UTTARA BANK Vs. MACNEILL AND KILBURN LTD.

JUDGEMENT

(1.) This appeal by special leave is directed against the judgment and order passed by the High Court Division in the Civil Rule No. 652(s) of 1978.

(2.) The appellant is a Commercial Bank. The respondent 1 has filed a suit as plaintiff being Title suit No. 42 of 1977 for a declaration that the final notice of claim dated 5.1.77 made by the appellant against respondent 2 for encashment of letter of guarantee is illegal and void for restraining the appellant from encasing the letter of guarantee and further, restraining the respondent 2 from honoring the said letter of guarantee. The trial Court rejected the plaint under Order 7 rule 11 of the Code of Civil Procedure holding that the plaintiff has no cause of action and the Court had no pecuniary jurisdiction to try the suit. On appeal the appellate Court below dismissed the appeal and affirmed the judgment of the trial Court and it was further held that the suit was barred under section 42 of the Specific Relief Act. Thereafter the respondent filed a second appeal in the High Court Division which was admitted under Order 41, rule 11 of the Code of Civil Procedure. At this stage the plaintiff respondent filed an application for restraining the appellant from making demand on respondent 2 to encash the letter of guarantee and restraining respondent 2 also from honoring the said letter of guarantee. This prayer was granted by the High Court Division while the second appeal is still pending for disposal. Leave was granted to consider whether the High Court Division acted correctly and in accordance with law in passing the order of injunction.

(3.) Plaintiff's case was that it made an offer to defendant 3, Crete Construction Company Limited, for the supply of 3, 50,000 cft. of boulders @ Tk. 215/- per 100 cft., FOB Chhatak. As per terms of the offer defendant 3 was to lift at its own risk and responsibility the entire stock of boulders from the site of the plaintiff. This was accepted by the defendant 3 who made advance payment of Tk. 7, 52,500/- for the boulders. In the form of performance bond, the plaintiff furnished a letter of guarantee dated 4.5.74, through its banker, the Chartered Bank, defendant 2 in favour of Crete Construction Company Banker, Uttara Bank, defendant 1, for an equivalent sum on the same date. According to the contract Uttara Bank, would encase the letter of guarantee in case the plaintiff failed to supply the boulders to the defendant 3. It appears the terms of the contract was varied by the parties and difference of opinion emerged from the correspondence of parties. The plaintiff alleged that the defendant 3 had not settled the outstanding bills and without doing so the defendant 3 advised its banker, the defendant 1 (Uttara Bank) to issue claim notice on defendant 2 (Chartered Bank) for encashment of the letter of guarantee on the ground that the plaintiff failed to complete the supply of boulders. To thwart this move of defendant 3 the plaintiff brought the suit against defendant 1 (Uttara Bank) restraining it from encashing the letter guarantee and defendant 2 from honouring the same. As has been noticed the appeal is still pending but the learned Single Judge made the rule absolute by issuing order of injunction.