Supreme Court: The Division Bench of Sanjay Kishan Kaul and Hemant Gupta, JJ., while addressing the present matter, remarked that:
Fate of a suit against encashment of bank guarantee still hangs in balance after almost two decades!
Respondent 1 preferred an appeal before the Additional District Judge and the appellate court passed an interim order restraining the release of payment of bank guarantee, and the said order was confirmed.
On 6-01-2020, this Court passed an order directing the disposal of the appeal within a period of 3 months from the next date, meanwhile, respondent 1 moved an application seeking admission of copy of the report expert opinion under Section 45 of the Evidence Act. They sought to place on record some documents of the appellant with an objective of the signature comparison. Such a request was rejected by the ADJ, and an appeal was filed against the said order and a notice was issued and further proceedings pending were stayed.
Further, the aforesaid fact was brought to the notice of this Court and on noticing the mockery made out of the proceedings, for a stay of encashment of bank guarantee, Court called for a report.
On 2-11-2020, the High Court vacated the stay observing that the order of this Court was not brought to the knowledge of the High Court. In terms of the impugned judgment, the order dated 18-2-2020 of ADJ was set aside and the matter was remitted back to ADJ to consider the application under Order 41 Rule 27 CPC afresh at the time of hearing of the appeal.
Analysis, Law and Decision
Court found the impugned order to be unsustainable.
Supreme Court noted that the suit had been filed for a decree of permanent injunction restraining the appellant from encashment of bank guarantee and to the bank from making payment., along with a decree of declaration of the agreement including the arbitration clause, null and void and unenforceable.
Bench opined that the argument of respondent 1 is fallacious and it is trite to say that as a bank guarantee is an independent contact, there is a limited scope for interference in case of encashment of bank guarantee as enunciated by various courts including this Court from time to time.
Adding to the above, Court stated that one of the reasons for interference could be egregious fraud. Respondent was unnecessarily prolonging the issue and somehow preventing the encashment of the bank guarantee.
Therefore, impugned order was set aside and the Court dismissed the appeal filed by respondent No. 1 before the High Court against the order of the first appellate court rejecting their application for production of additional documents. [Atlanta Infrastructure Ltd. v. Delta Marine Company, 2021 SCC OnLine SC 482, decided on 19-07-2021]