SYNDICATE BANK Vs. GROZ-BECKERT SABOO LTD

JUDGEMENT

(1.) M/s. Groz-Beckert Saboo Limited placed an order on 21.2.90 for installation of Diesel Generating Set which was to be provided by M/s. Sudhir Engineering Company, New Delhi at a price of Rs.9,80,250/-. Subsequently its price was increased to Rs.11,61,208.50/-. M/s. Sudhir Engineering Company, New Delhi, furnished a Bank guarantee dated 13.11.90 in the sum of Rs.50,000/-for satisfactory erection and commissioning of the Diesel Generating Set. The civil work in accordance with the foundation, drawing etc. was to be provided by M/s. Sudhir Engineering Company, New Delhi. The work of installation and commissioning could not be completed by 11.12.90, the stipulated date. The complainant demanded Rs.50,000/- which was the guarantee money. On failure of M/s. Sudhir Engineering Company, New Delhi and the Syndicate Bank, a complaint was instituted. On 24.3.95 it was ordered by the Consumer Disputes Redressal Forum, Union Territory, Chandigarh that Syndicate Bank, Asaf Ali Road, New Delhi, was liable to pay Rs.50,000/- together with interest @ 18% p. a. Aggrieved against it the present appeal has been preferred by Syndicate Bank.

(2.) At the outset it shall be useful to refer to an important clause of the Bank guarantee (Annexure P3) and it is reproduced as under : "we, Syndicate Bank, Asaf Ali Road, New Delhi at the request of M/s. Sudhir Engineering Company, do hereby irrevocably hold ourselves firmly bound to pay to M/s. Groz Beckert Saboo Ltd. , Chandigarh an amount of Rs.50,000/- (Rs. fifty thousand only) for satisfactory commissioning, which clearly means that M/s. Sudhir Engineering Company, shall commission the equipment within One month, subject to completion of all the civil works including cabling, earthing, exhaust piping and all other necessary jobs done, which is necessary for completion of commissioning and such civil work done by M/s. Groz Beckert Saboo Ltd. , Chandigarh to be carried before commissioning shall be certified by M/s. Kirloskar Cummins Limited/manufacturer. "

(3.) A perusal of the aforesaid condition shows that it was essential that M/s. Kirloskar Cummins Limited certified that completion and commissioning of the civil work done by M/s. Groz Beckert Saboo Ltd. , Chandigarh was satisfactory. There was no such certificate. On behalf of the appellant it has been stressed that the Bank guarantee dated 13.11.90 (Annexure P 3) was a kind of agreement between the complainant and the appellant-Bank. The complainant had knowingly undertaken the condition that completion of the civil work was to be certified by a particular specialist known as M/s. Kirloskar Cummins Ltd. If the complainant failed to secure the completion certificate as agreed to, there was no breach on the part of the appellant and it could not be held liable to pay the sum of Rs.50,000/-. The learned Counsel for the appellant has drawn our attention to Gangapur Sahakari Sakhar Karkhana Ltd. V/s. Prabhakar Engineers (P) Ltd.,1993 1 BC 323 wherein it was noticed that the respondent completed its part of the contract and the obligation under the contract came to an end. Here the main dispute was between M/s. Sudhir Engineering Company, New Delhi and the complainant. It shall be useful to refer to an important part of the letter dated 6.3.91 from M/s. Kirloskar Cummins Ltd. , ad dressed to M/s. Groz Beckert Saboo (Annexure P9) and it is reproduced as under : "it has already been informed to you in our earlier letter dated February 19, 1991 that we have no authority to certify the civil work carried out by some one by referring to particular design/drawing. We are sure that Sudhir Engineering and all their customers understand that the items which are not supplied by Kirloskar Cummins cannot be certified in any way by us. We have also taken up this matter seriously with Sudhir Engineering and have requested them to give necessary clarification to you. " A perusal of this part of the letter shows that no cause of action arose against the appellant in the circumstances of the case. The terms and conditions of a Bank guarantee cannot be interpreted widely. After considering the facts and circumstances discussed above, we accept the appeal and set-aside the impugned order of the District Forum, Union Territory, Chandigarh. The parties are left to bear their own costs. Announced. The order be communicated to the parties free of charges.