BEDI RICE MILLS Vs. PUNJAB AND SIND BANK

JUDGEMENT

(1.) This revision petition is directed against the order passed by the Courts below on the application under Order 39 rules 1 and 2 read with Section 151 CPC dismissed by the trial Court and affirmed by the appellate Court.

(2.) M/s. Bedi Rice Mills-plaintiff, now petitioner, is a partnership firm, carrying on business of rice shelling at Bhikhiwind. Shri Iqbal Singh- plaintiff No. 2 is one of the registered partners of the Firm. A suit for permanent injunction restraining the Punjab State Warehousing Corporation and Divisional Manager, Punjab State Warehousing Corporation-defendant Nos. 2 and 3, now respondents, from encashing the bank guarantee to the tune of Rs. 15 lakhs from Punjab and Sind Bank-defendant No. 1, except in due course of law after releasing/supply of the paddy to the plaintiffs for milling for season 1997-98, was filed by the plaintiffs. It is averred in the plaint that the defendant Nos. 2 and 3 had agreed to release/supply to the plaintiffs paddy for milling by one plaintiff-firm for the period commencing 18.4.1997 to 18.4.1998. It was also agreed that the written agreement shall be executed by one of the plaintiffs and the defendant Nos. 2 and 3 and then the plaintiffs would give local guarantee for due performance of the agreement. Defendant Nos. 2 and 3 never entered into an agreement with the plaintiffs for the year 1997-98 nor they released/supplied paddy to the plaintiff-firm. They had directed the plaintiffs to give bank guarantee of Rs. 15 lakhs for the due performance of alleged agreement and the plaintiffs gave the guarantee. No paddy was supplied for milling nor any agreement was executed, therefore, they are not entitled to encash the bank guarantee amounting to Rs. 15 lakhs.

(3.) The suit was resisted by the defendants Nos 2 and 3. It is pleaded inter-alia that the defendants entered into an agreement for custom milling of the paddy and the defendants had supplied paddy. The plaintiffs failed to supply rice according to the terms of the agreement. They had also assured the defendants by bank guarantee dated 18.4.1997 valid up to 18.4.1998 for the supply of rice in accordance with the agreement. Since they had failed to perform their part of the agreement by not supplying rice when the paddy was already supplied to them, therefore, the defendants have a right to collect the amount of the bank guarantee amounting to Rs. 15 lakhs from defendant No. 1. A criminal case under Section 138 of the Negotiable Instruments Act, in respect of a cheque of Rs. 87 lakhs is already pending in the Court.