MANU/DE/0504/1998 Equivalent Citation: 1998IIIAD(Delhi)641, 1998(1)ARBLR566(Delhi), [1998]94CompCas40 (Delhi), 73(1998)DLT147, 1998(45)DRJ423 IN THE HIGH COURT OF DELHI IA No.

7934/97 in Suit No. 1695/97 Decided On: 28.04.1998 Appellants:P.D. Alkaram Pvt. Ltd. Vs. Respondent: Canara Bank & Another Hon'ble Judges/Coram: D.K. Jain, J. Counsels: For Appellant/Petitioner/plaintiff: Mr. Ashish Bhagat, Adv For Respondents/Defendant: Mr. S.S. Javeli, Sr. Adv. and Ms. Asha Jain, Adv. Subject: Banking Subject: Commercial Acts/Rules/Orders: Code of Civil Procedure, 1908 (CPC) - Order XXIX Rules 1, Code of Civil Procedure, 1908 (CPC) - Order XXIX Rules 2 Cases Referred: U.P. State Sugar Corporation v. Sumac International Ltd., (1977) 1 S 568; Cooperative Federation Ltd v. Singh Consultants & Engineers (P) Ltd (1988) 1 S 174; UP State Sugar Corporation v. Sumac International Ltd. (1997)1 S 568; Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd. & Anr. (1997) 6 S 450; National Thermal Power Corporation v. Flowmore Pvt. Ltd. (1995) 4 S 515; Delkon India Private Limited v. Bharat Heavy Electricals Limited 69(1997) DLT 491; Hindustan Steel Works Construction Ltd. v. Tarapore & Company and Anr. (1996) 5 S 34; Swenska Handlesbanken v. Indian Charge Chrome (1994) 1 S 502 Case Note: Civil Procedure Code, 1908 - Order 39 Rule 1 & 2--Restraint on bank guarantee-Considerations for--Existence of special equity--Encashment on account of delay in execution of work--Delay is not caused on account of the conduct of party entrusted with contract--Restraint on encashment of bank guarantee, issued. Held: A Bank guarantee is an independent contract whereby a bank undertakes to unconditionally and unequivocally abide by its terms and it cannot be affected by disputes between the parties to the underlying transactions. It creates an irrevocable obligation on the bank to perform the contract in terms thereof and on occurrence of the events mentioned therein, the bank guarantee becomes enforceable. It is only in exceptional cases like : (i) a case of established fraud (based on material events and not on bald pleadings in the application for stay) of "egregious" nature of which the bank has the knowledge and (ii) allowing encashment would result in irretrievable injustice to one of the parties concerned, the Court may interdict the

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encashment of the bank guarantee. In all other cases, the bank, giving such a guarantee, is bound to honour it as per its terms. There were delays in diverse ways by the defendant. To start with, the mobilization advance was released to the plaintiff on 9 May 1996 after the expiry of more than four months from the date of work order (dated 28 December 1995) and after more than three months of furnishing of bank guarantee by the plaintiff, when, as per the terms of the contract, the stipulated completion time of contract was only five months, extendable by one month for final finishing. Again, vide letter dated 29 May 1996, the plaintifff furnished to the defendant precise details of the deficiencies in the civil work as a result whereof it was unable to carry out the structural glazing. Though the defendant objected to the tone of the letter but nonetheless admitted that there were areas of civil work which were yet to be taken up. Similarly, it kept quiet on the request of the plaintiff contained in the same letter that the date of start of work may be considered from the date the site was handed over to them after completion of the civil work. As for the plea in defense based on the work order that work assigned to the plaintiff was to commence "immediately", on the issue of work order and, Therefore, the plea of the plaintiff that the work could not be executed for want of site could not be accepted, 1 feel that, the stand of learned counsel for the defendant is belied by the defendant's own stand, reflected in the correspondence exchanged between the parties, particularly by its fax message dated 17 July 1996 and letter dated 3 October 1996. When the plaintiff prima facie, seems to have utilised the entire mobilization advance for procuring the material for use on the defendant's building, as per the approved specifications, I feel that the plaintiff has successfully brought out special circumstances which are sufficient to make the present case an exceptional one justifying interference by restraining defendant no.2 from enforcing the bank guarantee in question. As a matter of fact having gained knowledge that the plaintiff has procured substantial material, even invocation of the bank guarantee after oral termination of the contract appears to be fraudulent. Bearing in mind all these factors, I find that special equities are in favor of the plaintiff and if the defendant is allowed to encash the bank guarantee in question, it would amount to irretrievable injustice to the plaintiff. I am, Therefore, satisfied that it is a fit case where defendant no. 1 needs being interdicted from encashing the bank guarantee in question. ORDER D.K. Jain, J. 1. In the suit for declaration and permanent injunction, declaring that the bank guarantee dated 6 December 1996, as revalidated, is not enforceable in law and restraining defendant no.2 from acting upon the said bank guarantee and invoking it, the plaintiff filed this application under Order 39 Rules 1 & 2 read with Section 151 CPC for grant of ad interim injunction to the same effect. On it, ex parte ad interim injunction order was issued on 19 August 1997 restraining defendant no.1 bank from remitting to defendant no.2 a sum of Rs.20 lakhs under the bank guarantee in question. 2. On being served with the summons/notice, defendant no. 2 has filed the written statement and reply to the application, resisting the suit and the application. 3. The brief facts, material for the disposal of the application, culled out from the pleadings, are : 4. The plaintiff, a joint venture company, incorporated in terms of an agreement between one M/s. P.D. Manufacturing International Pte. Ltd, Singapore and its Indian partner M/s. Alkaram Aluminium Pvt. Ltd of New Delhi, is engaged in the manufacture, installation and sale of aluminium curtain wall, cladding and glazing for the construction industry. Defendant no.1 is the Canara Bank, who have furnished the bank guarantee in question on behalf of the plaintiff. Defendant no.2 is M/s. Gemini Arts Ltd., a company engaged in the business of construction of

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multi-storeyed buildings. 5. Defendant No.2 undertook the construction of a multi-storeyed project, named as Prasad Towers, at Chennai. Pursuant to negotiations between the plaintiff and the said defendant regarding fixing of semi-utilized aluminium curtain wall for the said Prasad Towers, the defendant awarded the job to the plaintiff by communicating the work order to them on 28 December 1995. The relevant portion of the work order reads as follows: "Completion Time: the total work shall be started immediately and completed within 5 months in phased manner from the date of this work order. However, we will give one more month for final finishing". xxxxxxxxxxxx "Mobilization advance: 20% of the contract price shall be paid to you as Mobilization Advance against bank guarantee and subsequently recovered on a pro-rata basis in proportion to the value of the work done, by the time 90% of the total work is completed". 6. The plaintiff's case, succinctly stated, is that a bank guarantee for Rs.20 lakhs was furnished by it to defendant no.2 for mobilization advance made by the said defendant in terms of the contract, which was utilised by it for procuring material worth over Rs.24 lakhs for executing the job; defendant no.2 failed to discharge its primary obligations like: (i) timely disbursement of mobilization advance, despite plaintiff's furnishing of bank guarantee of defendant no.1; (ii) making the site available despite repeated requests but assuring to do so all the while; and (iii) failure to get R beams casted, being pre-requisite for putting up contracted Aluminium Curtain Wall, which lapses on its part are admitted facts but the said defendant still, illegally purported to terminate the contract orally and sought to invoke the bank guarantee, which, if not stayed/restrained by injunction, would cause irreparable loss to it. 7. It is claimed that plaintiff's officers had been visiting the site; being cognizant of the deficiencies and the defendant's failure to hand over the site it waived strict adherence to time schedule; while the plaintiff, on the contrary, did all to expeditiously and timely arranging and procuring specific material for executing the job from M/s. Hindalco Ltd., against invoices produced on record; and also to have arranged manpower and in the bargain, due to failures of the defendant and their fraudulent misrepresentations, to have suffered heavy losses, entitling it to be reimbursed by defendant no.2. The plaintiff states to have shockingly learnt from a public notice in press that the said defendant is under heavy debts and its properties,including "Prasad Towers" are under mortgage with the Indian Bank, Chennai and if under these circumstances the encashment of bank guarantee is not stayed, the plaintiff would suffer irreparable loss. 8. The suit and the application for interim injunction are opposed by defendant no.2 on the plea that the bank guarantee furnished being unconditional, defendant no.2, the beneficiary, is entitled to invoke and realise the same irrespective of any pending dispute for otherwise the purpose of giving bank guarantee would be defeated and the present being neither a case of fraud nor of irretrievable loss, the suit is misconceived. In support, reliance is heavily placed on the decision of the Supreme Court in U.P. State Sugar Corporation Vs. Sumac International Ltd., (1977) 1 S 568. It is alleged that the advance of Rs.20 lacs was given to the plaintiff for using it exclusively for the purpose of the contract, to be executed within six months, time being the essence of the contract, but after receiving the said amount, the plaintiff, with ulterior motive, did nothing towards the execution of the contract and did not utilise the said amount; the plaintiff has no valid claim against the defendant; it can always sue the defendant for damages and it has no right under law for injuncting the defendant from invoking the bank guarantee. It is denied that any officer of the plaintiff company had visited the site or that the defendant had ever waived the clause of completion of work within six months. It is asserted that the site was made available for commencement of work on 21 October 1996, and on failure of the plaintiff, the contract in question was cancelled telephonically on 9 August 1997 and the plaintiff was asked to refund the advance of Rs.20 lacs.

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9. I have heard Mr. Ashish Bhagat, Advocate for the plaintiff and Mr. S.S. Javeli, Senior counsel for the contesting defendant no.2 at some length. During arguments reference was made to the correspondence exchanged between the parties to show that the site was neither ready nor could be or was handed over to the plaintiff and the delay in execution was attributable solely to defendant no.2. Serialtim it is as under: Date of Substance of the communication Communication 28 December 1995 Work order communicated by defendant no.2 to the plaintiff - completion time five months. 15 January 1996 Acceptance letter. plaintiff furnished bank guarantee for Rs.20 lakhs for release of mobilization advance requested defendant no.2/its architects to inspect mock-up (sample) on 19 January 1996. 22 February 1996 plaintiffs request to defendant no.2 to release mobilization advance. 9 May 1996 Mobilization advance released. 22 May 1996 plaintiff's representatives visit the site and notice incomplete civil work. 29 May 1996 plaintiff's letter to defendant no.2, stating: "After discussion it was agreed by you that the civil work and other deficiencies pointed out as above shall be completed by you in one and a half month's time and the site will be ready to take up the curtain wall work by us by 10-07-96. Under the circumstances mentioned above it is not possible for us to commence the work of curtain wall at this stage and it depends entirely on completion of the civil work as pointed out above. We shall Therefore, await your communication in this regard so that we can mobilize ourselves only when the site is ready from your side. We will also request that the date of start for this work may be considered from the date the site is handed over to us after the completion of the civil work." 6 June 1996 Defendant's reply to plaintiff's letter - assuring that the items affecting structural glazing had been put on top priority and should be complete in a couple of weeks. 5 July 1996 Defendant's letter to the plaintiff - site will be ready by 15 July 1997. 17 July 1996 Defendant's fax message to the plaintiff - "site still not ready for commencing structural glazing work. Clearance will be intimated within a fortnight". 8 August 1996 plaintiff's fax to the defendant, requesting it to make site available. 3 October 1996 Fax message from defendant's General Manager to the plaintiff stating: "This is to inform you that after a slight delay on the project, we are back on track and we will be in a position to hand over the site to you by the 21st of this month. Please do the needful to start the work by then." 31 March 1997 plaintiff's letter to defendant - informing that huge amount spent in procuring designed frames and brackets and requesting to inform if site is ready so that it could send workers to take measurements.

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9 April 1997 Defendant No.2's letter to the plaintiff saying: "we understand from the letter that you have already purchased the entire material for this project immediately after getting the mobilization advance. We would like to you to get the shade of powder coating approved by Mr. Rajinder Kumar in Delhi. Subsequently please make arrangements to send the material to site. Kindly send us the schedule for delivery of material to the site immediately" 15 April 1997 plaintiff's letter to the defendant - inform if site available and all beams, lintels etc., casted and plastered so that engineer could be sent. 2 May 1997 Defendant's letter to plaintiff -Timeframe suggested was rather too long - send the schedule dates. 10 May 1997 plaintiff's letter to defendant no.2 - not in a position to give real dates. Bank guarantee expiring on 5 June 1997 - send it for revalidation to the bank. (Bank guarantee renewed up to 5 June 1998). 1 June 1997 Defendant informing the plaintiff - civil work completed, site will be made available shortly. 10. It would be appropriate at this stage to notice relevant stipulations in the bank guarantee, which are extracted below: "We, the Canara Bank, H-54, Connaught Circus, New Delhi-110001, do hereby undertake to pay the amount due and payable under this guarantee without any demur, merely on demand from the Employer stating that the amount claimed is due to the Employer under the said agreement any such demand made on the said bank shall be conclusive as regards the amount due and payable by the said Bank under this guarantee and the said Bank agrees that the liability of the said Bank to pay the Employer the amount so demanded shall be absolute and unconditional notwithstanding any dispute or disputes raised by the Contractor and notwithstanding any legal proceedings pending in any court or tribunal relating thereto. However, our liability under this guarantee shall be restricted to an amount not exceeding Rs.20.00 Lacs (Rupees Twenty Lacs only). We, the Canara Bank further agree that the Employer shall be the sole judge of and as to whether the said contractor has not utilised the said advance or any part thereof for the purpose of the contract and the extent of loss or damage, caused to or suffered by the Employer on account of the said advance not being recovered in full and decision of the Employer that the said Contractor has not utilised the said advance or any part thereof for the purpose of the said contract as to the amount or amounts of loss or damage caused to or suffered by the Employer shall be final and binding on us". 11. It would appear that the bank guarantee is an absolute one and irrespective of the existence of any disputes between the parties, it is invokable by the beneficiary as per stipulations therein. 12. As noticed above, apart from the breach attributed to defendant no.2 in its failures to discharge its obligations, like those reflected in the affronted resume of correspondence, the invocation of bank guarantee is challenged primarily on the grounds: (a) the fraud allegedly perpetrated by defendant no.2 on the plaintiff and (b) irretrievable injustice to the plaintiff as a consequence of allowing its encashment.

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13. Elaborating the plea of fraud played by defendant no.2, Mr.Bhagat, has contended that the gamut of correspondence between the parties clearly indicates that the defendant neither intended to nor was in a position to hand over the site but was only making fraudulent misrepresentations and its stand about the site being ready on 21 October 1996 was only a make belief. It was urged that the said defendant not only made it impossible for the plaintiff to complete the contracted work right from inception of the contract, it perpetrated a fraud in an attempt to cover up its defaults by illegally terminating the contract orally on the purported false please that the plaintiff has failed to perform its part of the obligation under the contract. It has been urged that the defendant has not only misled the plaintiff to invest huge funds in securing the materials for the contracted job, it also got the bank guarantee renewed by making false representation about the progress of the civil work from stage to stage, which clearly established that the defendant's invocation of the bank guarantee would be fraudulent. Reference was made to the correspondence between the parties to contend that defendant no.2, right from inception till end either had no intention to or miserably failed to honour the contract and its conduct was fraudulent. His submission is that the "process of mobilization" commenced from the stage when various drawings were got prepared by the plaintiff and continued till the supplies were received from the Hindalco and Therefore the stand of the defendant that after receiving the mobilization advance it did not utilise the same for the purpose it was meant is fallacious. It is urged that the plaintiff having already spent more than Rs.24 lakhs, per invoices produced, as against Rs. 20 lakhs advanced to it by the defendant, on the purchase of materials between 7 June 1996 to 28 September 1997 and on 28 January 1997, if the injunction as prayed is not granted, it would suffer irretrievable injustice particularly when the defendant, invoking the bank guarantee is in very poor financial state and under heavy debt and its entire property is mortgaged, about which, as noted above, a public notice has been issued by the bank. 14. The public notice published reads as follows: "This is to warn the general public that the below mentioned properties "Gemini Towers" situated at #601, (Old Door No.121), Anna Salai, Madras - 600 006 are 1. mortgaged by M/s. Gemini Arts (P) Ltd., (7 grounds and 596 sq.ft.) to the loans granted by the bank to M/s. Gemini Pictures Circuits (P) Ltd., and M/s. Gemini Arts (P) Ltd., AND mortgaged by M/s. Green Garden (P) Ltd. (13 grounds and 1804 sq.ft.) to the loans granted by the bank to M/s. Gemini Arts (P) Ltd. The mortgages are in favor of Indian Bank, Thousand Lights Branch. Above mortgages are extended to the loans granted by the bank to M/s. Ravishankar Industries (P) Ltd. The said mortgages are continuing and hence, bank has got rights over the below mentioned properties as per law. Any transaction in respect of these properties now known as "Gemini Towers" without consent of the bank is not binding on the bank and any person who deals with these properties either as a lessee or a purchaser or the like in any manner whatsoever will be doing so at his own risk and responsibility". 15. Though the fact of defendant being under a heavy debt is disputed but issue of public notice by the bank is not denied in the written statement. During the course of hearing, a copy of the letter dated 9 August 1997, written by defendant no.2 to the bank asking it to remit the amount under the bank guarantee in question was placed on record and it was submitted that the invocation of bank guarantee is not in accordance with its terms, as it neither stated that the plaintiff has not utilised the mobilization advance nor indicated the amount of loss allegedly suffered by defendant no.2 to entitle it to invoke the bank guarantee. For all these reasons, it was submitted that encashment of bank guarantee maybe restrained.

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16. Mr. Javeli, learned senior counsel for contesting defendant no.2, relying on the terms of the work order, relating to "completion time" has submitted that in the contract there was no stipulation about the completion of the entire civil work and/or of handing over the site; the work was contemplated to start "immediately" in phased manner on the issue of work order on the site as it then existed; no grievance about the incomplete civil work was made out by the plaintiff till it received the mobilization advance and the plea of non-availability of site to the plaintiff is only an afterthought to somehow wriggle out of the contract, which the plaintiff was incapable of performing. Relying heavily on the plaintiff's letter dated 29 May 1996, extracted above, expressing inability to start work of curtain walls, as the civil work was not complete, the learned counsel sought to refute the stand of the plaintiff that it had placed order or supply of material on 15 May 1996 and it received the same from June to September 1996, on the plea that in view of categorical assertion by the plaintiff in the said letter "not to start work" there was no occasion to procure the material from M/s. Hindalco Limited, with which, it is alleged, the plaintiff otherwise enjoys friendly relations. Mr. Javeli has contended that even assuming that there was delay in completion of civil work at site, it would not tantamount to fraud so as to interdict the bank from encashing the bank guarantee. Learned counsel has vehemently submitted that it is now well settled that except in case of fraud, and that too when it creates special equities in the form of irretrievable injustice, the court should not interfere by restraining the beneficiary from encashing the bank guarantee. In support of the contention he has placed reliance on the decisions of the Supreme Court in U.P. 17. Cooperative Federation Ltd Vs . Singh Consultants & Engineers (P) Ltd MANU/SC/0021/1987 : [1988]1SCR1124 , UP State Sugar Corporation Vs . Sumac International Ltd. MANU/SC/0380/1997 : AIR1997SC1644 , Dwarikesh Sugar Industries Ltd. Vs . Prem Heavy Engineering Works (P) Ltd. & Anr. MANU/SC/0639/1997 : AIR1997SC2477 , National Thermal Power Corporation Vs. Flowmore Pvt. Ltd. (1995) 4 S 515 and my order in Delkon India Private Limited Vs . Bharat Heavy Electricals Limited MANU/DE/1175/1997 : 69(1997)DLT491 . There is no quarrel with the principles of law governing the bank guarantees, laid down in the affronted judgments. It is well settled by a catena of decisions of the Supreme Court, including the ones noted above, that a bank guarantee is an independent contract whereby a bank undertakes to unconditionally and unequivocally abide by its terms and it cannot be affected by disputes between the parties to the underlying transactions. It creates an irrevocable obligation on the bank to perform the contract in terms thereof and on occurrence of the events mentioned therein, the bank guarantee becomes enforceable. It is only in exceptional cases like : (i) a case of established fraud (based on material events and not on bald pleadings in the application for stay) of "egregious" nature of which the bank has the knowledge and (ii) allowing encashment would result in irretrievable injustice to one of the parties concerned, the Court may interdict the encashment of the bank guarantee. In all other cases, the bank, giving such a guarantee, is bound to honour it as per its terms. The said principles have again been reiterated in the latest decision rendered in Dwarikesh Sugar Industries case (supra). 18. In Hindustan Steel Works Construction Ltd. Vs . Tarapore & Company and Anr. MANU/SC/0582/1996 : AIR1996SC2268 , the Supreme Court dealt with the question whether apart from fraud there can be any other valid ground for interdicting encashment of bank guarantee. While referring to various earlier decisions, succinctly analysing the ratio of the judgment in UP Cooperative Federation Ltd. (supra) and Swenska Handlesbanken Vs . Indian Charge Chrome MANU/SC/0138/1994 : AIR1994SC626 , their lordships held as follows: "Therefore, fraud cannot be said to be the only exception. In a case where the party approaching the court is able to establish that in view of special equities in his favor if injunction as requested is not granted then he would suffer irretrievable injustice, the court can and would interfere. It may be pointed out that fraud which is recognised as an exception is the fraud by one of the parties to the underlying contract and which has the effect of vitiating the entire underlying transaction. A demand by the beneficiary under the bank guarantee may become fraudulent not because of any fraud committed by the beneficiary while executing the underlying contract but it may become so because of subsequent events or circumstances. We see no good reason why the courts should not restrain a person making such a

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fraudulent demand from enforcing a bank guarantee". 19. The apex court finally concluded by saying that "the correct position of law is that commitment of banks must be honoured free from interference by the Courts and it is only in exceptional cases, that is to say, in case of fraud or in a case where irretrievable injustice would be done if the bank guarantee is allowed to be encashed, the court should interfere". 20. It prima facie appears from the resume of correspondence between the parties, digested above, and the invoices for purchase of material by the plaintiff that it did spend about Rs.24 lakhs on the specific material purchased for the job to be executed. Applying the affronted principles of law laid down in Hindustan Steel Works Construction Ltd., (supra), I am of the considered view that in the present case the plaintiff has been able to establish special equities in its favor and if injunction, as prayed, is not granted, it would suffer irretrievable injustice. 21. As noticed above, there were delays in diverse ways by the defendant. To start with, the mobilization advance was released to the plaintiff on 9 May 1996 after the expiry of more than four months from the date of work order (dated 28 December 1995) and after more than three months of furnishing of bank guarantee by the plaintiff, when, as per the terms of the contract, the stipulated completion time of contract was only five months, extendable by one month for final finishing. Again, vide letter dated 29 May 1996, the plaintiff furnished to the defendant precise details of the deficiencies in the civil work as a result whereof it was unable to carry out the structural glazing. Though the defendant objected to the tone of the letter but nonetheless admitted that there were areas of civil work which were yet to be taken up. Similarly, it kept quiet on the request of the plaintiff contained in the same letter that the date of start of work may be considered from the date the site was handed over to them after completion of the civil work. 22. As for the plea in defense based on the work order that work assigned to the plaintiff was to commence "immediately", on the issue of work order and, Therefore, the plea of the plaintiff that the work could not be executed for want of site could not be accepted, I feel that, the stand of learned counsel for the defendant is belied by the defendant's own stand, reflected in the correspondence exchanged between the parties, particularly by its fax message dated 17 July 1996 and letter dated 3 October 1996. 23. It is evident from these messages that everything was not well at the site for which the plaintiff could obviously be not blamed. Learned counsel for the defendant has not been able to show any material controverting the stand of the plaintiff with regard to the civil work in the building under construction. 24. The plaintiff has also placed on record sufficient material, in the form of various invoices issued by M/s. Hindalco Industries Ltd.; bill-wise details of aluminium procured, corresponding to drawings filed per Annexure P-1 (Colly.), which, prima facie, shows that it had procured fabrication material worth more than Rs.20 lacs, advanced by the defendant. In the light of this material, over-emphasis of learned counsel for the defendant on the above extracted last part of the plaintiff's letter dated 29 May 1996, to the effect that it would start mobilising itself for the job only when the site is ready, renders it of no substance. It may not be out of place to mention that during the course of hearing it was suggested to learned counsel for the defendant that the purchased material stated to be lying at the premises of the plaintiff may be got inspected by the defendant and if deemed fit it could be released to the defendant for being used in the building under construction. It seems that the inspection was carried out because it was stated at the bar by learned counsel for the defendant that the material was not complete and it was on that plea that the defendant did not show any interest in the material. In this view of the matter, plaintiff's pleas of defendant's failures and fraudulent misrepresentation apart, to be dealt with on merits later in due course, when the plaintiff prima facie, seems to have utilised the entire mobilization advance for procuring the material for use on the defendant's building, as per the approved specifications, I feel that the plaintiff has successfully brought out special circumstances which are sufficient to make the present case an exceptional one justifying interference by restraining defendant no.2 from enforcing the bank guarantee in question. As a matter of fact having gained knowledge that the plaintiff has procured

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substantial material, even invocation of the bank guarantee after oral termination of the contract appears to be fraudulent. Bearing in mind all these factors, I find that special equities are in favor of the plaintiff and if the defendant is allowed to encash the bank guarantee in question, it would amount to irretrievable injustice to the plaintiff. I am, Therefore, satisfied that it is a fit case where defendant no.1 needs being interdicted from encashing the bank guarantee in question. 25. For the view I have taken, it is unnecessary to go into the pleas of fraud and improper invocation of the bank guarantee raised by the plaintiff, although the invocation of bank guarantee by defendant no.2's letter dated 9 August 1997, asking the bank- defendant no.1 to remit the amount under the bank guarantee, prima facie, does not appear to be in terms of the bank guarantee. 26. For all these reasons, the application is allowed and the interim order dated 19 August 1997 is confirmed till the disposal of the suit subject to the condition that the entire material procured by the plaintiff from M/s. Hindalco under various invoices, filed in Court, for use in the defendant's building will be properly preserved and shall not be disposed of without the leave of the Court and further the plaintiff shall keep the bank guarantee alive till the disposal of the suit. 27. The view expressed hereinabove is tentative for the limited purpose of decision in this application and shall not be construed as expression of opinion on merits of the controversies between the parties.

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