Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO (COMM) 129/2021
SPML INFRA LTD ..... Appellant
Through: Mr. Sayan Ray & Mr. Parag
Chaturvedi, Advocates.
versus
HITACHI INDIA (P) LTD. AND ANR ..... Respondents
Through: Mr. Prasouk Jain with Ms. Rabiya
Thakur, Advocates.
Mr. Ateev Mathur, Advocate for
Respondent No.2 ( SCB)
th
% Date of Decision: 27 August, 2021
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MR. JUSTICE NAVIN CHAWLA
J U D G M E N T
MANMOHAN, J: (Oral)
The hearing has been done by way of video conferencing.
CM APPL.28298/2021
Exemption allowed, subject to all just exceptions.
Accordingly, application stands disposed of.
FAO (COMM) 129/2021 & CM APPL. 28297/2021
rd
1. Present appeal has been filed challenging the order dated 23 July,
2021 passed by Learned District Judge, Commercial Court-02, South East
District, Saket District Courts (“Trial Court”) in OMP(I) (Comm) No.
192/2021 whereby the Trial Court has passed an ex parte ad-interim status
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:28.08.2021
22:49:41
FAO (COMM) 129/2021 Page 1 of 3
quo order as regards the encashment of Respondent’s No. 2 Bank
Guarantees for Rs.16,20,000/- in an application filed by Respondent No. 1
under Section 9 of the Arbitration and Conciliation Act, 1996.
2. Learned counsel for the appellant states that the Bank Guarantee was
invoked as the Respondent no.1 had not extended the said Bank Guarantee
st
up to 31 March, 2022.
3. Issue notice. Mr. Prasouk Jain, Advocate accepts notice on behalf of
Respondent no.1 and Mr. Ateev Mathur, Advocate accepts notice on behalf
of Respondent no.2.
4. Learned counsel for the respondents state that the Bank Guarantee in
st
question has been extended till 31 March, 2022. Let the original extended
Bank Guarantee be furnished to the learned counsel for the appellant within
a week.
5. In view of the aforesaid statement, this Court was inclined to dispose
of not only the appeal but also the Section 9 petition filed by the respondent
no.1. However, Mr. Jain, learned counsel for respondent no.1, states that he
would like to press for an injunction order before the trial court restraining
the appellant from encashing the Bank Guarantee in question during its
validity period. In support of his contention, he draws this Court’s attention
nd
to learned Single Judge’s order dated 22 July, 2021, passed in a similar
matter between the same parties.
6. Prima facie this Court is of the opinion that Bank Guarantees are not
furnished for being photo framed and kept in a drawing room. The learned
nd
Single Judge in the order dated 22 July, 2021, has advisedly used the
expression that ‘ the order has been passed in view of the consensus arrived
at between the parties ’. There is no judicial finding that a Bank Guarantee
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:28.08.2021
22:49:41
FAO (COMM) 129/2021 Page 2 of 3
cannot be encashed during its validity.
7. In our view, the Court cannot injunct encashment of a bank guarantee
during its validity if a cause of action arises in future. Bank guarantee has a
meaning and legal sanctity attached to it. The Supreme Court in U.P.
Cooperative Federation Ltd. vs. Singh Consultants and Engineers (P)
Ltd., (1988) 1 SCC 174, has held that bank guarantees must be honoured
free form interference by Courts, otherwise, trust in commerce internal and
international would be irreparably damaged. Recently, in Andhra Pradesh
Pollution Control Board vs. CCL Products (India) Limited, 2019 SCC
OnLine SC 985, the Supreme Court has held as under:
“23. The settled legal position which has emerged from the
precedents of this Court is that absent a case of fraud, irretrievable
injustice and special equities, the Court should not interfere iwth the
invocation or encashment of a bank guarantee so long as the
invocation was in terms of the bank guarantee.”
8. However, learned counsel for the respondent no.1 insists on arguing
the matter and showing some documents. Respondent no.1 is given an
opportunity to file whatever documents he wishes to rely upon within a
week.
th
9. List on 13 September, 2021.
10. The order be uploaded on the website forthwith. Copy of the order be
also forwarded to the learned counsel through e-mail.
MANMOHAN, J
NAVIN CHAWLA, J
AUGUST 27, 2021/AS
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:28.08.2021
22:49:41
FAO (COMM) 129/2021 Page 3 of 3