w w w . L a w y e r S e r v i c e s . i n



Standard Chartered Bank v/s Heavy Engineering Corporation Limited & Another


Company & Directors' Information:- HEAVY ENGINEERING CORPORATION PRIVATE LIMITED [Active] CIN = U27100JH1958GOI000630

Company & Directors' Information:- M & B ENGINEERING LIMITED [Active] CIN = U45200GJ1981PLC004437

Company & Directors' Information:- STANDARD CORPORATION INDIA LIMITED [Active] CIN = U29211PB1999PLC022397

Company & Directors' Information:- G. R. ENGINEERING PRIVATE LIMITED [Active] CIN = U65990MH1990PTC058602

Company & Directors' Information:- G G ENGINEERING LIMITED [Active] CIN = L28900MH2006PLC159174

Company & Directors' Information:- V U B ENGINEERING PRIVATE LIMITED [Active] CIN = U29290MH2005PTC154033

Company & Directors' Information:- N S ENGINEERING COMPANY PVT LTD [Active] CIN = U29219TG1989PTC010511

Company & Directors' Information:- S S S ENGINEERING COMPANY PRIVATE LIMITED [Strike Off] CIN = U27205KA1981PTC004194

Company & Directors' Information:- H M G ENGINEERING LIMITED [Active] CIN = U45200MH1977PLC019533

Company & Directors' Information:- K R R ENGINEERING PRIVATE LIMITED [Active] CIN = U29309TN1989PTC016852

Company & Directors' Information:- G G ENGINEERING LIMITED [Active] CIN = U28900MH2006PLC159174

Company & Directors' Information:- D B ENGINEERING PRIVATE LTD [Active] CIN = U74899DL1986PTC026541

Company & Directors' Information:- G G ENGINEERING PRIVATE LIMITED [Active] CIN = U28900MH2006PTC159174

Company & Directors' Information:- J P ENGINEERING CORPN PVT LTD [Active] CIN = U34103WB1951PTC019638

Company & Directors' Information:- T N S HEAVY ENGINEERING PRIVATE LIMITED [Active] CIN = U29130TN1996PTC035388

Company & Directors' Information:- S N B ENGINEERING PRIVATE LIMITED [Active] CIN = U27106DL2007PTC301213

Company & Directors' Information:- T P W ENGINEERING LTD [Active] CIN = U27203WB1975PLC029939

Company & Directors' Information:- C L ENGINEERING PRIVATE LIMITED [Active] CIN = U34300PB1992PTC012057

Company & Directors' Information:- R K HEAVY ENGINEERING PRIVATE LIMITED [Active] CIN = U74999TN2009PTC074092

Company & Directors' Information:- W & W ENGINEERING PRIVATE LIMITED [Active] CIN = U72900TN2003PTC051228

Company & Directors' Information:- M L R ENGINEERING PRIVATE LIMITED [Active] CIN = U74999TG2006PTC051974

Company & Directors' Information:- K B ENGINEERING CO PVT LTD [Active] CIN = U74160TG1988PTC008366

Company & Directors' Information:- R P ENGINEERING PVT LTD [Active] CIN = U29299WB1992PTC055482

Company & Directors' Information:- J & K ENGINEERING LIMITED [Active] CIN = U45203JK2006PLC002684

Company & Directors' Information:- S P T ENGINEERING PRIVATE LIMITED [Converted to LLP] CIN = U27109UP2005PTC030940

Company & Directors' Information:- A R F ENGINEERING LIMITED [Active] CIN = U27200TN1980PLC008347

Company & Directors' Information:- A M ENGINEERING PRIVATE LIMITED [Amalgamated] CIN = U65910MH1981PTC187856

Company & Directors' Information:- S. S. E. ENGINEERING PRIVATE LIMITED [Active] CIN = U36990MH2007PTC175320

Company & Directors' Information:- C T ENGINEERING LIMITED [Strike Off] CIN = U29259GJ1986PLC009007

Company & Directors' Information:- R AND S ENGINEERING INDIA PVT LTD [Active] CIN = U29199GJ1995PTC027661

Company & Directors' Information:- U AND R ENGINEERING PRIVATE LIMITED [Active] CIN = U29199TZ1999PTC009012

Company & Directors' Information:- I Q ENGINEERING (INDIA) PRIVATE LIMITED [Active] CIN = U85110KA1996PTC021507

Company & Directors' Information:- G M ENGINEERING PRIVATE LIMITED [Active] CIN = U28910GJ2013PTC077091

Company & Directors' Information:- W. E. ENGINEERING PVT. LTD. [Active] CIN = U52335WB1985PTC039370

Company & Directors' Information:- L. B. ENGINEERING PRIVATE LIMITED [Active] CIN = U74999WB2018PTC225084

Company & Directors' Information:- R I ENGINEERING (INDIA) PRIVATE LIMITED [Active] CIN = U74210KA1991PTC012420

Company & Directors' Information:- U D ENGINEERING PRIVATE LIMITED [Active] CIN = U32109DL1999PTC102586

Company & Directors' Information:- K M T S ENGINEERING PRIVATE LIMITED [Active] CIN = U29192DL2005PTC141240

Company & Directors' Information:- C A G ENGINEERING LIMITED [Active] CIN = U00350PB2006PLC029521

Company & Directors' Information:- C A G ENGINEERING LIMITED [Active] CIN = U29110PB2006PLC029521

Company & Directors' Information:- D ENGINEERING PRIVATE LIMITED [Active] CIN = U29269TZ1932PTC000046

Company & Directors' Information:- V K B ENGINEERING PRIVATE LIMITED [Active] CIN = U74899DL2005PTC141483

Company & Directors' Information:- STANDARD ENGINEERING ( INDIA) PRIVATE LIMITED [Strike Off] CIN = U29219TN2007PTC062450

Company & Directors' Information:- INDIA ENGINEERING PRIVATE LIMITED [Active] CIN = U72200PN1999PTC014259

Company & Directors' Information:- C N C ENGINEERING LIMITED [Strike Off] CIN = U93000KA1986PLC007922

Company & Directors' Information:- M K V ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U29199TZ1997PTC007736

Company & Directors' Information:- G V T ENGINEERING (INDIA) PRIVATE LIMITED [Active] CIN = U29219DL1996PTC082427

Company & Directors' Information:- K. I. ENGINEERING PRIVATE LIMITED [Active] CIN = U74999WB2009PTC133109

Company & Directors' Information:- G M E P ENGINEERING PRIVATE LIMITED [Active] CIN = U29192DL1998PTC096737

Company & Directors' Information:- J T ENGINEERING PRIVATE LIMITED [Active] CIN = U74899DL1984PTC018756

Company & Directors' Information:- M C ENGINEERING CO PVT LTD [Active] CIN = U74899DL1972PTC006392

Company & Directors' Information:- C P ENGINEERING (INDIA) PRIVATE LIMITED [Active] CIN = U27209TN1987PTC014052

Company & Directors' Information:- J B L ENGINEERING PRIVATE LIMITED [Active] CIN = U28112MP2008PTC021459

Company & Directors' Information:- H V S ENGINEERING PRIVATE LIMITED [Active] CIN = U28920MH2005PTC158342

Company & Directors' Information:- S C ENGINEERING CO PVT LTD [Active] CIN = U74210WB1982PTC035623

Company & Directors' Information:- R R HEAVY ENGINEERING CO PVT LTD [Active] CIN = U29248UP1976PTC004222

Company & Directors' Information:- U M ENGINEERING PRIVATE LIMITED [Active] CIN = U29200MH1977PTC019574

Company & Directors' Information:- A V K ENGINEERING PRIVATE LIMITED [Active] CIN = U74899DL1995PTC071971

Company & Directors' Information:- S K ENGINEERING CO PRIVATE LIMITED [Strike Off] CIN = U05001UP1952PTC002408

Company & Directors' Information:- G D ENGINEERING COMPANY (INDIA) PVT LTD [Active] CIN = U74210WB1993PTC058553

Company & Directors' Information:- V M R ENGINEERING PRIVATE LIMITED [Active] CIN = U29120DL2005PTC136764

Company & Directors' Information:- K. S. I. ENGINEERING PRIVATE LIMITED [Active] CIN = U36999HR2007PTC036660

Company & Directors' Information:- N S S ENGINEERING PRIVATE LIMITED [Active] CIN = U28999KA1989PTC010312

Company & Directors' Information:- A P V ENGINEERING CO LTD [Strike Off] CIN = U29113WB1945PLC006428

Company & Directors' Information:- G B ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U29212PB1996PTC017500

Company & Directors' Information:- C M S ENGINEERING INDIA PRIVATE LIMITED [Strike Off] CIN = U74210TN2010PTC075302

Company & Directors' Information:- J K B ENGINEERING COMPANY PRIVATE LIMITED [Strike Off] CIN = U31300TN1996PTC036482

Company & Directors' Information:- T S C ENGINEERING PRIVATE LIMITED [Active] CIN = U70109DL2011PTC217251

Company & Directors' Information:- H T S ENGINEERING PRIVATE LIMITED [Active] CIN = U74999MH2008PTC187914

Company & Directors' Information:- T P ENGINEERING PRIVATE LIMITED [Active] CIN = U45201OR2010PTC011517

Company & Directors' Information:- S B ENGINEERING PVT LTD [Active] CIN = U29199GJ1982PTC005292

Company & Directors' Information:- J J ENGINEERING PVT LTD [Active] CIN = U29219WB1986PTC041433

Company & Directors' Information:- D & L ENGINEERING PRIVATE LIMITED [Converted to LLP] CIN = U29113TN2004PTC052690

Company & Directors' Information:- H R P ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U31503MH1997PTC108621

Company & Directors' Information:- S H ENGINEERING PRIVATE LIMITED [Active] CIN = U70101WB1999PTC088930

Company & Directors' Information:- V K S ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U28133TN2005PTC057283

Company & Directors' Information:- M K ENGINEERING PVT LTD [Active] CIN = U29199GJ1995PTC027278

Company & Directors' Information:- K J ENGINEERING PRIVATE LIMITED [Active] CIN = U29299PN2006PTC129171

Company & Directors' Information:- C S S ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U45302TN2003PTC051161

Company & Directors' Information:- N. P. ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U31100WB2010PTC150609

Company & Directors' Information:- S R K ENGINEERING CO PVT LTD [Active] CIN = U67120WB1994PTC063442

Company & Directors' Information:- M P T ENGINEERING PVT LTD [Strike Off] CIN = U29299KL1994PTC007761

Company & Directors' Information:- T S R C ENGINEERING PRIVATE LIMITED [Active] CIN = U29100UP2020PTC133920

Company & Directors' Information:- A K ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U50300UP1981PTC005354

Company & Directors' Information:- H M T D ENGINEERING PVT LTD [Active] CIN = U99999MH1981PTC035175

Company & Directors' Information:- J P ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U28129MH1972PTC015813

Company & Directors' Information:- V M ENGINEERING COMPANY PRIVATE LIMITED [Active] CIN = U28920MH1969PTC014224

Company & Directors' Information:- H M A ENGINEERING LIMITED [Strike Off] CIN = U45209PB2008PLC031777

Company & Directors' Information:- P T S ENGINEERING INDIA PRIVATE LIMITED [Active] CIN = U74210TZ2011PTC016944

Company & Directors' Information:- K S M ENGINEERING PRIVATE LIMITED [Active] CIN = U74210TG1997PTC028612

Company & Directors' Information:- M M ENGINEERING COMPANY PRIVATE LIMITED [Converted to LLP] CIN = U28932MH1979PTC021819

Company & Directors' Information:- N G T ENGINEERING PVT LTD [Active] CIN = U27109WB1968PTC027292

Company & Directors' Information:- M A S ENGINEERING PRIVATE LIMITED [Active] CIN = U99999MH1976PTC019233

Company & Directors' Information:- G R K ENGINEERING (INDIA) PRIVATE LIMITED [Active] CIN = U74200AP2011PTC076356

Company & Directors' Information:- P N S ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U29120TN2006PTC060120

Company & Directors' Information:- K P ENGINEERING CORPORATION PVT LTD [Strike Off] CIN = U74200WB1961PTC025258

Company & Directors' Information:- M A N INDIA ENGINEERING LTD [Strike Off] CIN = U74200WB1979PLC020893

Company & Directors' Information:- R V K ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U29253TN2010PTC074505

Company & Directors' Information:- R K ENGINEERING COMPANY PVT LTD [Active] CIN = U74899DL1975PTC007743

Company & Directors' Information:- G S A ENGINEERING CORPN PVT LTD [Strike Off] CIN = U74210WB1957PTC023382

Company & Directors' Information:- A R M ENGINEERING PRIVATE LIMITED. [Strike Off] CIN = U00500JH1988PTC003057

Company & Directors' Information:- L & V ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U45202MZ2005PTC007690

Company & Directors' Information:- S G A ENGINEERING COMPANY PRIVATE LIMITED [Strike Off] CIN = U29200MH2005PTC154349

Company & Directors' Information:- C P C ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U29120TZ1986PTC001880

Company & Directors' Information:- P K R ENGINEERING INDIA PRIVATE LIMITED [Strike Off] CIN = U29130TZ2004PTC011094

Company & Directors' Information:- M N B ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U70101TN2005PTC057442

Company & Directors' Information:- R R K ENGINEERING PRIVATE LIMITED [Active] CIN = U74999WB2011PTC161080

Company & Directors' Information:- D M S ENGINEERING CO PVT LTD [Strike Off] CIN = U28920WB1964PTC026168

Company & Directors' Information:- S D S ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U28999PN2000PTC014838

Company & Directors' Information:- G B L ENGINEERING COMPANY PRIVATE LIMITED [Strike Off] CIN = U29130RJ1998PTC015182

Company & Directors' Information:- N T ENGINEERING COMPANY PVT LTD [Strike Off] CIN = U99999PY1986PTC000445

Company & Directors' Information:- R K ENGINEERING PRIVATE LIMITED [Active] CIN = U31100MH2005PTC152838

Company & Directors' Information:- V J S ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U29130TN1996PTC036636

Company & Directors' Information:- R. K. V. ENGINEERING PRIVATE LIMITED [Active] CIN = U29253MH2010PTC205237

Company & Directors' Information:- U S ENGINEERING PVT LTD [Active] CIN = U34300CH1986PTC006887

Company & Directors' Information:- A D ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U74210OR1989PTC002348

Company & Directors' Information:- R J ENGINEERING COMPANY PRIVATE LIMITED [Active] CIN = U27107RJ1972PTC001441

Company & Directors' Information:- H F ENGINEERING PRIVATE LIMITED [Active] CIN = U29244KL2013PTC033909

Company & Directors' Information:- O N ENGINEERING PRIVATE LIMITED [Active] CIN = U74899DL1988PTC031987

Company & Directors' Information:- P S R ENGINEERING PVT LTD [Strike Off] CIN = U40200WB1987PTC042244

Company & Directors' Information:- P N ENGINEERING CO PVT LTD [Strike Off] CIN = U74210WB1980PTC032750

Company & Directors' Information:- A M A R ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U29219DL1997PTC084187

Company & Directors' Information:- S G D ENGINEERING PRIVATE LIMITED [Active] CIN = U29210KA2009PTC050452

Company & Directors' Information:- G A S ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U29191MH2004PTC149606

Company & Directors' Information:- G T ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U29219PN2012PTC145781

Company & Directors' Information:- M. M. K. ENGINEERING COMPANY PRIVATE LIMITED [Active] CIN = U29305MH2014PTC252830

Company & Directors' Information:- K-4 ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U31400MH2010PTC204004

Company & Directors' Information:- N J ENGINEERING PRIVATE LIMITED [Active] CIN = U45209MH2015PTC262607

Company & Directors' Information:- P R S ENGINEERING PRIVATE LIMITED [Active] CIN = U29253TN2009PTC073915

Company & Directors' Information:- U P S ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U40300TN2013PTC090167

Company & Directors' Information:- K G D ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U45400WB2014PTC200732

Company & Directors' Information:- T A ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U28992CH2003PTC025800

Company & Directors' Information:- M N A ENGINEERING PVT LTD [Strike Off] CIN = U45202CH2006PTC030215

Company & Directors' Information:- A A P ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U27106DL2005PTC138318

Company & Directors' Information:- A C ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U29253DL2011PTC222515

Company & Directors' Information:- S. Z. ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U29253DL2014PTC274095

Company & Directors' Information:- IN ENGINEERING PRIVATE LIMITED [Active] CIN = U74210DL2011PTC212284

Company & Directors' Information:- J N ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U45400DL2015PTC278906

Company & Directors' Information:- N I ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U45400DL2015PTC280734

Company & Directors' Information:- A N D ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U51502DL2012PTC242516

Company & Directors' Information:- R R V ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U51909DL1997PTC089342

Company & Directors' Information:- Z. M. ENGINEERING PRIVATE LIMITED [Active] CIN = U51909DL2007PTC168270

Company & Directors' Information:- K Y ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U74999DL2013PTC248278

Company & Directors' Information:- R AND T ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U34300DL2005PTC136846

Company & Directors' Information:- THE ENGINEERING CORPORATION PRIVATE LIMITED [Strike Off] CIN = U99999KA1951PTC000699

Company & Directors' Information:- S J P ENGINEERING CO. PRIVATE LIMITED [Strike Off] CIN = U51505KA2002PTC030808

Company & Directors' Information:- S I ENGINEERING COMPANY PRIVATE LIMITED [Strike Off] CIN = U27109UP1967PTC003182

Company & Directors' Information:- W D ENGINEERING PRIVATE LIMITED [Active] CIN = U29308MH2020PTC345065

Company & Directors' Information:- U K S HEAVY ENGINEERING COMPANY LIMITED [Strike Off] CIN = U29100DL1995PLC074900

Company & Directors' Information:- S D ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U18101DL1999PTC102948

Company & Directors' Information:- A-1 STANDARD PRIVATE LIMITED [Strike Off] CIN = U16000MH1998PTC114505

Company & Directors' Information:- M B D ENGINEERING PRIVATE LIMITED [Strike Off] CIN = U74210DL2008PTC181446

Company & Directors' Information:- A. B. C. ENGINEERING CORPORATION LIMITED [Not available for efiling] CIN = U99999MH1950PLC008192

Company & Directors' Information:-  ENGINEERING COMPANY ( [Not Available for eFiling] CIN = U99999MH1951PLC010002

Company & Directors' Information:- F M P ENGINEERING PVT LTD [Strike Off] CIN = U29259GJ1965PTC001337

    Civil Appeal No. 9288 of 2019 (Arising Out of SLP(Civil) No. 23430 of 2019)

    Decided On, 18 December 2019

    At, Supreme Court of India

    By, THE HONOURABLE MR. JUSTICE L. NAGESWARA RAO & THE HONOURABLE MR. JUSTICE AJAY RASTOGI

    For the Appellant: Amit Sibal, Sr. Advocate, Ateev Mathur, Ajay Monga, Devmani Bansal, Vikas Kumar, Advocates. For the Respondents: M/s. Meharia & Company, Dhananjay Garg, Advocates.



Judgment Text


Ajay Rastogi, J.

Leave granted.

2. The instant appeal is being preferred against the judgment and order dated 8th May, 2019 passed by the Division Bench of the High Court of Calcutta setting aside the judgment dated 16th October, 2015 of the Single Bench and accepting claim of the 1st respondent-plaintiff holding that the bank guarantees were properly invoked in law and accordingly the decree came to be passed for Rs. 1,10,33,207.00/- as claimed in paragraph 18 of the plaint with interest at the rate of 8 per cent per annum from the date of institution of the suit until payment.

3. Although both the Judges of the Division Bench has delivered their separate judgment but have expressed a concurring view on the subject.

4. The dispute primarily arose with regard to two bank guarantees amounting to Rs. 71,35,100/- and Rs. 20,32,500/- in terms of the letters of intent, HEC-CS-1502-81 dated 19th May, 1981 and HEC-CS-1502-81 dated 19th May, 1981 furnished on behalf of the 2nd defendant by the appellant Bank(1st defendant) in favour of the 1st respondent-plaintiff "as advance against supply of plant and equipment" by the 1st respondent-plaintiff to the 2nd respondent (defendant no. 2). The two bank guarantees are on identical terms and the only difference is the date and the amount which are reproduced as under:-

Bank Guarantee No. 1001/03/100G dated 16th February, 1983

"We, GRINDLAYS BANK P.L.C., 19 Netaji Subhas Road, Calcutta 700001 undertake the Indemnity and keep the CORPORATION indemnified to the extent of Rs. 71,35,100/-(Rupees SEVENTY ONE LAKHS THIRTY FIVE THOUSAND AND ONE HUNDRED ONLY) against any loss or damage caused to or suffered by the CORPORATION by reason or any breach or failure by the said SUPPLIER, in due performance of the aforesaid contract, we shall forthwith on demand pay to the CORPORATION any sum or sums not exceeding Rs. 71,35,100/-(RUPEES SEVENTY ONE LAKHS THIRTY FIVE THOUSAND AND ONE HUNDRED ONLY) without making any prior reference to the said SUPPLIER with and exclusion of any action in Court by SUPPLIER."

Bank Guarantee No. G/1001/84/608 dated 29th August, 1984

"We, GRINDLAYS BANK P.L.C., 19 Netaji Subhas Road, Calcutta 700001 do hereby undertake the Indemnity and keep the CORPORATION indemnified to the extent of Rs. 20,32,500(Rupees TWENTY LAKHS THIRTY TWO THOUSAND FIVE HUNDRED ONLY) against any loss or damage caused to or suffered by the CORPORATION by reason or any breach or failure by the said SUPPLIER, in due performance of the aforesaid contract, we shall forthwith on demand pay to the CORPORATION any sum or sums not exceeding Rs. 20,32,500/-(RUPEES TWENTY LAKHS THIRTY TWO THOUSAND FIVE HUNDRED ONLY) without making any prior reference to the said SUPPLIER with and exclusion of any action in Court by SUPPLIER." (emphasis supplied)

5. The said two bank guarantees were furnished for and on behalf of 2nd respondent towards the sum insured "against any loss or damage caused to or suffered by the Corporation by reason or any breach or failure by the said supplier, in due performance of the aforesaid contract."

Brief facts of the case :

6. By a letter of intent dated 19th May, 1981, 1st respondent placed an order on 2nd respondent(Simon Carves India Ltd. 'SCIL') for the complete design, supply of both indigenous and imported equipments, erection and commissioning of requisite civil and construction works of the Dankuni Coal Complex at a total price of Rs. 21.10 crores. The letter of intent dated 19th May, 1981 after describing 4 sections of the LTC plant at Dankuni stated as under:-

"The above price covers the complete design, supply of both indigenous and imported equipment, erection and commissioning with requisite civil and structural works complete in all respects except land filling upto 4.00 M level, railways siding, roads & outside drawing and perphorial lighting which will only be outside your scope or work.

The break up of the total price of Rs. 21.10 crores for purpose of billing is enclosed.

We have noted the terms of payment proposed by you in your letter dated 18.05.81. As we have indicated about the terms of payment agreed to by us, it will not be possible to consider your proposal for relaxation of the same. However, attempts will be made to consider some softening of payment terms later depending our own cash flows on this project.

Kindly let us have your detailed technical specifications etc to enable us to draw up a detailed contract for the work.

Kindly communicate your acceptance of this letter of intent and furnish us a bank guarantee on approved proforma to release the initial advance of Rs. 15.64 lakhs to you.

In pursuance of the letter of intent two bank guarantees have been furnished by the defendant no. 1 on behalf of the defendant no. 2 "as advance against the supply of plant and equipment." (emphasis supplied)

7. Pursuant to the letter of intent, a formal Memorandum of Agreement dated 8th August, 1985 was executed by and between SCIL. Thereafter, the 1st respondent (plaintiff) from time to time advanced for the said work against several bank guarantees furnished by SCIL. It may be noticed that the instant dispute pertains to two bank guarantees dated 16th February, 1983 and 29th August, 1984, which were advanced to SCIL, the details of which have been indicated above. The said guarantees furnished by the appellant bank were extended from time to time and revalidated.

8. In due course of time, in breach of contract with the 1st respondent-plaintiff, SCIL failed to duly complete the supply of equipment and the other conditions of the letter of intent and further defective equipments. It is alleged that the work had to be abandoned due to which 1st respondent suffered huge losses and damages. Ultimately, a sum of Rs. 139.90 lakhs, was deducted bythe 1st respondent from final bill which pertained to the apportioned work handed over to SCIL.

9. In view of the letter dated 6th November, 1998, 1st respondent-plaintiff demanded encashment of both the said guarantees which were refused by the bank to honour and diverse correspondence was exchanged by and between the 1st respondent -plaintiff and the appellant-defendant bank. 1st respondent in continuation made subsequent demands for encashment of the guarantees by letter dated 19th December, 1998 which is reproduced hereunder:-

"No.HDC/Proj/Fin/98-343

Dated the 19th December, 1998

To

The Chief Manager Corporate Banking ANZ Grindlays Bank 19, Netaji Subhas Road Post Box No. 2645 Calcutta-700001

Dear Sir,

With reference to your St. Relationship Manager's letter dtd. 7.12.98 regarding encashment of B.Gs issued by you on behalf of M/s. SCIL for a total value of Rs.91.68 lakhs you are very much aware that M/s. SCIL owes to H.E.C. Rs. 139.90 lakhs due to defective supply of Plant & Equipment as well as non-supply of Plant & Equipment and also other contractual deficiencies which has caused loss as reflected in the handing over/taking over report of the DCC Project by CIL. You are also aware that HEC has gone out of the way in supporting SCIL and getting the Plant completed with minimum damage. It is within HEC's full rights to invoke the BG as per Clause No.2 of the BG's which is reproduced below; (BG No. G1001/83/1084 dt. 16.8.83 for Rs. 71,35,100.00 and BG No. G1001/84/608 dt. 29.8.84 for Rs. 20,32,500.00).

WE GRINDLAYS BANK PLC 19, Netaji Subhas Road, Calcutta - 700001 do hereby undertake the Indemnity of Rs. (Rupees__________) against any loss or damage caused to or suffered by the CORPORATION by reason or any breach or failure by the said SUPPLIER, in due performance of the aforesaid contract, we shall forthwith on demand pay to the CORPORATION any sum or sums not exceeding Rs. (RUPEES without making any prior reference to the said SUPPLIER with an exclusion of any action in court by SUPPLIER.

The failure of M/s. SCIL in fulfilling the contractual obligation which includes performance Guarantees of Plant & Equipment are very well documented by HEC & CIL. In fact, the unadjusted advance of SCIL on account of Plant & Equipment is far in excess of the loss suffered by HEC. The same has been brought down to Rs. 139.90 lakhs after allowing credit for contractual settlement.

Although as per terms of BG we are not bound to explain you all these things but the above details are furnished so that good sense will prevail and we expect you to live up to your reputation and honour the beneficiaries claim for encashment.

Thanking you,

Yours faithfully, T.L.N. SOURI

GENERAL MANAGER (PROJECTS & MNTG)

(emphasis supplied)"

10. This was followed by the letter dated 28th December, 1998 which is also reproduced hereunder: -

"No.GGM(CM)/ /98

28 th December, 1998

To

The Chief Manager

ANZ Grindlays Bank

CALCUTTA.

(Atten: Shri Vasudeo Kundu) Fax No.033-2211196

Sub: Encashment of two Bank Guarantees Nos.

1) G/1001/83/108G for Rs. 71,35,100/-

2) G/1001/88/608 for Rs. 20,32,500/-

Ref: Our letter dated 19.11.1998. Dear Sir,

We have intimated vide our above letter to encash the above two Bank Guarantees issued by you on behalf of SCIL India Ltd., to HEC.

You are requested to encash the above Bank Guarantees and send the proceeds amounting to Rs. 91,67,600/- within 3 days time. Kindly treat this as most urgent and failing on the part of the Bank to honour the beneficiaries demand will be viewed seriously.

Thanking you,

Yours faithfully, (L.M. Prasad)"

11. A further complaint was made by way of a letter dated 22nd February, 1999 to the Banking Ombudsman, Calcutta. Ultimately, 1st respondent-plaintiff was constrained to institute a suit before the High Court of Calcutta for decree of Rs. 1,10,33,207.07/- along with interest being the aggregate sum of both the said guarantees.

12. The appellant Bank filed its written statement and primarily took objection that the invocation of the bank guarantees was not in accordance with either of the said guarantees and contrary to the terms thereof and accordingly the appellant Bank was not liable to make payment to the 1st respondent-plaintiff under either of the said guarantees. In support of its defence, the appellant Bank referred to the diverse correspondence exchanged between the appellant and 1st respondent. In brief, the defence of the appellant Bank was that the invocation of the said bank guarantees was contrary to the terms or not in terms thereof.

13. On the pleadings of the parties, the suit in the first instance came to the dismissed vide judgment & decree dated 16th October, 2015 which came to be challenged by the 1st respondent in appeal before the Division Bench of the High Court of Calcutta. In a concurring judgment while setting aside the judgment of the Single Judge of the High Court, it was finally held that the bank guarantees were properly invoked in law by the 1st respondent-plaintiff and accordingly passed a decree of Rs. 1,10,33,207.00/-together with interest at the rate of 8% per annum on and from the date of institution of the suit until payment.

14. Learned senior counsel for the appellant Bank, Shri Amit Sibal submits that the said bank guarantees only covered losses arising out of supply of plant & equipment and according to the pleadings on record, the plant stood installed in October, 1990 and this is the case where the appellant Bank in its independent capacity, refused the claim for it being clearly false to its knowledge and also not in accordance with the terms of the guarantee, i.e. beyond the purview of the bank guarantees and failing to apportion those losses suffered on account of claims which would be within the terms of the bank guarantees.

15. Learned counsel further submits that the bank guarantees are in reference to two category of losses (i) non-supply/defective supply of plant & equipment (ii) "other contractual deficiencies" and by the invocation vide letter dated 19th December, 1998 claims caused by "non-supply/defective supply of plant & equipment and other contractual deficiencies" is outside the purview of the bank guarantee. Further, assuming the correctness of the claim, the 1st respondent if suffered loss for both (i) non-supply/defective supply of plant and equipment (ii) "other contractual deficiencies", it is difficult to determine the apportionment between the two categories, because the invocation does not state how they are apportioned. The invocation is thus inchoate and incomplete and this according to the appellant does not constitute a valid invocation at all and it has not been properly appreciated by the Division Bench of the High Court in the impugned judgment and has to be interfered by this Court.

16. In support of his submission, learned counsel has placed reliance on the judgment of this Court in Hindustan Construction Co. Ltd. vs. State of Bihar & Others, (1999) 8 SCC 436 and Gangotri Enterprises Ltd. Vs. Union of India and Others, (2016) 11 SCC 720.

17. Per contra, Ms. Madhavi Diwan, learned ASG appearing on behalf of the 1st respondent, while supporting the finding recorded by the High Court in the impugned judgment submits that as per precedents laid down by this Court, the question of law is no more res integra and is well settled that the bank guarantee is an independent contract between the bank and the beneficiary and the bank is always obliged to honour its guarantee as long as it is an unconditional and irrevocable one. At the same time, the dispute between the beneficiary and the party at whose instance the bank has given the guarantee is immaterial and is of no consequence and two exceptions to the rule have been carved out. The first is when there is a fraud of which the Bank has notice and a fraud of the beneficiary from which it seeks to benefit. The second exception to the general rule of non-intervention is such when there is a 'irretrievable injury' or 'irretrievable injustice' that would occur to the Bank.

18. We have heard learned counsel for the parties and with their assistance perused the material available on record.

19. The law relating to invocation of bank guarantees with the consistent line of precedents of this Court is well settled and a three-Judge Bench of this Court in Ansal Engineering Projects Ltd. vs. Tehri Hydro Development Corporation Ltd. and Another, (1996) 5 SCC 450 held thus:-

"4. It is settled law that bank guarantee is an independent and distinct contract between the bank and the beneficiary and is not qualified by the underlying transaction and the validity of the primary contract between the person at whose instance the bank guarantee was given and the beneficiary. Unless fraud or special equity exists, is pleaded and prima facie established by strong evidence as a triable issue, the beneficiary cannot be restrained from encashing the bank guarantee even if dispute between the beneficiary and the person at whose instance the bank guarantee was given by the bank, had arisen in performance of the contract or execution of the works undertaken in furtherance thereof. The bank unconditionally and irrevocably promised to pay, on demand, the amount of liability undertaken in the guarantee without any demur or dispute in terms of the bank guarantee. The object behind is to inculcate respect for free flow of commerce and trade and faith in the commercial banking transactions unhedged by pending disputes between the beneficiary and the contractor.

5......The court exercising its power cannot interfere with enforcement of bank guarantee/letters of credit except only in cases where fraud or special equity is prima facie made out in the case as triable issue by strong evidence so as to prevent irretrievable injustice to the parties." (emphasis supplied)

20. A bank guarantee constitutes an independent contract. In Hindustan Construction Co. Ltd. vs. State of Bihar and others (supra), a two Judge Bench of this Court formulated the condition upon which the invocation of the bank guarantee depends in the following terms:-

"9. What is important, therefore, is that the bank guarantee should be in unequivocal terms, unconditional and recite that the amount would be 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."

21. The same principle was followed in State Bank of India and Another vs. Mula Sahakari Sakhar Karkhana Ltd, (2006) 6 SCC 293 wherein a two-Judge Bench held thus:-

"33. It is beyond any cavil that a bank guarantee must be construed on its own terms. It is considered to be a separate transaction.

34. If a construction, as was suggested by Mr Naphade, is to be accepted, it would also be open to a banker to put forward a case that absolute and unequivocal bank guarantee should be read as a conditional one having regard to circumstances attending thereto. It is, to our mind, impermissible in law."

22. Taking note of the exposition of law on the subject in Himadri Chemicals Industries Limited vs. Coal Tar Refining Co., (2007) 8 SCC 110 a two-Judge Bench of this Court in Gujarat Maritime Board vs. Larsen & Toubro Infrastructure Development Projects Limited and Another, (2016) 10 SCC 46 has laid down the principles for grant or refusal for invocation of bank guarantee or a letter of credit. The relevant paragraph is as under:-

" From the discussions made hereinabove relating to the principles for grant or refusal to grant of injunction to restrain enforcement of a bank guarantee or a letter of credit, we find that the following principles should be noted in the matter of injunction to restrain the encashment of a bank guarantee or a letter of credit:

(i) While dealing with an application for injunction in the course of commercial dealings, and when an unconditional bank guarantee or letter of credit is given or accepted, the beneficiary is entitled to realise such a bank guarantee or a letter of credit in terms thereof irrespective of any pending disputes relating to the terms of the contract.

(ii) The bank giving such guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer.

(iii) The courts should be slow in granting an order of injunction to restrain the realisation of a bank guarantee or a letter of credit.

(iv) Since a bank guarantee or a letter of credit is an independent and a separate contract and is absolute in nature, the existence of any dispute between the parties to the contract is not a ground for issuing an order of injunction to restrain enforcement of bank guarantees or letters of credit.

(v) Fraud of an egregious nature which would vitiate the very foundation of such a bank guarantee or letter of credit and the beneficiary seeks to take advantage of the situation.

(vi) Allowing encashment of an unconditional bank guarantee or a letter of credit would result in irretrievable harm or injustice to one of the parties concerned."

23. The settled position in law that emerges from the precedents of this Court is that the bank guarantee is an independent contract between bank and the beneficiary and the bank is always obliged to honour its guarantee as long as it is an unconditional and irrevocable one. The dispute between the beneficiary and the party at whose instance the bank has given the guarantee is immaterial and is of no consequence. There are, however, exceptions to this Rule when there is a clear case of fraud, irretrievable injustice or special equities. The Court ordinarily should not interfere with the invocation or encashment of the bank guarantee so long as the invocation is in terms of the bank guarantee.

24. The guarantees in the instant case were unconditional, specific in nature and limited in amount. The terms of the guarantee categorically covered money which the 1st respondent had advanced against supply of the plant and equipment by SCIL. The said guarantees covered any loss and damage caused to or suffered by the 1st respondent-plaintiff in due performance of the contract for supply of plant and equipment. The guarantee documents dated 16th February, 1983 and 29th August, 1984, as a whole and clause 2 of the guarantee document in particular cover the advance which had been paid by the 1st respondent-plaintiff by reason of any breach or failure by SCIL in due performance of the aforesaid contracts i.e. against the contract for supply of plant and equipment.

25. From the correspondence that has been exchanged by and between them pertaining to invocation of the said guarantees, it clearly manifests that the initial letter of invocation written by the 1st respondent-plaintiff dated 6th November, 1998 indeed was per se inadequate and did not enumerate any condition for invocation of said guarantees save and except a reference to "a substantial amount to be recovered from SCIL". However, in the later correspondence exchanged between the parties dated 19 th December, 1998

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followed by a letter dated 28th December, 1998, 1st respondent informed the appellant Bank that due to defective supply of plant and equipment as well as non-supply of plant and equipment and also other contractual deficiencies of SCIL, losses had been suffered by the 1st respondent and it was duly informed to the appellant Bank that the losses had been incurred both on account of supply of plant and equipment and on account of performance of the supply of plant and equipment. On reading of letters exchanged by and between 1st respondent and the appellant Bank pertaining to invocation of the guarantees, the condition of the guarantees had been duly complied with. 26. In our considered view, once the demand was made in due compliance of bank guarantees, it was not open for the appellant Bank to determine as to whether the invocation of the bank guarantee was justified so long as the invocation was in terms of the bank guarantee. The demand once made would oblige the bank to pay under the terms of the bank guarantee and it is not the case of the appellant Bank that its defence falls in any of the exception to the rule of case of fraud, irretrievable injustice and special equities. In absence thereof, it is not even open for the Court to interfere with the invocation and encashment of the bank guarantee so long as the invocation was in terms of the bank guarantee and this what has been observed by the Division Bench of the High Court in the impugned judgment and that reflected the correct legal position. 27. It is informed by the learned counsel for the appellant that the Standard Chartered Bank's predecessor in interest, ANZ Grindlay's Bank had opened a fixed deposit of Rs. 91,67,600/- on 18th May, 2001, which was lien marked to HEC (Heavy Engineering Corporation Ltd.) and is being held under the control of the Registry of the High Court of Calcutta and the current fixed deposit is valued at Rs. 2,32,69,129.71/- and the total liability under the impugned order as on date will be Rs. 2,78,03,681.64/-. The Registry of the High Court of Calcutta may release the money lying in the account in favour of the 1st respondent and it is for the appellant Bank(judgment debtor) to settle and satisfy the decree which is impugned in the instant proceedings. 28. We do not find any merit in the appeal which is hereby dismissed. No costs. 29. Pending application(s), if any, stands disposed of.
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