Milkfood Limited Vs. Union Bank of India - Court Judgment

Excerpt:
- - 5.12.1989. valid up to 11.6.1989 4. it is claimed that there was a default on the part of dany dairy consequent to which a demand notice was sent on 21.03.1990 for the encashment of the bank guarantees but the defendant failed to make payment. 615 was sought to be encased by the plaintiff vide the letter dated 06.12.1989 wherein it had been stated that failure by dany dairy to meet its commitment left the plaintiff with no option but to present the bank guarantee. 14. it is further claimed that the plaintiff would be entitled to invoke bank guarantee no 615 only upon the failure of dany dairy to meet its contractual obligations and such non performance would be conclusive after the plaintiff has demanded the amount of the bank guarantee from dany dairy. it is averred that the letter invoking the said bank guarantee does not indicate any conclusive proof of failure of dany dairy to meet its obligations and the invocation was thus improper. 22. it was further submitted that all the three bank guarantees were invoked by the plaintiff at delhi and the defendant was obliged to make payment of the same at delhi and in view of the failure of the defendant to make payment, the breach took place at delhi. 23. it was submitted by the plaintiff that the defendant admittedly has its zonal office as well as various branches at delhi. air2003sc511 in which it was observed that it is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision. it was contended by the plaintiff that acknowledgment in the balance sheet extends the limitation under section 18 of the limitation act and the failure of the defendant to produce the balance sheet along with documents entitles the court to draw an adverse inference against them under section 114(g) of the indian evidence act, 1872 (for short, the 'evidence act'). in this behalf learned counsel referred to the judgment of the supreme court in gopal krishna ketkar v. withholding best evidence which can throw light on the issues in controversy was observed not to be sound practice. 50. learned counsel for the defendant in this context contended that the plaintiff could not seek adverse presumption as the plaintiff had failed to inspect or seek certified copies of the balance sheets, had failed to requisition the balance sheet and had called for its production much after the statutory period of mandatory custody. from 18.03.1993 to 23.04.1996 has to be excluded and if such period is excluded, the filing of the suit is perfectly within the period of limitation. explanation -for the purposes of this section, (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or night; learned counsel for the defendant submitted that the court is to examine whether invocation by the plaintiff was mala fide, bad or ill intended as the bank guarantees were re compensatory and not encashable. sum cheong piling pte ltd [2002] blr 459 wherein it was observed that a demand under the performance guarantee can only be made where the seller has failed or refused to fulfilll his obligations under the contract and the sellers demand or refusal as a condition precedent to the buyer making a demand. the argument of the respondent that the call was made in bad faith was accepted by the court. debts recovery appellate tribunal air1998sc634 ,a case involving recovery, it was observed that it is well settled that the question whether the goods were supplied by the appellant or not is not for the bank. singh consultants & engineers [1988]1scr1124 that the bank must pay if the documents are in order in the terms of the credit are satisfied. 614 and 626, it is stated that the defendant undertakes to pay the amount due and payable without any demur merely on a demand by the buyer stating that the amount claimed is due by way of loss or damage caused or would be caused to or suffered by the buyer by reasons of any breach of the terms and conditions in the purchase order or failure to perform the purchase order by the supplier. 2. we, union bank of india, do hereby undertake to pay the amounts due and payable under this guarantee without any demur merely on a demand from the buyer stating that the amount claimed is due by way of loss or damage caused to or would be caused to or suffered by the buyer by reasons of any breach by the said supplier of any of the terms and conditions in the purchase order or by reasons of the supplier's failure to perform the said purchase order, any such demand made on the bank shall be conclusive as regards the amount due and payable by the bank under this guarantee shall be restricted to an amount not exceeding rs 50,00,000/- (rupees fifty lacs only)..72. thus, as per the terms of the said bank guarantees, what was required for payment was a demand by the buyer/plaintiff stating that the amount claimed is by way of loss caused or loss which would be likely to be caused as a reason of breach of conditions of the purchase order or failure to perform the purchase order in case, the supplier fails to perform or fulfill the purchase order as per the terms and conditions agreed upon the buyer is entitled to demand an amount equal to 15% of the order value from the supplier and the demand made by the buyer by itself will be conclusive evidence and proof that the supplier has failed to perform or fulfill his obligations, neither the supplier nor the bank will be entitled to raise any dispute regarding the reasons for the failure of the performance of fulfillment, on any ground. we, union bank of india, do hereby undertake to pay an amount equal to 15% of the order value, being the amount due and payable under this guarantee without any demur, merely on a demand from the buyer stating that the amount claimed is due by way of non performance of the contractual obligations as aforesaid by the supplier or by reason of the supplier's failure to perform the said contractual commitments/purchase order, any such demand made on the bank shall be conclusive as regards the amount due and payable by the bank under this guarantee. 74. the terms of the said bank guarantee also provide that in case of failure by the supplier to perform the purchase order, the buyer is entitled to an amount of 15 per cent of the order value and the demand made by the buyer itself will be conclusive evidence and proof that the supplier has failed to perform or fulfilll his obligations and neither the supplier nor the bank will be entitled to raise any disputes regarding the reasons for the failure. the demand made by the buyer from the supplier would be conclusive proof of the failure of the supplier to perform the conditions of the contract but the same has not been made a precondition for payment by the defendant. 76. the aforesaid shows that the plaintiff had sent demand notices stating that dany dairy had failed to perform its obligations under the purchase order and committed breach of the terms of the purchase order.sanjay kishan kaul, j.1. the plaintiff, a company incorporated under the companies act, 1956, filed the present suit under order xxxvii of the code of civil procedure, 1908 (hereinafter referred to as the 'said code') for the recovery of rs. 85,60,000.00 along with interest @ 20 per cent per annum. 2. it is stated that one dany dairy and food engineers ltd. (for short, 'dany dairy'), which used to deal, inter alia, in the manufacture and sale of dairy equipments submitted proposals and offers for the supply, erection and commissioning of evaporating plant pursuant to which a meeting took place at the head office of the plaintiff and a formal purchase order was issued on 25.05.1998 to the local office and registered office of dany dairy.3. the terms and conditions included the furnishing of a bank guarantee and the defendant bank furnished three guarantees to the plaintiff, the details of which are as under:s.no. bank guarantee amount date of issue valid up to number1 614(ex. p-3) rs.50.00 lakh (reduced to 9.6.1988, 8.12.1988, extended on 10.12.1988, rs.25.00 lakh) 13.6.1988 27.5.1989, 5.12.1989 up to 8.6.19902 615 16.5 lakh 9.6.1988 extended on 27.5.1989 & 5.12.1989. (ex. d-5) 8.6.1989, valid up to 8.6.19903 626 12.00 lakh 12.9.1988 extended on 13.4.1989, (ex. p-5) valid up to 11.6.1989 11.3.1989, extended on 13.4.1989, 27.5.1989 & 5.12.1989. valid up to 11.6.19894. it is claimed that there was a default on the part of dany dairy consequent to which a demand notice was sent on 21.03.1990 for the encashment of the bank guarantees but the defendant failed to make payment. 5. a suit is stated to have been filed in the court of the 1st additional civil judge saharanpur in which the defendant was also imp leaded. in the said suit, an injunction is stated to have been granted on 17.01.1991 restraining the defendant from making payments which was vacated on 13.02.1992. thereafter, a telex is stated to have been sent on 04.06.1992 indicating approaches made to the head office, zonal office and other offices to which no reply was received. thus, the present suit. 6. it is claimed that the defendant works for gain at delhi, the letters of guarantee were addressed to the plaintiff's delhi office and the sum guaranteed was payable at delhi and thus, this court has the jurisdiction in the present matter. 7. the defendant filed an application being i.a. 8213/1993 for leave to defend, which was allowed vide order dated 07.07.1993 and the defendant was granted unconditional leave to defend. 8. the defendant in the written statement has taken the stand that the present suit is liable to be stayed in view of the provisions of section 10 of the said code. it is stated that a suit has been filed by dany dairy in the court of civil judge, saharanpur against the plaintiff and the defendant, inter alias for the grant of a decree of rs. 66,901.00 against the plaintiff and permanent injunction restraining the plaintiff from realizing the amounts towards bank guarantees which is being contested by the plaintiff. in that suit it is the case of dany dairy that the terms and conditions of the agreement had been fulfilled and on reconciliation of accounts between dany dairy and the plaintiff, a balance of rs. 66,901.00 was found to be due to dany dairy from the plaintiff. it is averred that the question whether there was any breach on the part of dany dairy in the performance of the contract is a question pending adjudication in that suit, which was instituted prior to the present suit. it is thus claimed that the present suit is liable to be stayed pending adjudication of the saharanpur suit.9. another plea taken in the written statement is of lack of territorial jurisdiction of this court to try the present suit as the applications for the issue of the bank guarantees were received by the defendant at its branch in saharanpur and the said bank guarantees were also issued and were payable at saharanpur. besides, all communications were also received in saharanpur. 10. it is claimed that the suit is barred by limitation. it is stated that the bank guarantee no. 615 was sought to be encased by the plaintiff vide the letter dated 06.12.1989 wherein it had been stated that failure by dany dairy to meet its commitment left the plaintiff with no option but to present the bank guarantee. the other bank guarantees being no. 614 and 626 were invoked on 21.03.1990. it is thus averred that as the present suit has been filed only on 22.05.1993, it is barred by time. 11. it is averred that dany dairy is a necessary and proper party in the present suit and the present suit cannot be adjudicated without the impleadment of dany dairy. the defendant has also taken the plea that a bank guarantee cannot be permitted to be used as a means for unjust enrichment and can be interdicted on a prima facie demonstration of fraud on the part of the beneficiary. 12. it is also alleged that the plaint has not been verified and filed by a duly authorized person. 13. insofar as the merits of the case are concerned, the stand of the defendant is that the plaintiff is not entitled to any monies. it is claimed that the amounts advanced by the plaintiff to dany dairy covered by bank guarantee nos 614 and 615 were to be proportionately refunded by dany dairy to the plaintiff. it is averred that against the said two guarantees, the plaintiff made a cash advance and had adjusted in their books of accounts the cash advance and the bank commission charges. it is averred that in a statement provided by the plaintiff it has been declared that as against the purchase order dated 25.05.1988 a nil balance was found due from dany dairy. and thus no cause arose for the invocation of the bank guarantees. 14. it is further claimed that the plaintiff would be entitled to invoke bank guarantee no 615 only upon the failure of dany dairy to meet its contractual obligations and such non performance would be conclusive after the plaintiff has demanded the amount of the bank guarantee from dany dairy. it is averred that the letter invoking the said bank guarantee does not indicate any conclusive proof of failure of dany dairy to meet its obligations and the invocation was thus improper. as regards bank guarantee no 626, again it is averred that the demand of invocation was not made in accordance with the terms and conditions of the said bank guarantee and thus the defendant rightly refused to accept the same. it is also pleaded that the entire equipment required to be delivered as per the contract dated 25.05.1988 was admittedly delivered and the non performance relates to a contract dated 19.10.1988 which is not the subject matter of the bank guarantee nos 614 and 615 and thus the plaintiff cannot claim to be entitled to any amount under the said bank guarantees. the defendant has also alleged a possibility of collusion between the plaintiff and dany dairy. 15. on 27.03.1997, issues were framed in the suit which are as under:1. is the present suit not maintainable for the reasons disclosed in the preliminary objection no.1? opd2. is there no territorial jurisdiction of this court to try and entertain the suit for the reasons disclosed in the preliminary objection no.2? opd3. does the present suit suffer from misguide of cause of action and multifariousness as disclosed in preliminary objection no.3? opd4. is the suit barred by limitation qua bank guarantee no.614, 615 and 626 for the reasons disclosed in preliminary objection no.5 & 6? opd5. is the plaint not signed and verified by duly authorised persons? opp6. to what amount plaintiff is entitled to recover? opp7. to what amount is the plaintiff is entitled to interest; if so, at what rate? opp8. relief16. on behalf of the plaintiff, sh. pradip sachdeva appeared as pw1, sh. s.p. khurana as pw 2 and sh. harmesh mohan sood as pw 3. an affidavit was also filed of mr. sudhir avasthi (pw 4) but on 11.04.2005, the same was withdrawn. on behalf of the defendant mr. p.k maheswari was examined as dw 1 and mr. r.k. gupta was examined as dw 2.17. learned counsels for the parties were heard at length on various dates. issue 1: is the present suit not maintainable for the reasons disclosed in the preliminary objection no.1? opd18. the first issue pertains to the objection taken by the defendant under section 10 of the said code in view of the suit filed by dany dairy in saharanpur. insofar as the said suit is concerned, the same is stated to have been filed in late 1990 and an injunction was granted on 17.01.1991 which was thereafter vacated on 13.02.1992. on 29.07.1993 the said suit is stated to have been dismissed in default. it is also stated that dany dairy was ordered to be wound up by the allahabad high court in c.p. no. 4/1992 vide an order dated 18.03.1993 and an official liquidator was appointed.19. in view of the dismissal of the said suit, the objection is no longer pressed by the defendant. the issue thus does not survive for consideration.issue 2. is there no territorial jurisdiction of this court to try and entertain the suit for the reasons disclosed in the preliminary objection no.2? opd20. the case of the plaintiff as regards the issue of territorial jurisdiction is that all three bank guarantees were issued by the defendant in favor of the plaintiff at delhi and though the same were issued by the saharanpur branch of the defendant, they were addressed to the plaintiff at delhi and also were accepted by conduct, by the plaintiff at delhi. further, the extensions of the bank guarantees were also addressed to the plaintiff at delhi. 21. it was submitted that the contract between the plaintiff and dany dairy was executed at delhi. in this behalf a reference was made to the examination in chief of pw 2 wherein it has been stated that the contract was executed between the parties at the delhi office. 22. it was further submitted that all the three bank guarantees were invoked by the plaintiff at delhi and the defendant was obliged to make payment of the same at delhi and in view of the failure of the defendant to make payment, the breach took place at delhi. 23. it was submitted by the plaintiff that the defendant admittedly has its zonal office as well as various branches at delhi. it was thus contended that in view of the explanationn to section 20 of the said code whereunder a corporation is deemed to carry on business in respect of cause of action arising at any place where it has a subordinate office, this court has territorial jurisdiction in the present matter. in this behalf, learned senior counsel referred to the judgment of the apex court in m/s patel roadways limited, bombay v. m/s prasad trading company air 1992 sc 1516. wherein it was observed in the context of the explanationn to section 20 of the said code that the clear intendment of the explanationn is that where a corporation has a subordinate office in the place where the cause of action arises, it cannot be heard to say that it cannot be sued there because it does not carry on business at that place. it would be a great hardship if inspire of the corporation having a subordinate office at the place where the cause of action arises, such plaintiff is compelled to travel to the place where the corporation has its principal place of business. the explanationn provides an alternative locus for the corporation's place of business, not an additional one. the explanationn to section 20 of the said code is as under:20. other suits to be tried where defendants reside or cause of action arises [explanation].-a corporation shall be deemed to carry on business at its sole or principal office in [india] or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.24. learned counsel for the plaintiff submitted that though the bank guarantees do not expressly state the place of payment, by necessary implication the place would be delhi from where the plaintiff invoked the said guarantees. in support of his submission, learned counsel referred to the cross examination of dw 2 wherein it was stated that the bank guarantees were to be paid by the saharanpur branch but they could be paid at any place at the request of the plaintiff. it was thus averred that other than the execution of the bank guarantee document which took place at saharanpur, all other aspects of the cause of action including place of performance, place of breach and place of payment are at delhi. 25. learned counsel placed reliance on the judgment of learned single judge of this court in v.a. tech esheer wyss flovel ltd. v. nippon power ltd and ors. (2002) iii ad (del) 948 in support of the proposition that in matter of contracts part of the cause of action arises where the money is expressly or impliedly payable under the contract. 26. learned counsel for the plaintiff contended that even in the absence of a covenant in the agreement for the place of payment, courts have consistently applied the english common rule that the place of payment is where the plaintiff is stationed as the obligation to pay a debt involves the obligation of the debtor to find the creditor at the place he is when the money becomes payable. 27. in support of his submissions learned counsel placed reliance on a judgment of learned single judge of this court in boston scientific international b.v. v. metro hospital : 136(2007)dlt278 . in this case it was observed that even if it assumed that delhi was not the expressly contracted place of payment, delhi would still be the presumed place of payment because of the general rule that in the absence of a contract to the contrary, a debtor is bound to find the creditor for making the payment. the place of payment is where the creditor resides. reference was also made to the judgment of a division bench of the calcutta high court in state of punjab v. a.k. raha (engineers) ltd. : air1964cal418 ; judgment of learned single judge in gappulal s/o chandarlal v. kanderwal brothers air 1955 m.b. 96 and of learned single judge of this court in l.n. gupta v. smt. tara mani air 1984 del 49 wherein the rule that the debtor must find the creditor and pay the debt where the creditor resides was held applicable in india. 28. learned counsel for the plaintiff also sought to contend that the rule of forum convenience guides the court in deciding objections relating to territorial jurisdiction. in lohia starlinger limited and anr v. govt of nct of delhi and ors. (2006) v ad (del) 732, learned single judge of this court observed that so far as civil litigation is concerned, it has been held that the same can be instituted in any court where even a part of the cause of action has arisen. however, it has been held by the apex court that it is not every fact pleaded by a litigant which gives rise to a cause of action and only such facts as are necessary to adjudicate upon the lis would constitute a cause of action conferring territorial jurisdiction. even if it was found that a part of the cause of action has arisen within the jurisdiction of the court, on the principles of forum non convenience, or otherwise, it may refuse to exercise jurisdiction in the matter. 29. learned counsel for the defendant, on the other hand, submitted that the request for issuance of the bank guarantees was received by the defendant from dany dairy at saharanpur and the said bank guarantees were issued from the saharanpur branch. the bank guarantees were evocable in accordance with the tenor of the respective instruments at the saharanpur branch and the payments, if warranted under law were also to be made at the saharanpur branch. further it was submitted that the notice invoking the guarantees was also received at the saharanpur branch and did not stipulate payments at delhi. 30. it was contended the bank guarantees, being 'credits' within the meaning of the uniform customs and practices of documentary credits (for short, ucp), each branch of the bank is considered to be a separate bank for the said purposes. learned counsel for the defendant made a reference to the ucp. article 2 of the ucp pertains to the meaning of credits and provides inter alia, that 'for the purposes of these articles, branches of a bank in different countries are considered another bank'.31. learned counsel for the defendant referred to the cross examination of dw 2 wherein dw 2 admitted that the defendant has a zonal office at delhi but stated that the zonal office has control over branches of regional office delhi, chandigarh, jalandar and jaipur. it was thus contended that the saharanpur branch is not under the administrative control of the delhi zonal office. dw 2 in his affidavit of evidence has stated that the defendant bank's regional office at meerut had administrative control over the saharanpur branch.32. learned counsel further referred to the cross examination of dw 2 wherein the stand taken is that the bank guarantees were to be paid only by the saharanpur branch of the defendant but could be paid at any place on the request of the plaintiff. the said witness has also taken the stand that he was unaware of the place from where the plaintiff had sent the letters invoking the bank guarantees but they were to be invoked at saharanpur. when asked whether the guarantees mention any place where the guarantees were to be invoked, dw 2 referred to bank guarantee no. 614 the second paragraph of which mentions 'we, union bank of india do hereby undertake to pay the amount due and payable under this guarantee' and stated that 'we' means the issuing branch is defendant which is the saharanpur branch. 33. learned counsel referred to the judgment of learned single judge of this court in association of corporation and apex societies of handlooms v. state of bihar and anr. : air2000delhi106 , which involved a bank guarantee. in this case, the bank guarantee was executed at patna, the main contract was entered into at patna and the performance was to be enforced at patna. it was held that this court did not have the necessary jurisdiction to entertain the suit. learned counsel for the plaintiff sought to distinguish the judgment in association of corporation and apex societies of handlooms case (supra) by submitting that the facts of the case are different and in that case, there was a specific term in the bank guarantee that the court at patna shall have jurisdiction. in the judgment of the supreme court in south east asia shipping co. ltd v. nav bharat enterprises pvt. ltd (1996) 3 scc 442, which was referred to in that judgment, it was observed that merely because the bank guarantee was executed at delhi and transmitted for performance to bombay does not constitute a cause of action to give rise to the respondent to lay the suit on the original side of the delhi high court. it was thus contended that there must be a cause of action other than the execution of the bank guarantee for the court to entertain the suit.34. a perusal of the aforesaid as also the bank guarantees shows that while all three bank guarantees were issued by the saharapur branch of the defendant, the said bank guarantees did not specify any place of payment. in his cross examination, dw 2 has also affirmed that though the said bank guarantees are payable only by the saharanpur branch of the defendant, the same could be paid at any place. thus, delhi is certainly one of the places where the bank guarantees were payable.35. further the letter dated 9.06.1988 (ex. p-6) which is the covering letter sent with bank guarantee no. 614; letter dated 13.06.1988 (ex. p-4) for the amendment of bank guarantee no 614,letter dated 09.06.1988 with regard to issue of bank guarantee no 615 (ex. d-3), letter dated 12.09.1988 (ex. p-11) with regard to the issue of bank guarantee no. 626 as also letters for the extension of the bank guarantees (ex. p-7, ex. p-9, ex. p-10, ex. p-13, ex.p-14 ) etc are addressed to the plaintiff at delhi. the letters of the plaintiff invoking bank guarantee no 615 (ex. d- 1) has been written by the plaintiff from delhi. 36. it is not disputed that the defendant has a zonal office at delhi. this has been admitted by dw 2 in his cross examination though the stand taken is that the saharanpur branch of the defendant which was to make the payment was not under the administrative control of the zonal office at delhi. 37. the legal position as set out in m/s patel roadways limited bombay case (supra) is that in view of the explanationn to section 20 of the said code, where a corporation has a subordinate office at a place where the cause of action arises, it can be sued at that place. 38. the judgment in v.a. tech esheer wyss flovel ltd case (supra) is to the effect that a part of the cause of action arises at the place where under the contract, the money is expressly or impliedly payable. the bank guarantees did not specify any place as the place of payment and were in fact payable at any place at the request of the plaintiff. the plaintiff invoked the said guarantees at delhi.39. as regards the plea of the plaintiff that the debtor is bound to find the creditor for making the payment, there is no dispute in the legal principle recognized in the judgments in boston scientific international b.v., state of punjab and l.n. gupta cases (supra). the amount would be payable where the creditor resides. in view of the principle that the debtor must pay the creditor where the creditor resides, delhi which is the place at which the creditor/plaintiff 'resided' and from where the plaintiff wrote the letters invoking the bank guarantees would be the place at which the same were payable.40. insofar as the contention of the defendant that as per the ucp branches of a bank are considered to be a separate bank for the purposes of credits is concerned, a perusal of the relevant portion of article 2 shows that the same pertains to branches of a bank in different countries. 41. as regards the principle of forum convenience, the position is that the plaintiff's choice of forum is usually not disturbed unless the balance of convenience is strongly in favor of the defendant. in determining whether a more appropriate forum exists, connecting factors, such as those effecting the convenience of parties, expenses involved and the law governing the relevant transactions are to be looked into. the mere fact that a part of the cause of action has arisen within the jurisdiction of the court may itself not be considered to be a determinative factor compelling the court to decide the matter on merits. in determining which of the available forums is the forum convenienc in a given matter, the convenience of all the parties had to be seen. in this behalf, reference may be made to the recent judgment of this court in (india tv) independent news service pvt. limited v. india broadcast live llc and ors. (i.a nos. 651/2007, 1336/2007 & 2611/2007) decided on 10.07.2007.in the present case, both the plaintiff and the defendant have branches/offices at delhi. the bank guarantees were payable at any place including delhi. thus, delhi cannot be said to be a forum non convenience in the present matter.42. there is also no dispute that all three bank guarantees were issued by the saharanpur branch of the defendant and were payable by the said branch. the covering letters with the bank guarantees as also the letters of extension of the bank guarantees were addressed to the plaintiff at delhi. the said bank guarantees could be paid at any place including in delhi. the bank guarantees did not specify any place for payment or invocation of the same. the letters invoking the bank guarantees were written by the plaintiff from delhi. the defendant does have branches and a zonal office at delhi. it thus cannot be said that a suit cannot be filed against the defendant at delhi. in view of the aforesaid, delhi courts will have jurisdiction in the present matter. the issue is thus decided accordingly.issue 3 does the present suit suffer from misguide of cause of action and multifariousness as disclosed in preliminary objection no.3? opd43. the issue was not pressed by learned counsel for the defendant.4. is the suit barred by limitation qua bank guarantee no.614, 615 and 626 for the reasons disclosed in preliminary objection no.5 & 6? opd44. the case of the defendant in this behalf is that under article 55 and article 113 of the limitation act, 1963 (hereinafter referred to as the 'limitation act'), the cause of action arises when the contract is breached or when the right to sue arose. the right to payment was asserted by the plaintiff by the notice dated 21.03.1990 and non payment of the same triggered the right to sue as the contract stood breached. syndicate bank v. channaverappa : air2006sc1874 was a case in which the guarantee deeds specifically stated that the guarantors agree to pay and satisfy the bank on demand and in a case where the guarantee is payable on demand, the limitation begins to run when the demand is made and the guarantor commits breach by not complying with the demand. the court considered the meaning of the words on demand and observed that if while making the demand for payment no period is specified within which the payment should be made, the breach occurs or the right to sue accrues when the demand is served on the guarantor. the relevant observations are as under:12. we will examine the meaning of the words 'on demand'. as noticed above, the high court was of the view that the words 'on demand' in law have a special meaning and when an agreement states that an amount is payable on demand, it implies that it is always payable, that is payable forthwith and a demand is not a condition precedent for the amount to become payable. the meaning attached to the expression 'on demand' as 'always payable' or 'payable forthwith without demand' is not one of universal application. the said meaning applies only in certain circumstances. the said meaning is normally applied to promissory notes or bills of exchange payable on demand. we may refer to articles 21 and 22 in this behalf. article 21 provides that for money lent under an agreement that it shall be payable on demand, the period of limitation (3 years) begins to run when the loan is made. on the other hand, the very same words 'payable on demand' have a different meaning in article 22 which provides that for money deposited under an agreement that it shall be payable on demand, the period of limitation (3 years) will begin to run when the demand is made. thus, the words 'payable on demand' have been given different meanings when applied with reference to 'money lent' and 'money deposited'. in the context of article 21, the meaning and effect of those words is 'always payable' or payable from the moment when the loan is made, whereas in the context of article 22, the meaning is 'payable when actually a demand for payment is made'. 13. what then is the meaning of the said words used in the guarantee bonds in question? the guarantee bond states that the guarantors agree to pay and satisfy the bank 'on demand'. it specifically provides that the liability to pay interest would arise upon the guarantor only from the date of demand by the bank for payment. it also provides that the guarantee shall be a continuing guarantee for payment of the ultimate balance to become due to the bank by the borrower. the terms of guarantee, thus, make it clear that the liability to pay would arise on the guarantors only when a demand is made. article 55 provides that the time will begin to run when the contract is 'broken'. even if article 113 is to be applied, the time begins to run only when the right to sue accrues. in this case, the contract was broken and the right to sue accrued only when a demand for payment was made by the bank and it was refused by the guarantors. when a demand is made requiring payment within a stipulated period, say 15 days, the breach occurs or right to sue accrues, if payment is not made or is refused within 15 days. if while making the demand for payment, no period is stipulated within which the payment should be made, the breach occurs or right to sue accrues, when the demand is served on the guarantor. 14. we have to, however, enter a caveat here. when the demand is made by the creditor on the guarantor, under a guarantee which requires a demand, as a condition precedent for the liability of the guarantor, such demand should be for payment of a sum which is legally due and recoverable from the principal debtor. if the debt had already become time-barred against the principal debtor, the question of creditor demanding payment thereafter, for the first time, against the guarantor would not arise. when the demand is made against the guarantor, if the claim is a live claim (that is, a claim which is not barred) against the principal debtor, limitation in respect of the guarantor will run from the date of such demand and refusal/non-compliance. where guarantor becomes liable in pursuance of a demand validly made in time, the creditor can sue the guarantor within three years, even if the claim against the principal debtor gets subsequently time-barred. to clarify the above, the following illustration may be useful:let us say that a creditor makes some advances to a borrower between 10-4-1991 and 1-6-1991 and the repayment thereof is guaranteed by the guarantor undertaking to pay on demand by the creditor, under a continuing guarantee dated 1-4-1991. let us further say a demand is made by the creditor against the guarantor for payment on 1-3-1993. though the limitation against the principal debtor may expire on 1-6-1994, as the demand was made on 1-3-1993 when the claim was 'live' against the principal debtor, the limitation as against the guarantor would be 3 years from 1-3-1993. on the other hand, if the creditor does not make a demand at all against the guarantor till 1-6-1994 when the claims against the principal debtor get time-barred, any demand against the guarantor made thereafter say on 15-9-1994 would not be valid or enforceable. 45. insofar as the aforesaid judgment is concerned, learned counsel for the plaintiff contended that the same is not applicable as in that case, the question before the court was with regard to a letter of guarantee given by the borrower in which ultimate balance due to the bank was guaranteed. it was not a case of performance guarantee issued by a bank. it was contended that the ratio of case must be considered in the background of the facts of the case. in support of his submission, learned counsel placed made a reference to the judgment of the supreme court in bhavnagar university v. palitana sugar mills (p) ltd. : air2003sc511 in which it was observed that it is well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision.46. learned counsel for the plaintiff contended that the bank guarantees were invoked on 21.03.1990 and were valid up to june 1990. the limitation period would commence only from the date of refusal by the bank to honour the bank guarantee. it was pointed out that dw1 in his cross examination admitted that the bank did not reply to the demand for encashment of the bank guarantee. further, it was also admitted that the bank had never protested or objected for demand on encashment of bank guarantee until the filing of the written statement in the saharanpur court.47. it was also the case of the plaintiff that the defendant admits that the liability in respect of the bank guarantee had not been written off and the said liability continues to be reflected in their balance sheet from year to year till date. it was thus contended that the cause of action is continuous as inspire of the fact that the said liability continues to be reflected in the balance sheets and accounts of the defendant, the defendant has not discharged the same. 48. in this behalf, reference was again made to the cross examination of dw1 that the liability under the bank guarantee is not written off but continues to exist. further reference was made to the cross examination of dw 2 wherein dw 2 stated he could produce the balance sheets if asked. it was submitted that a direction was issued to him for the production of the balance sheets and schedule of liabilities of the bank but the same were not produced and on 05.12.2006, the stand taken by dw 2 was that the records were not available. it was contended by the plaintiff that acknowledgment in the balance sheet extends the limitation under section 18 of the limitation act and the failure of the defendant to produce the balance sheet along with documents entitles the court to draw an adverse inference against them under section 114(g) of the indian evidence act, 1872 (for short, the 'evidence act'). in this behalf learned counsel referred to the judgment of the supreme court in gopal krishna ketkar v. mohamed haji latif and ors. : [1968]3scr862 . it was observed in this case that even if the burden of proof does not lie on a party the court may draw an adverse inference if he withholds important documents in his possession which can throw light on an important issue. withholding best evidence which can throw light on the issues in controversy was observed not to be sound practice. 49. learned senior counsel for the plaintiff also made a reference to the provisions of section 63 of the evidence act to contend that as dw 1 had admitted that the liabilities as regards the bank guarantees had not been written off and the relevant balance sheets had not been produced, the same may be secondary evidence. the relevant provision is as under:63. secondary evidence - secondary evidence means and includes.5. oral accounts of the contents of a document given by some person who has himself seen it.50. learned counsel for the defendant in this context contended that the plaintiff could not seek adverse presumption as the plaintiff had failed to inspect or seek certified copies of the balance sheets, had failed to requisition the balance sheet and had called for its production much after the statutory period of mandatory custody. in this behalf, learned counsel relied on entry 5 of the schedule of the companies (preservation and disposal of records rules, 1966. the said entry provides the mandatory period for which 'copies of all annual returns prepared under sections 159 and 160 and copies of all certificates and documents required to be annexed thereto under sections 160 and 161' are required to be maintained. the period prescribed is eight years.51. learned counsel contended that an acknowledgment must be clear. in this behalf reliance was placed on the judgment in uttam singh duggal & co. ltd. v. union bank of india and ors. : air2000sc2740 . learned counsel further submitted that acknowledgment in the balance sheet does not ipso facto constitute an acknowledgment of liability under section 18 of the limitation act. it was also contended that provisioning in a balance sheet is different from making an admission of a debt. while provisioning is a matter of tax liability, admission reflects on the admitted position of a company.52. in a.v. murthy v. b.s. nagabasavanna : 2002crilj1479 , the court noted that if the amount borrowed by the respondent is shown in the balance sheet, it may amount to acknowledgment and the creditor might have a fresh period of limitation from the date on which the acknowledgment was made. in this case the balance sheets had been produced before the court. however, no final opinion was expressed by the court as the matter was remanded back to the magistrate. 53. learned counsel for the plaintiff also contended that the time period while an injunction was operating against the plaintiff and the defendant is to be excluded under the general principles of such exclusion under section 15 of the limitation act. in m.m.t.c. ltd v. bombay art jewellers and ors. : air2006cal169 , the bank guarantee was invoked on 28.12.1992 while the suit was filed on 27.03.1997. it was found that by an order dated 18.03.1993 of the appeal court in writ jurisdiction, the plaintiff was restrained from making any claim for enforcing the bank guarantee. the order was accepted till the disposal of the writ petition. the court noted that under the provisions of section 15 of the limitation act, the period during which an order of injunction was in operation for the purpose of computation of limitation i. e. from 18.03.1993 to 23.04.1996 has to be excluded and if such period is excluded, the filing of the suit is perfectly within the period of limitation.54. one of the contentions of the learned counsel for the defendant is that the limitation period commenced from 21.02.1990 when the plaintiff sent the letters invoking the bank guarantees and the suit has been filed only on 22.05.1993 which is beyond the limitation period. the judgment in syndicate bank case (supra) relied on by the defendant is to the effect that where a bank guarantee is payable on demand and in the demand, no time period has been specified for making the payment, the guarantor commits breach by not complying with the demand and the breach occurs when the demand is served upon the guarantor. 55. it may be noticed however, that as held in the judgment in m.m.t.c. ltd case (supra), in view of the provisions of section 15 of the limitation act, the period during which an injunction is in operation has to be excluded while computing the period of limitation.56. the present suit has been filed for recovering the amount due under the bank guarantees. a perusal of bank guarantee nos. 614, 615 and 626 shows that the same were payable 'on a demand' from the 'buyer' stating that the amount claimed is by way of loss or damage caused to or suffered by the buyer by reasons of breach by the supplier. the notices invoking the bank guarantee with respect to bank guarantee no. 615 was sent on 06.12.1989 and letter invoking the three bank guarantees (bank guarantee nos. 614,615 and 626) were sent by the plaintiff on 21.03.1990. the was no reply sent to the notices/letters invoking the bank guarantees. the bank did not protest against the invocation notices and did not deny their liability until the written statement was filed in the saharanpur suit. thus, the first instance at which any objection was raised to the liability under the bank guarantees was in the suit in saharanpur. in fact, it has been noticed in the order dated 13.02.1992 of the 1st additional civil judge, saharanpur that on the basis of the letter of invocation of bank guarantees of defendant no. 1 (the plaintiff herein), defendant no. 2 (the defendant herein) had vide its letter dated 10.01.1991 asked the plaintiff (dany dairy) to make the amount of the bank guarantees available so that the payment of the bank guarantees can be made. the bank guarantees were valid till 08.06.1990 (bank guarantee nos 614 and 615) and 11.06.1990 (bank guarantee no. 626). this position is reflected in the certified copies of the bank guarantee register(ex. dw 2/p1) filed by dw 2. thus the plaintiff had sent the letters of invocation during the validity of the bank guarantees. 57. even otherwise, an injunction against encashment of the bank guarantees was granted on 17.01.1991 in the suit filed by dany dairy in the saharanpur court which was thereafter vacated on 13.02.1992. thus, the period from 17.01.1991 to 13.02.1992 would have to be excluded in calculating the period of limitation. in view thereof, the present suit, filed on 22.05.1993 is within the period of limitation.58. learned counsel for the plaintiff has also taken the plea that as the liabilities under the bank guarantees have not been written off by the defendant and continue to be reflected in the balance sheets of the defendant, the same amounts to extension of the period of limitation under section 18 of the limitation act. the said provision is as under:18. effect of acknowledgment in writing - (1) where before the expiration of the prescribed period for a suit or application in respect or any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derived his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.(2) where the writing containing thee acknowledgement is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the indian evidence act,1872 ( 1 of 1872), oral evidence of its contents shall not be received.explanation - for the purposes of this section, -(a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or night;(b) the word 'signed' means signed either personally or by an agent duly authorised in this behalf ; and(c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right.59. on 15.11.2006, further examination of dw 2 had been deferred for the production of the account books and on 05.12.2006 dw 2 stated that the balance sheets along with the schedule of liabilities for the period 1988-1993 are not available as the same are old. however, a copy of the guarantee register (ex. dw2/p1) was filed. a perusal of the same shows that the three bank guarantees have been mentioned along with their expiry dates. the column pertaining to expiry dates and remarks shows that bank guarantee nos. 614, 615 were extended up to 08.06.1990 and guarantee no 626 was extended up to 11.06.1990. 60. as observed in the gopal krishna ketkar case (supra) the court may draw an adverse inference if a party withholds important documents in its possession which can throw light on an important issue. there is also no dispute that under section 114 of the evidence act, the court may presume that evidence which could be and is not produced would, if produced be unfavorable to the person who withholds it. the said provision reads as under:114. court may presume existence of certain facts - the court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case. illustration the court may presume - (g) that evidence which could be and is not produced would, if produced be unfavorable to the person who withholds it;61. section 18 of the limitation act provides for the computation of a fresh limitation period in cases where an acknowledgment of the liability is made in writing before the expiry of the period of limitation. there is also no dispute that under the provisions of section 114 of the evidence act,the court may presume the existence of any fact that it thinks likely to have happened regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case. in the present case, dw 1 in his cross examination admitted that the liability under the bank guarantee had not been written off and would continue to be reflected in the balance sheets of the bank from year to year. while dw 2 had stated that he would be able to produce the balance sheets, the stand taken on the next date was that the record is very old and is thus not available. 62. the balance sheets of the relevant period were sought for the first time only in the cross examination of dw 2 on 15.11.2006. the records were of the years 1988-1993 and are thus over 13 years old and as contended by learned counsel for the defendant the mandatory period for which the same were to be maintained had expired. in the circumstances considering the time period an adverse presumption cannot really be drawn against the defendant. there is thus nothing on record besides the stand of dw 1 that the liabilities are reflected in the balance sheets. as regards the plea of the plaintiff under section 63 of the evidence act, all that has been stated by dw 1 is that the liabilities have not been written off and the same would be reflected in the balance sheet of the bank from year to year. nothing has been stated as to in what manner the liabilities are reflected in the balance sheets etc. 63. be that as it may, the letters/notices invoking the bank guarantees were sent on 06.12.1989 and 21.03.1990. the bank guarantees were valid as per the position in the certified copies of the bank guarantee register filed by dw 2 till 08.06.1990 and 11.06.1990. the defendant has not protested against the letters/notices of invocation. in fact no replies were sent to them. after the letters of invocation, the payment ought to have been made within a reasonable period but no payment was made. the was an injunction operating against the encashment of the bank guarantees from 17.01.1991 to 13.02.1992. the period thereof would have to be excluded in computing the limitation period. in view of the aforesaid, the suit filed on 22.05.1993 was within the period of limitation. the issue is thus decided accordingly.issue 5. is the plaint not signed and verified by duly authorised persons? opp64. learned counsel for the plaintiff submitted that the plaint has been signed and verified by sh. s.p. khurana pw 2, company secretary of the plaintiff. pw 1, in his examination in chief, identified the signatures of pw 2 on the plaint. 65. it was submitted that there is no challenge to the fact that mr. khurana was the company secretary of the plaintiff company at the relevant time. a reference was made to the provisions of order xxix rule 1 of the said code according to which the plaint can be signed by the secretary or any director as the principal officer of the company. in support of his submissions, learned counsel referred to the judgment of the supreme court in united bank of india v. naresh kumar and ors. air 1997 sc 3. 66. learned counsel for the defendant submitted that in view of the judgment in united bank of india case (supra), the issue is not being contested by the defendant. the issue is thus answered in favor of the plaintiff.issue 6. to what amount plaintiff is entitled to recover? opp67. the defendant has disputed loss or damage to the plaintiff and has contended that the plaintiff is obliged to establish the same. learned counsel for the defendant submitted that the court is to examine whether invocation by the plaintiff was mala fide, bad or ill intended as the bank guarantees were re compensatory and not encashable. in this behalf, reliance was placed on the judgment of a division bench of this court in satluj jal vidyut nigam ltd. v. jai prakash hyundai consortium : air2006delhi239 . in the said judgment, the court took note inter alias of the judgment in samwoh asphalt premix pte ltd. v. sum cheong piling pte ltd [2002] blr 459 wherein it was observed that a demand under the performance guarantee can only be made where the seller has failed or refused to fulfilll his obligations under the contract and the sellers demand or refusal as a condition precedent to the buyer making a demand. an assertion to that effect is implied in a demand made to a buyer. in the satluj jal vidyut nigam ltd. case (supra) it was observed that a performance guarantee sought to be invoked not in terms of the agreement but in terms of something alien to the agreement would be something unconscionable and lack bona fides. the argument of the respondent that the call was made in bad faith was accepted by the court. 68. it was contended that the plaintiff admittedly reconciled the accounts of dany dairy on 30.06.1989 admitting a liability of rs. 66,901.10. learned counsel drew the attention of the court to the cross examination of pw 2 wherein he has stated that the accounts of dany dairy were reconciled by the plaintiff and has also stated that the guarantees could not be invoked if there was no loss to the plaintiff. further reference was made to the reexamination of pw2 wherein it was stated that exhibits pw 2/d2 to pw2/d8 were issued from delhi and in respect of ex pw2/d2 to pw 2/d8, payments were issued from delhi. it was thus submitted that it cannot be urged that the said documents are not proved.69. it was contended that no technical or financial person proving loss or damage to the plaintiff appeared in the witness box and even when questions regarding damages were put to pw 2 there was no rebuttal as regards the same. thus, it was contended that the plaintiff is not entitled to the amounts under the bank guarantees.70. in the judgment of the apex court in i.t.c. ltd. v. debts recovery appellate tribunal : air1998sc634 , a case involving recovery, it was observed that it is well settled that the question whether the goods were supplied by the appellant or not is not for the bank. the court took note of the observations in u.p. cooperative federation ltd v. singh consultants & engineers : [1988]1scr1124 that the bank must pay if the documents are in order in the terms of the credit are satisfied. the courts have generally permitted dishonour on the fraud of the beneficiary and not on the fraud of someone else. the observations in edward owen v. barclays bank international (1978) 1 all er 976 that the bank cannot refuse payment merely because according to it, the claim was dishonest or suspicious or appeared to be a sharp practice but it must be established to be a fraud. 71. a perusal of the bank guarantees shows that in bank guarantee no. 614 and 626, it is stated that the defendant undertakes to pay the amount due and payable without any demur merely on a demand by the buyer stating that the amount claimed is due by way of loss or damage caused or would be caused to or suffered by the buyer by reasons of any breach of the terms and conditions in the purchase order or failure to perform the purchase order by the supplier. similar terms are contained in bank guarantee no. 626. the relevant paragraphs of bank guarantee no. 614 are as under:in consideration of m/s milkfood limited, new delhi (hereinafter called the 'buyer') having agreed to grant an advance of rs 50,00,000/- (rupees fifty lacs only) to m/s dany dairy & food engineers limited, 7/4 km. stone, dehradun road, saharanpur (hereinafter called the said 'supplier') under the terms and conditions of a purchase order dated 25.05.98 made between the buyer and m/s danay dairy and food engineers ltd. for the supply, erection and commissioning of evaporating plant (hereinafter called 'the said purchase order') on production of a bank guarantee for rs 50,00,000/- (rupees fifty lacs only), we union bank of india, railway road, saharanpur (hereinafter called 'the bank') do hereby undertake to pay the buyer an amount not exceeding rs 50,00,000/- (rupees fifty lacs only) against any loss/damage caused to or suffered, would be caused or suffered by the buyer by reason of any breach by the said supplier of any of the terms and conditions contained in the said purchase order. 2. we, union bank of india, do hereby undertake to pay the amounts due and payable under this guarantee without any demur merely on a demand from the buyer stating that the amount claimed is due by way of loss or damage caused to or would be caused to or suffered by the buyer by reasons of any breach by the said supplier of any of the terms and conditions in the purchase order or by reasons of the supplier's failure to perform the said purchase order, any such demand made on the bank shall be conclusive as regards the amount due and payable by the bank under this guarantee shall be restricted to an amount not exceeding rs 50,00,000/- (rupees fifty lacs only)....72. thus, as per the terms of the said bank guarantees, what was required for payment was a demand by the buyer/plaintiff stating that the amount claimed is by way of loss caused or loss which would be likely to be caused as a reason of breach of conditions of the purchase order or failure to perform the purchase order by the supplier i.e. dany dairy. no further condition as regards proof of breach or proof of loss etc is required by the terms of the said guarantees. a perusal of the notice/letter sent by the plaintiff invoking the bank guarantee no 626 shows that its is stated that the amount of the bank guarantee has become due on account of loss/ damage suffered by the plaintiff due to the breach of conditions of the purchase order by dany dairy and that there has been default by dany dairy in performance of the purchase order. a similar notice/letter was sent invoking bank guarantee no. 614.73. insofar as bank guarantee no. 615 is concerned, the said bank also contains a similar undertaking by the defendant to pay an amount equal to 15 per cent of the value of the purchase order without any demur on a demand being made by the plaintiff that the amount is due by way of non performance of the contractual obligations. the relevant paragraphs are as under:in case, the supplier fails to perform or fulfill the purchase order as per the terms and conditions agreed upon the buyer is entitled to demand an amount equal to 15% of the order value from the supplier and the demand made by the buyer by itself will be conclusive evidence and proof that the supplier has failed to perform or fulfill his obligations, neither the supplier nor the bank will be entitled to raise any dispute regarding the reasons for the failure of the performance of fulfillment, on any ground. we, union bank of india, do hereby undertake to pay an amount equal to 15% of the order value, being the amount due and payable under this guarantee without any demur, merely on a demand from the buyer stating that the amount claimed is due by way of non performance of the contractual obligations as aforesaid by the supplier or by reason of the supplier's failure to perform the said contractual commitments/purchase order, any such demand made on the bank shall be conclusive as regards the amount due and payable by the bank under this guarantee. however, our liability under this guarantee shall be restricted to an amount not exceeding rs 16,50,000/- (rupees sixteen lacs fifty thousand only) being the amount equal to 15% of the total order value. 74. the terms of the said bank guarantee also provide that in case of failure by the supplier to perform the purchase order, the buyer is entitled to an amount of 15 per cent of the order value and the demand made by the buyer itself will be conclusive evidence and proof that the supplier has failed to perform or fulfilll his obligations and neither the supplier nor the bank will be entitled to raise any disputes regarding the reasons for the failure. thus, the terms of bank guarantee shows that the defendant would be liable to make payment of the amount of the bank guarantee merely on a demand being made by the plaintiff. the demand made by the buyer from the supplier would be conclusive proof of the failure of the supplier to perform the conditions of the contract but the same has not been made a precondition for payment by the defendant.75. again in the case of bank guarantee no. 615, notices/letters were sent invoking the bank guarantee on 06.12.1989 (ex. d-1) and 21.03.1990 stating that there was on the account of non fulfillment of the terms of the purchase order. 76. the aforesaid shows that the plaintiff had sent demand notices stating that dany dairy had failed to perform its obligations under the purchase order and committed breach of the terms of the purchase order. it may be noticed that the letters of invocation letters dated 21.03.1990 have not been exhibited. the same are however not disputed and reference have been made to the letters of invocation in the written statement. no further condition such as proof of actual loss or breach was required to be shown as per the terms of the bank guarantee. the bank guarantees were thus invoked in accordance with the terms and conditions of the bank guarantees. the judgment in i.t.c. ltd. case (supra) also shows that the question whether the goods were supplied or not is not for the bank.77. insofar as the aspect of fraud is concerned, is apparent from the observations in edward owen's case (supra) that mere allegations of fraud are not sufficient and fraud has to be established. in the present case, there is no sufficient evidence on record showing fraud by the plaintiff. as regards the aspect of reconciliation of accounts of dany dairy, which is stated to have been carried out by the plaintiff, the case of the plaintiff is that the accounts related to other matters. this was the stand taken in the saharanpur suit, which has been taken note of in the order dated 13.02.1992 of the 1st additional civil judge, saharanpur. 78. thus, the plaintiff invoked the three bank guarantees in accordance with the terms thereof and is thus entitled to the amounts payable under the three bank guarantees being rs. 25,00,000.00 under bank guarantee no 614, rs. 16,50,000.00 under bank guarantee no. 615 and rs. 12,00,000.00 under bank guarantee no 626. the issue is thus decided accordingly.issue 7. to what amount is the plaintiff is entitled to interest; if so, at what rate? opp79. the plaintiff has claimed interest @ 20 per cent per annum. pw 1 in his statement on 20.01.2000 stated that the rate on interest claimed is 20 percent as the same was the prevalent rate. he has also stated that at the time of execution of the bank guarantees, the interest being paid by the plaintiff company was 17-18 per cent.80. insofar as the rates of interest are concerned, the stand of pw 1 is that the interest rates being paid by the plaintiff company at the time of execution of the bank guarantees in question were 17- 18 per cent. no evidence to the contrary has been led. it however cannot be lost sight of that though the interest rates were initially high the same have subsequently declined. 81. the letters invoking the bank guarantees were sent on 21.03.1990. thus, the payments pursuant thereto should have been made within a reasonable period of about one month. in the light of the aforesaid, i am of the view that the plaintiff is entitled to simple interest @ 17 per cent per annum from 01.05.1989 till the filing of the suit on the principal amount of rs. 53,50,000.00 and thereafter simple interest @ 12 per cent per annum from the date of filing of the suit till the date of realization on the principal amount of rs. 53,50,000.00. the issue is thus decided accordingly. issue 8. relief'82. in view of the aforesaid, the plaintiff is entitled to an amount of rs. 53,50,000.00 along with simple interest thereon @ 17 per cent per annum from 01.05.1989 till the filing of the suit i. e. 21.05.1993 and simple interest @ 12 per cent per annum from the date of filing of the suit i. e. 22.05.1993 till the date of realization. the plaintiff is also entitled to costs.83. a decree is passed in favor of the plaintiff and against the defendant in the aforesaid terms.84. a decree be drawn up accordingly.