation of Gujarat Limited and now known as Gujarat Sidhee Cement Limited had approached the plaintiff for the supply of a quenching system, and after certain negotiations the plaintiff had agreed to supply the quenching system to defendant No. 1. Defendant No. 1 had placed the order under a letter dated May 20, 1995. In pursuance of,,the said purchase order the plaintiff had supplied the said system and has also installed the system at the plant of defendant No. 1 in or about November, 1995. The plaintiff had given a performance guarantee to defendant No. 1 and that defendant No. 3, SGZ Bank, had issued the performance guarantee on July 28, 1995, which was valid for a period of eight months, or sixty day, from the date of the commission.

(3.) THE question before me is as to whether the court below was justified in ordering that the amount which would be lying with defendant No. 2 State Bank of India upon the payment being made by defendant No. 3 SGZ Bank, Germany, could be ordered to be retained with defendant No. 2 bank, and could be ordered not to be paid to defendant No. 1, who is the appellant before me. The whole question in my opinion centres round the approach to be adopted by the courts while deciding the question of the invocation of the guarantee.