INDURE PRIVATE LIMITED Vs. CETHAR VESSELS LIMITED

JUDGEMENT

(1.) THESE appeals are preferred against the fair and decreetal order dated 17.06.2010 made in Arbitration O.P.No.3/2009 on the file of the Court of the Principal District Judge, Tiruchirappalli. Since both these appeals have been filed against a common order, they are taken up together and being disposed of by a common judgment.

(2.) THE brief facts arising out of these appeals are as under:- For the sake of convenience, the parties are referred to, as arrayed in CMA(MD)No.1113 of 2010. THE petitioner is a company incorporated under the provisions of the Companies Act. Also, the first respondent is a company incorporated under the provisions of the Companies Act and is engaged in manufacturing Industrial Boilers, Power Plants and allied products and supply the same to the customers all over India and even to foreign customers. Both the appellant and the first respondent entered into an agreement for purchase of 2 Nos. 90 Tph, 87 ata 515$5C superheat steam temperature AFBC STEAM GENERATOR. THE said agreement was entered on 09.02.2005. Clause 3.0 of the agreement states that the supply of the above Steam Generators as stipulated in the Contract has to be completed within 15 months for 1st set and 17 months for 2nd set from the effective date on FOT, Ex-works, basis so as to ensure that the boiler with all its auxiliaries included in Supplier's Scope can be fully erected, trial run, cleaned and be ready to supply steam to OWNER's TG set. Clause 4.0 is the Contract Price. THE Contract price is Rs.29,92,00,000/- (Rupees Twenty Nine Crores Ninety Two Lakhs Only). ED & Education Cess/ Sales Tax shall be payable extra against Form 'C' and Form XVII on FOT Ex-works/Ex-sub supplier's works basis. Clause 5.0 - Warranty/Guarantee Period reads as follows:-

(3.) LEARNED counsel for the second and third respondents have stated that the bank is right in not honouring the bank guarantee on the ground that the original bank guarantee granted was modified and made a conditional one, and that unless and until the conditions are satisfied, the bank guarantee cannot be invoked. Therefore the second and third respondent-Banks have correctly rejected the enforcement of the bank guarantee. It is further submitted that the bank has duly intimated the same to the appellant. Therefore, not honouring the bank guarantee is in accordance with law.