M P MINERALS LTD Vs. BANK OF INDIA

JUDGEMENT

(1.) The present complaint has been filed by the complainant against the respondent Bank alleging deficiency in service in not paying the amount of the Bank Guarantee on a demand being on the Bank requiring it to pay under the Bank Guarantee. The Bank took the plea that the demand in the manner it has been made is not in accordance with the terms of the guarantee and as such it is not obliged to pay. After the pleadings were completed, both the parties relied upon the documents on record and said that no oral evidence is necessary.

(2.) The facts of this case lie in a very narrow compass. The respondent Bank executed a Bank Guarantee No. 93-94/28 on 6.7.1993 on behalf of its customer, M/s. Searsole Chemicals Ltd. in favour of the complainant. In the guarantee the respondent Bank had undertaken to pay to the complainant an amount not exceeding Rs. 20 lakhs by reason of any breach by the said M/s. Searsole Chemicals Ltd. of any of the conditions contained in the agreement dated 7.6.1993, between the complainant and M/s. Searsole Chemicals Ltd. The said guarantee is alleged to have been extended by the respondent Bank vide its letter dated 5th September, 1994 for one year, i.e. from 20th May, 1994 to 19th May, 1995. The complainant had served on the Bank a letter calling upon the respondent Bank to pay under the said guarantee which reads as under :

(3.) When the amount was not paid, in response to the aforesaid demand and subsequent to correspondence, the complainant filed the present complaint. Notice thereof was served on the respondent Bank who took several pleas including one of limitation in terms of the guarantee which provided that all rights stood forfeited under the guarantee as it was not invoked within the prescribed time and have referred to the last clause of Bank Guarantee.