DODSAL LIMITED Vs. KRISHAK BHARATI CO OP LIMITED

JUDGEMENT

(1.) THIS appeal is directed against the order of the learned Single Judge dated 20th December, 1994 rejecting the prayer of the appellants M/s. Dodsal Limited for an injunction restraining the respondent No. 1, Krishak Bharati Co-operative Limited, from invoking the Bank guarantee and respondent No. 2, the State Bank of India, from performing the same.

(2.) BRIEFLY stated, the material facts of the case are as follows :

(3.) WE have heard the learned Counsel for the appellants Mr. S. K. Cooper, who submits that the respondent No. 1 is not entitled to invoke the Bank guarantee for a sum of Rs. 1,11,29,059/ -. According to him, the Bank guarantee can be invoked only for a sum of Rs. 38,75,654/- which was the amount of outstanding advance. The contention of the appellants is that the Bank guarantee did not cover loss of interest on advance. Mr. Cooper, therefore, submits that in that view of the matter, the invocation of the Bank guarantee by the respondent No. 1 in the instant case is outside the scope and ambit of the Bank guarantee and fraudulent. Mr. Tulzapurkar, learned Counsel for respondent No. 1, vehemently opposes the above submission of the counsel for the appellants. According to him, the above submission of Mr. Cooper is even factually incorrect. Our attention was drawn in this connection to Exh. 5 ( at page 65 of the paper book ) by which the original Bank guarantee was extended for a sum of Rs. 1,30,03,147/- and to Exh. 15 which shows how the above amount had been arrived at. We have perused the above exhibits. Exhibit 15 clearly shows that the amount of Rs. 1,30,03,147/- was arrived at by including the interest recoverable on the amount of outstanding advance. Mr. Tulzapurkar submits that on the face of the above documents, there is no basis or justification for the appellants to contend that the Bank guarantee did not cover interest on outstanding amounts. The learned Counsel further submits that even if there is a dispute about the amount payable by the appellants to the respondent No. 1, that would not justify grant of injunction restraining the respondent No. 1 from invoking the Bank guarantee or the Bank from discharging its liability under the same. According to the learned Counsel, in order to restrain the operation of Bank guarantee, there should be good prima-facie case of fraud and special equities in the form of preventing irretrievable injustice between the parties. Reliance was placed in support of this contention on a number of decisions of the Supreme Court with which we shall deal a little later. It was contended that these conditions are wholly non-existent in the instant case. The appellants, according to Mr. Tulzapurkar, have neither been able to establish a case of prima-facie fraud nor to make out a case of irretrievable injustice. It is, therefore, not one of those cases where the operation of the Bank guarantee can be restrained. The counsel submits that the learned Single Judge was, therefore, justified in the instant case in refusing to interfere with the invocation of the Bank guarantee.