BINNY LTD Vs. MAYUR FLOORING PRIVATE LIMITED

JUDGEMENT

(1.) THE plaintiff, who is the appellant herein, has challenged the judgment dated 15.5.2001 passed by the learned single Judge in C.S. No.70 of 1995 as also the decree dated 15.5.2001 passed therein.

(2.) THE suit for recovery of money and also for permanent injunction preferred by the plaintiff/appellant has been dismissed by the first Court and the counter claim made by the first defendant/respondent to the extent of Rs.65 lakhs with interest at the rate of 9% per annum has been allowed in favour of the first defendant/respondent for payment by the plaintiff/appellant.

(3.) FURTHER, according to the plaintiff, the first defendant had confirmed by its letter dated 23.2.93 that it has to pay a sum of Rs.66,899/= being the balance due on account of 75% of the value of the machineries. The plaintiff proceeded with the performance trial while certain complaints were made by the first defendant with regard to performance and functioning of the machineries including failure of imported silent block. Various defects were stated by the first defendant by its letter dated 26.4.94 which it had noticed during the operation of the machine, which was suitably replied by the plaintiff on 29.4.94. There were various correspondence between the plaintiff and the first defendant and ultimately the plaintiff carried out the performance trial on 10.12.94 and according to the plaintiff, the parameters noted on that day were completely satisfactory. The machine had also been performing very well and three months trial could have been successfully carried out based on the parameters by March 1995. While so, even before completion of the performance trial, the first defendant, without settling the claims of the plaintiff for a sum of Rs.66,899/= which was still due on account of 75% of the value of the machineries, committed fraud by invoking the bank guarantee given by the plaintiff through the 2nd defendant in the month of January 1995. It was alleged by the plaintiff that the first defendant wanted to enrich itself unlawfully by invoking the back guarantee and tried to draw the sum of Rs.8,40,750/= being the value of bank guarantee without paying the 25% retention money and a sum of Rs.66,899/= as was due out of the 75% of the value. A specific plea was taken by the plaintiff that when the first defendant owes large money to the plaintiff, it was not entitled to invoke the bank guarantee and the first defendant had not even exhausted the period of three months, being the time fixed for performance trial. As the first defendant owes a sum of Rs.15,40,073/= towards cost of the machineries supplied by the plaintiff without waiting for the performance trial period to be over, the action taken by the first defendant in invoking the bank guarantee is unwarranted. The first defendant was trying to play fraud on the plaintiff causing loss to the plaintiff to make unlawful gain for itself. The first defendant was not entitled to invoke the bank guarantee and in view of the fraudulent act on the part of the first defendant, the plaintiff was constrained to file the suit praying for permanent injunction restraining the first defendant from invoking the bank guarantee furnished by the 2nd defendant at the instance of the plaintiff and also for granting a decree for balance of the amount of Rs.15,40,073/= still due to the plaintiff towards cost of the machineries supplied by it.