SEETAL ENTERPRISES Vs. TINNA OILS AND CHEMICALS LTD

JUDGEMENT

(1.) THE correctness of the order passed by the learned Civil Judge (Sr. Division), First Court, Cuttack, in Miscellaneous Case No. 11 of 1996, arising out of T. S. No. 18 of 1996, refusing to restrain the opposite party therein from encashing the bank guarantee involved in the suit is called in question by the plaintiff -appellant in this appeal.

(2.) THE essential facts which need narration for the present appeal are as follows : The appellant -plaintiff, a proprietorship concern, was appointed as a consignee agent by respondent No. 1 -defendant No. 1 -company for their product, namely, sunflower refined oil for the entire State of Orissa with effect from September 3, 1994. In pursuance of the agreement for such appointment the plaintiff deposited the security deposit and furnished a bank guarantee, bearing No. 95 -96/1, for an amount of Rs. 4 lakhs for one year commencing from April 28, 1995. As averred by the plaintiff, it was his responsibility to provide proper storage for the product and toassist in the process of sale and distribution of the same, but the responsibility of sale was on the staff of defendant No. 1. After the commencement of the transaction the plaintiff used to duly deposit the amount for the quantity of stocks received from defendant No. 1. However, after the product was launched in the market it was found that 'Sunfit' brand of sunflower refined oil was not able to compete with the other products, the personnel deployed by defendant No. 1 to look after the sales and distribution were not diligent in promoting the product in the market and the faulty policy of the said defendant was responsible for deterioration in the sale position. In spite of suggestions by the plaintiff on a number of occasions, defendant No. 1 remained unresponsive and maintained a sphinx -like silence. While the sale was constantly deteriorating and the plaintiff was incurring huge expenditure and there was no reimbursement by defendant No. 1, contrary to all anticipations, the said defendant despatched further stock valued at Rs. 14,40,905.20 on four instalments, out of which more than Rs. 9,15,000 was sold by the end of December, 1995. On December 31, 1995, the plaintiff intimated defendant No. 1 regarding the surplus stock in its hands and made some suggestions for disposal of the same. While the plaintiff was conducting himself in a completely bona fide manner expecting proper response from defendant No. 1, the said defendant in its turn, without caring for the suggestion of the appellant, in a callous manner, moved defendant No. 2, the State Bank of India, for encashment of the bank guarantee on the ground that there has been non -payment of dues.

(3.) OPPOSITE party No. 2, the State Bank of India, represented by its branch manager, Jeypore branch, chose not to contest the application.