S R ENTERPRISES Vs. MADHYA PRADESH ELECTRICITY BOARD

JUDGEMENT

(1.) The present revision petition is against the order dated 18 -11 -1991 passed by the District Judge, Jabalpur in Misc. Judicial Case No. 149/91 refusing to grant injunction in favour of the applicant restraining the non -applicant from encashing the Bank Guarantee amount.

(2.) The submission of the learned counsel for the applicant is that the applicant had taken a contract for erection of towers on Indore Nagda 400 KV line from the non -applicant/Board. In terms of the contract, the Board had to prepare the foundation over which the tower was to be erected and supply various members (parts) from designated store where after the applicant was to erect the tower but the Board had given contract for preparation of foundation to other agencies. The Board failed to supply all the members, with the result that the applicant -Firm was prevented from erecting tower within the stipulated period of two months. The Board has illegally rescinded the contract. According to the applicant, the non -applicant/Board is liable to pay damages to the applicant to the tune of Rs. 12 lacs. The non -applicant/Board has invoked a Bank Guarantee that in case of breach of contract by the applicant they will encash the Bank Guarantee. The applicant -Firm has already approached the non -applicant/Board for Arbitration proceedings. It is not the demeanour of the non -applicant to hold the applicants guilty of breach of contract as such the Board cannot encash he bank guarantee. The applicant filed an application under Section 41 or the Arbitration Act before the Court below and prayed for injunction restraining the Board from encashing the bank guarantee.

(3.) The submission of the learned counsel for non -applicant/Board is that the Bank Guarantee given by the applicant is to the extent of 10% of the work to be done by the applicant. It is independent to original contract. Since the contract was time bound and the applicant -Firm failed to perform the same within the stipulated time, there was breach committed on their part. The non -applicant/Board has therefore, every right to encash the Bank Guarantee.