Full Judgment Text
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PETITIONER:
M/S. SARMON PTE LIMITED
Vs.
RESPONDENT:
M/S. UMESH KUMAR KAJARIA & ANR.
DATE OF JUDGMENT11/01/1995
BENCH:
VERMA, JAGDISH SARAN (J)
BENCH:
VERMA, JAGDISH SARAN (J)
BHARUCHA S.P. (J)
CITATION:
1995 SCC Supl. (1) 443 JT 1995 (2) 102
1995 SCALE (1)124
ACT:
HEADNOTE:
JUDGMENT:
ORDER
1. Leave granted.
2.The appellant filed a suit on the Original Side of the
High Court at Calcutta under the provisions of Order 37 of
the Code of Civil Procedure. The two respondents entered
appearance upon the summons for judgment taken out by the
appellant. On 2nd July, 1991, leave to defend the suit was
given to the respondents on condition that they deposited "a
sum of Rs. 30 lakhs with the Registrar, Original Side within
a month from date either by cash or by a bank guarantee or
any real properties within the jurisdiction of this Court to
the satisfaction of the Registrar. Original Side failing
which there will be a decree for a sum of Rs. 37,63,250.60
against the defendants which will carry interest at the rate
of 12 per cent per annum". The respondents having failed to
make a deposit as ordered, a decree was passed. The
respondents were ordered and decreed to pay to the appellant
the sum of Rs. 37,73,250.60 with interest thereon at the
rate of 12 per cent per annum from the date of decree till
realisation.
3.On 26th November, 1991, an order was passed by a Division
Bench of the High Court upon an appeal filed by the second
respondent against the order of conditional leave to defend.
Time to make the deposit was extended by 3 weeks after the
vacation, in default whereof the appellant was at liberty to
execute the decree. The respondents failed to make the de-
posit even within the said extended period and,
consequently, the appellant became entitled to execute the
decree.
4. A further order was passed in the aforesaid appeal on
19th February, 1992. The second respondent was directed to
furnish security in the sum of Rs. 15 lakhs by way of bank
guarantee or cash to the satisfaction of the Registrar,
Original Side, within two weeks, during which period an
unconditional stay of the decree was ordered. If security
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as aforestated was furnished, the stay was to continue till
further orders. The bank guarantee was required to be,
initially, for the period of one year, renewable from year
to year atleast three weeks before the date of expiry. In
default of renewal, the bank was required to pay the amount
covered thereby to the appellant. On 16th March, 1992, a
bank guarantee in the aforementioned terms was furnished.
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5. On 19th March, 1992, a Division Bench of the High Court
passed an order in the appeal filed by the first respondent
on the order granting conditional leave to defend. The
order stated: "In view of the security furnished in term of
the earlier order passed in the appeal preferred by the
appellant company M/s. Merchants & Traders (P) Ltd, (the
second respondent) no further security need be furnished by
Umesh Kumar Kajaria (the first respondent) in terms of the
order under appeal".
6. On 26th April, 1993, upon a special leave petition
filed by the appellant .against the order passed on 19th
February, 1992 in the appeal filed in the High Court by the
first respondent, this Court ordered:
"The order which commends to us is to convert
the order of the High Court of tile
respondents furnishing Bank Guarantee to the
tune of Rs. 15 lacs (Rs. fifteen lacs only) to
deposit in cash the said sum of Rs. 15 lacs in
court to await disposal by the High Court.
The High Court on its part is requested not to
retain the said sum of Rs. 15 lacs unduly and
consider the feasibility of passing it over to
the plaintiff-appellant. The High Court is
also requested to dispose of the appeal of the
respondents expeditiously.
Let the said sum of Rs. 15 lacks be deposited
by the respondent in the High Court within two
weeks and in order thereon to the above effect
be passed within the following two weeks. The
appeal is allowed accordingly. Costs to abide
by the event.
7. On 29th June, 1992, orders were passed upon
applications for stay in, broadly, common terms in the
appeals filed in the High Court by the first and the second
respondents against the order granting conditional leave to
defend. The orders stated that, in view of the fact that
the first respondent had furnished a bank guarantee in the
sum of Rs. 15 lakhs pursuant to the order dated 19th
February, 1992, no further order was required except that
the pendency of the appeals would not affect the hearing of
the suit, and directions in regard to pleadings and
discovery were given. Against the order dated 29th June,
1992, passed in the appeal filed by the first respondent as
aforesaid, the present special leave petition was preferred.
8.’It is relevant to mention now what has transpired after
the special leave petition was filed. The bank guarantee
which was valid upto 15th March, 1993, and which was to be
renewed from year to year, was not renewed by the second re-
spondent and lapsed. On 28th July, 1993, the bank that had
issued the bank guarantee, ANZ Grindlays Bank, was directed
by the High Court to deposit the amount of the bank
guarantee with its Registrar. Upon being informed of the
order on 29th July, 1993, the bank deposited the amount with
the Registrar on 10th September, 1993.
9.On 15th March, 1994, on this Special Leave Petition, it
was ordered that the amount deposited with the Registrar by
the bank be paid over to the appellant upon the appellant
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furnishing security to the satisfaction of the High Court
for refund thereof if the final outcome of the matter so
required. Further, the bank was issued notice and required
to state on affidavit the circumstances in which the amount
of the bank guarantee was paid and whether the bank
guarantee was subsisting at the time of payment.
10. The bank has filed an affidavit ex-
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plaining the circumstances of the payment; it has stated
that, notwithstanding the expiry of the one year period
mentioned in the bank guarantee on 15th March, 1993, the
bank guarantee was valid on the date of payment "because the
usual limitation period was available to the beneficiary
for enforcing the payment of the guaranteed amount within
such period". We accept the explanation given by the bank;
no further action as against the bank is required.
11. Insofar as this appeal is concerned, it will be seen
that each of the two respondents tiled separate appeals in
the High Court against the order giving them conditional
leave to defend. No appeal against the decree made as
aforesaid has been filed by either respondent.
12. In the appeal filed by the second respondent the order
of the Division Bench of the High Court was modified by this
Court on 26th April, 1993. The second respondent was
directed to deposit the sum of Rs. 15 lakhs in the High
Court instead of furnishing, a bank guarantee in that
amount. The failure of the second respondent to deposit the
sum of Rs. 15 lakhs in the High Court as ordered by this
Court and its failure to renew the bank guarantee as
required by the High Court has led to the deposit by the
bank of the amount of the bank guarantee, namely, Rs. 15
lakhs, in the High Court. The required deposit of Rs. 15
lakhs in court on behalf of the second respondent,
therefore, is satisfied, though not in the manner contem-
plated either by this Court or by the High Court.
13. The liability of the respondents to the appellant as
claimed in the suit is joint and several. It is, therefore,
appropriate that the deposit of Rs. 15 lakhs as aforesaid be
treated as having been made on behalf of both respondents as
a condition of stay of the execution of the decree, pending
the disposal of the appeals in the High Court. It is now
not necessary for this Court to make any further order. It
is for the Division Bench of the High Court to consider,
upon the appeals, which shall be heard together, whether,
having regard to the decree against which no appeal is
filed, the merits of the case and the conduct of the
respondents as hereinabove set out, leave, to defend the
suit should now be given and on terms other than those im-
posed by the learned Single Judge on the. summons for
judgment.
14. The appeal is disposed of accordingly. There shall be
no order as to costs.
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