Judgment:
P.K. Tripathy, J.
1. Plaintiff in Title Suit No. 78 of 2001 of the Court of Civil Judge (Sr. Division), Khurda, has preferred this revision challenging to the impugned judgment passed on 3.12.2002 by the Addl. District Judge, Khurda.
2. Plaintiff filed the suit praying for a permanent injunction against the defendants not to encash the bank guarantee furnished by him in favour of defendant Nos. 1 and 2 on various grounds including the ground of fraud and non-payment of the arrear dues plaintiff also filed an application under Order 39, Rules 1 & 2, C.P.C. which was registered as M.J.C. No. 78 of 2001. Plaintiff prayed for a temporary injunction. The defendants contested the Misc. Case, inter alia, on the ground of absence of any fraud and executability of the contract to encash the bank guarantee and they also raised lack of jurisdiction of the Civil Court at Khurda to decide the claim in view of the stipulation in the contract by conferring jurisdiction in the Courts at Bombay. Keeping in view the facts and circumstances, a further narration of the details of the fact is not necessary.
3. On consideration of the aforesaid contention, the Civil Judge granted temporary injunction, and on the self-same fact and circumstance learned Addl. District Judge vacated that order of temporary injunction. Both the Courts below have referred to several decisions of this Court and the Apex Court in the Context of grant or refusal of injunction for encashing a bank guarantee. This Court finds that the Courts below did not properly comprehend the ratio propounded by the Apex Court and mechanically and aimlessly followed the same either for granting or vacating the order of temporary injunction.
4. In the case of Hindustan Construction Company Ltd. v. State of Bihar and Ors., (1999) 8 Supreme Court Cases 436, the Apex Court, taking a stock of several previous decisions of that Court, sufficiently put the principle as to in what type of cases injunction can be granted and when injunction should be refused. In that respect, the Apex Court has said that :
'A bank guarantee is the common mode of securing payment of money in commercial dealings as the beneficiary, under the guarantee, is entitled to realise the whole of the amount under that guarantee in terms thereof irrespective of any pending dispute between the person on whose behalf the guarantee was given and the beneficiary. In contracts awarded to private individuals by the Government, which involve huge expenditure, as, for example, construction contracts, bank guarantees are usually required to be furnished in favour of the Government to secure payments made to the contractor as 'advance' from time to time during the course of the contract as also to secure performance of the work entrusted under the contract. Such guarantees are encashable in terms thereof on the lapse of the contractor either in the performance of the work or in paying back to the Government 'advance' the guarantee is invoked and the amount is recovered from the bank. An unconditional bank guarantee was given. It is for this reason that the courts are reluctant in granting an injunction against the invocation of bank guarantee, except in the case of fraud, which should be an established fraud, or where irretrievable injury was likely to be caused to the guarantor.
What is important, therefore, is that the bank guarantee should be in unequivocal terms, unconditional and recite that the amount would paid without demur or objection and irrespective of any dispute that might have cropped up or might have been pending between the beneficiary under the bank guarantee or the person on whose behalf the guarantee was furnished. The terms of the bank guarantee are, therefore, extremely material. Since the bank guarantee represents an independent contract between the bank and the beneficiary, both the parties would be bound by the terms thereof. The invocation, therefore, will have to be in accordance with the terms of the bank guarantee, or else, the invocation itself would be bad.'
(quoted from the placitum)
On reading the impugned orders of the Courts below, this Court does not find that they have referred to the terms and conditions of the Bank guarantee so as to find out whether that was conditional or unconditional. Even before this Court the parties have not produced a copy of the bank guarantee, from which this Court could have gathered about the terms and conditions regarding whether it is conditional or unconditional. The parties have filed a copy of the terms of contract proposed by the defendants and accepted by the plaintiff relating to the execution of the work and furnishing of the bank guarantee. Under such circumstance, this Court finds that the Courts below have decided the issue relating to grant and refusal of injunction respectively without properly understanding the facts, the terms and conditions in the bank guarantee and whether that was conditional one or unconditional. Because of that circumstance, while setting aside the orders of the Courts below, this Court directs learned Civil Judge (Jr. Division) to hear the parties afresh and to decide the case, as far as practicable, within a period of one month from the date of receipt of a copy of this order. Plaintiff shall produce a copy of the bank guarantee for perusal of the Court below. Under such circumstance, the interim order of injunction granted by this Court shall continue for a period of one month.
It is made clear that, this Court has expressed no opinion on the merit of the case and the aforesaid order of grant of interim injunction may not be construed in any manner and the Court below shall feel free to hear and dispose of the application for temporary injunction in accordance with law but expeditiously.
The Civil revision accordingly stands disposed of.