DIVYA INTERNATIONAL Vs. MUKUND PRATAPRAI MEHTA

JUDGEMENT

(1.) Being aggrieved and dissatisfied by Judgment and Order dated 13 January 2003, passed by the learned Single Judge in Summons for Judgment No. 413 of 2001 in Suit No. 4228 of 2000, the Appellant-Original Defendant No.1 has filed the present Appeal and thereby prayed to quash and set aside the impugned order.

(2.) In nutshell, the facts and events of the case are as under:-

(3.) On 22 February 1999, Respondent No.4 entered into the contract agreement with Respondent No.1, who was a contractor of M/s. AL Safwa Drugs, Dubai, whereby it sub-contracted to Respondent No.4 to carry out for mechanical, electrical and Plumbing work in the factory building at Dubai for M/s AL Safwa Drugs, Dubai. As per the Agreement, Respondent No.1 was to pay Respondent No.4 amount of Rs.16 lakhs as advance payment and Respondent No.4 was to execute a Bank Guarantee of the like amount in favour of Respondent No.1. On 4 March 1999, the Appellant Bank issued Bank Guarantee bearing No. 60/6 in favour of Respondent No.1, which was valid upto 25 August 1999 and later on extended till 16 February 2000. Due to some disputes, it was decided that the contract of carrying out the work in the factory building would be transferred directly to Respondent No.4 from Respondent No.1. Therefore, on 15 November 1999, a letter was issued by Respondent No.2 on behalf of Respondent No.1 to M/s. AL Safwa Drugs FZE (Principal), relieving Respondent No.4 (Sub-contractor) from the Contract Agreement with Respondent No.1 and thereby enclosing Bank Guarantee for completion of electrical works. On 30 November 1999, AL Safwa Drugs FZE issued a letter to Appellant Bank informing about the termination of the contract. They have appointed Respondent No. 4 directly to complete the electrification and also agreed to send the Bank Guarantee to the Appellant, upon receipt of the same from Respondent No.1. During the period from 22 November 1999 to 1 December 1999, Respondent No.4 issued letters to the Appellant Bank informing about the change in contract and asked to cancel and/or revoke the Bank Guarantee. The Appellant Bank replied the same by letter dated 24 November 1999 and asked for further details. Respondent No. 2 by his letter dated 18 December 1999, informed to M/s. AL Safwa, stating that he along with wife and son left for India due to sudden illness of mother and on 19 December 1999, allegedly claimed to be authorized signatory of Respondent No.1, issued a letter to the Appellant Bank and invoked the Bank Guarantee. By suspecting foul play on the part of Respondent Nos. 2 and 3, the Appellant Bank informed Respondent No.4 about the letter of invocation. On 21 December 1999, the Appellant Bank received a letter on behalf of Respondent No.1 through Respondent No. 5, stating that the Bank Guarantee was not handed over to AL Safwa Drugs, but illegally submitted to the Bank for invocation, therefore, requested not to be invoked. On 23 December 1999, the Appellant Bank informed to Respondent No.1 that they agreed to honour its commitments under the subject bank guarantee to the beneficiary name therein. However, the Appellant Bank called upon Respondent No.1 to verify the authenticity of address mentioned in the letter of invocation, as well as, informed about the receipt of letter dated 21 December 1999 issued by Respondent No.1 through Respondent No.5 to cancel the Bank Guarantee. Attention of Respondent No. 5 was specifically drawn to letter dated 15 November 1999 addressed to M/s. AL Safwa Drugs, FZE Dubai through Respondent No.2 and hence forwarded copies of the above letters and other papers received by the Appellant to Respondent No.1 to clarify its position for taking appropriate action.