SAB INDUSTRIES LTD Vs. INDIAN OVERSEAS BANK

JUDGEMENT

(1.) This judgment shall dispose of Complaints No.432 and 435 of 1993 wherein the date of execution of the Bank guarantee was 5.5.89 and also Complaints No.433 and 434 of 1993 wherein the date of execution of the Bank guarantees was 21.3.89 and for the reason that the facts in question and the parties relating to these complaints happen to be the same.

(2.) Briefly the complainant entered into an agreement for construction of under ground works of Gaj Hydel Project at Charri in Tehsil Dharamsala (H. P. ). M/s. Kropivnik Cableways Private Limited were to act as sub-contractor. The complainant agreed to make an advance payment to the extent of Rs.2.50 lacs to aforesaid sub-contractor and in this regard the aforesaid sub-contractor furnished a Bank guarantee on 5.5.89 which was valid till 4.5.90 for a period of one year. The respondent Bank had undertaken to pay to the complainant on demand all the amounts which were payable by the sub-contractor alongwith any amount upto the maximum sum of Rs.2.50 lakhs. There was an agreement that if there was any loss suffered by the Company, it was to be of the Company itself which would be final and binding on the Bank. It asked the complainant by means of a letter dated 17.3.90 not to release any payment directly to the sub-contractor as their liability under guarantee had to be reduced in proportion to the work done by the sub-contractor. The respondent was again informed on 2.5.90 and 3.5.90 before the expiry of the Bank guarantee on 4.5.90 that M/s. Kropivnik Cableways Private Limited the said sub-contractor had committed a breach of the terns and conditions of the agreement executed with complainant and the respondent Bank was required to make the payment of the sum of Rs.2,50,000/-to the complainant. The complainant again wrote to the respondent on 11.5.90, but of no avail. The reliefs claimed by the complainant are briefly as under: (i) A sum of Rs.2.50 lacs on account of the deficiency on the part of the respondent; (ii) Rs.1.00 lack on account of damages together with Rs.15,000/as expenses of litigation and interest @ 25% per annum. The Indian Overseas Bank, the respondent filed a reply wherein it has been averred that M/s. Kropivnik Cableways Pvt. Ltd. , the sub-contractor was a necessary party and without impleading it the dispute could not be decided. There was also a plea that it was barred by limitation inasmuch as cause of action arose to the complainant on 5.5.90. The other pleas are that the complainant himself violated Clauses 2 and 3 by making payments directly to the sub-contractor instead of routing the payments through the respondent Bank. The complaint has been instituted in violation of Clause No.5 of the Bank guarantee. The complainant was not the sole Judge to assess the losses occurred by virtue of Clauses 2 and 3 of the guarantee. It has further been averred that since the complainant himself violated the guarantee, the respondent Bank was not liable. It was denied that respondent Bank did not reply to the communication received from the complainant and on the contrary the respondent Bank had been informing the complainant by means of letter dated 17.3.90 that the complainant is violating the agreement by making direct payments to the sub-contractor. The letter dated 21.3.90 was a routine letter asking the complainant to surrender the papers after the expiring of the guarantee. The other pleas were that the respondent Bank rightly turned down as illegal, wrong and frivolous demands of the complainant that this Commission had no jurisdiction to try such complicated matters where several issues were involved and the complainant could at the most approach the Civil Court.

(3.) In this case an important plea raised on behalf of the respondent is that the work pertaining to construction of underground of Gaj Hydel Project was entrusted to M/s. S. A. Builders Ltd. , at the same time the requisite equipment, financial resources and personnel and know-how to execute the underground works component were with M/s. Kropivnik Cableways Private Ltd. , Chandigarh. The aforesaid Company agreed to act as sub-contractor for the complainant vide its agreement Annexures R 2 and 1 dated 31.8.88. The complainant financed the projected and the Bank guarantee was furnished by the sub-contractor. A dispute arose between the complainant and M/s. Kropivnik Cableways Private Ltd. . the subcontractor. Here the sub-contractor has not been impleaded as a respondent and it was a necessary party. This is an important omission made by the complainant and since there are several questions of facts involved such as non-joinder of necessary party, all this goes against the complainant. It shall be useful to refer to the statement of Mr. M. L. Jain, Director of the complainant recorded here. He has told that the complainant provided mobilization of loan to the tune of Rs.10 lakhs to the sub-contractor and had the subcontractor repaid their loan then no occasion would have arisen for proceeding against the Bank. Without impleading the sub-contractor it could not be possible to find out the default of the sub-contractor. Besides this Mr. M. L. Jain deposed that some of the payments were made directly to the laborers because there was an order of the Labour Court and he could not tell whether he informed the respondent Bank that some payments were being made directly by them. This Managing Director could not tell that some payments were made to M/s. Kropivnik Cableways Private Ltd. , the sub-contractor directly and not through the Indian Overseas Bank. This is in violation of Bank guarantee. The complainant could not establish that revocation of the guarantee was exercised on 15.3.90 because no authentic entry regarding its despatch could be shown by the witness when he was examined here. It is alleged that the postal certificate was not an authentic piece of evidence. The plea of the respondent had been that the guarantee was never invoked within the specified period. Mr. Rajiv Bhargava, Manager of the complainant when examined here on oath told that he was not m a position to contradict if the respondent Bank wrote a letter dated 9.4.90 that the Bank guarantee had expired and the relevant papers be returned to the Bank. The plea of the respondent Bank that after the expiry of the Bank guarantee the complainant fabricated the letter dated 15.3.90 as if it was invoked prior to its expiry. This communication does not find any mention in the letters written by the complainant on 24.4.90 and 26.4.90. It has further been seen that according to the affidavit of Mr. F. Kropivnik dated 10.4.96 no amount was due to the complainant and in fact a sum of Rs.3.91 lakhs was due from the complainant, M/s. S. A. Builders Ltd. (now SAB Industries Limited) which fact has not been rebutted by the complainant. There is force in the pleas taken by the respondent Bank that here the complainant cannot invoke the jurisdiction of this Commission under the Consumer Protection Act, 1986 because he is not a 'consumer'. As a consequence of the facts and circumstances given above all the four complaints mentioned above fail and are hereby dismissed. The parties are left to bear their own costs.