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Gujarat High Court
Capsugel vs M/S on 3 August, 2010
Author: Jayant Patel,&Nbsp;Honble Kumari,&Nbsp;
   Gujarat High Court Case Information System 

  
  
    

 
 
    	      
         
	    
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CA/2273/2010	 7/ 7	ORDER 
 
 

	

 

IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
 

 


 

CIVIL
APPLICATION - FOR STAY No. 2273 of 2010
 

In


 

FIRST
APPEAL No. 481 of 2010
 

 
 
=====================================================
 

CAPSUGEL
HEALTHCARE LIMITED - Petitioner(s)
 

Versus
 

M/S
VIMAL SERVICES LIMITED & 1 - Respondent(s)
 

===================================================== 
Appearance
: 
MR
MIHIR JOSHI,SR.COUNSEL with MR ABHIJAT and MR
NIKUNT K RAVAL for Applicant 
MR
SN SOPARKAR,SR.COUNSEL with MR AMAR N BHATT for Respondent(s):
1, 
None for Respondent(s) :
2, 
=====================================================
 
	  
	 
	  
		 
			 

CORAM
			: 
			
		
		 
			 

HONOURABLE
			MR.JUSTICE JAYANT PATEL
		
	
	 
		 
			 

 

			
		
		 
			 

and
		
	
	 
		 
			 

 

			
		
		 
			 

HON'BLE
			SMT. JUSTICE ABHILASHA KUMARI
		
	

 

 
 


 

Date
: 03/08/2010 

 

 
 
ORAL
ORDER

(Per
: HONOURABLE MR.JUSTICE JAYANT PATEL)

1. Present
application is filed for interim injunction pending the hearing of
the First Appeal against the invoking of the letter of credit by the
bank (for the sake of convenience, shall be referred to as the
bank guarantee or letter of credit ).

2. We have
heard Mr. Mihir Joshi, learned senior counsel appearing with learned
counsel Mr. Abhijat with learned counsel Mr.Nikunt Raval for the
applicant and Mr.S.N.Soparker,learned senior counsel with Mr. Amar
Bhatt for the respondents.

3. We may
record that since the lower Court has, after considering the nature
of Bank Guarantee, also has proceeded to examine the contract and its
breach between the plaintiff and the defendant No.1, therefore
whether such could have been done while considering the aspects of
the interim measure or not, the appeal has been admitted. So far as
the aspects of the observations made by the trial Court for the bank
guarantee and the interpretation of the clauses of the bank guarantee
are concerned, it appears that the view taken by the trial Court does
not deserve to be interfered with pending the First Appeal. In
addition to the observations made by the trial Court, the matter also
is required to be considered on equitable consideration, on the
aspect as to whether the party to the proceedings can be permitted to
back out from the bank guarantee or not and the answer would be in
negative.

4. It is,
by now, well settled that the contract of bank guarantee is to be
considered as independent and it should not be and cannot be mixed up
with the contract between the parties inter se i.e. other than the
bank guarantee. So far as the agreement between the parties is
concerned, namely, the plaintiff and the defendant No.1, it is to be
treated as a separate contract and its term should not be mixed with
the contract of bank guarantee.

Further,
if bank guarantee is to be considered as an independent contract,
certain aspects in the present Letter of Guarantee deserves to be
recorded. One is that its title is irrevocable revolving L/C, meaning
thereby, it cannot be revoked and would continue to remain as
revolving. The second is that the liability to make payment would
stand attracted when signed invoice in two copies are submitted. The
additional condition does provide for drawing of the draft for net
rental payment as per the Annexure, but the same cannot be segregated
from condition No.3, which refers to the rental payment providing for
30 months on rental basis as per the work order No.2000-2007 dated
5.5.2006. In the work order dated 5.5.2006 at Clause 3.2.13 under the
head of guarantees and foreclosure, relevant of which reads as
under:-

However due to whatsoever reason if the order/Contract is required to
be closed/cancelled/ terminated before the specified
contractual/rental period due to any ‘Force Majeure’ Conditions or
due to whatsoever reason in that case M/s.Bharti Healthcare Ltd. and
M/s.Capsugel Ltd.( Unit of Pfizer Ltd.) agrees to pay us the entire
rental charges for the remaining non-used hours of termination/
closure/ cancellation / non used of the installed CPP of this
contract.

Further
Clause No.5 of the bank guarantee reads as under :-

Even
due to any of the other reason, the payment to the extent of the LC
amount shall not be hold by this Bank due to whatsoever reason and
such payment will be paid by this Bank within 15 days from the date
of the presentation of the Invoice/Documents of the beneficiary.

The
aforesaid underlined portions show that as per the Clause 5 of the
special instructions, even due to any of the other reason, the
payment to the extent of the L.C amount shall not be held by the Bank
due to whatsoever reason and such payment will be paid by this Bank
within 15 days from the date of presentation of the Invoice/Documents
of the beneficiary.

5. The
aforesaid special circumstances goes to show that once the invoice
is drawn for the invoking of the bank guarantee, the same could be
termed as unconditional and the Bank has to honour the same,
irrespective of any dispute or discrepancy in the drawing of the
Invoice. The same is coupled with the aforesaid above referred
condition of work order which binds the party to the agreement to
honour and guarantee payment for any reason whatsoever including the
Force Majeure.

6. Attempt
to contend that the additional condition No.1 providing for drawing
of the draft at site for the net rental payment as per the Annexure
be read as part of the bank guarantee, even if considered, cannot be
read to dillute or frustrate the bank guarantee and other conditions
of the bank guarantee. Whether net rental for one reason or another
is payable or not is an aspect, which may be governed by MOU for
which either party to the agreement may press the conditions of the
MOU by way of arbitration or otherwise. But considering all other
conditions of the bank guarantee, it is not possible for us to prima
facie accept the contention, at this stage, that merely because there
was dispute or that there was genuine dispute about the liability to
pay net rental, the bank guarantee could not be invoked.

7. In view
of the aforesaid, read with the reasons recorded by the trial Court
to the extent of nature of bank guarantee, we find that it would not
be a case for granting interim injunction restraining the defendant/
opponent herein from invoking the bank guarantee. Be it noted that
the Bank has not raised any dispute but the plaintiff, who may be
ultimately affected by the invoking of the bank guarantee, has
approached to the trial Court for interim protection. Even, if the
maintainability is not given, further due weightage when the bank
guarantee is, in view of the reasons recorded by us hereinabove,
could be said as for attracting the liability or honouring the
liability due to any reason whatsoever, the interim injunction does
not deserve to be granted, for invoking of the bank guarantee which
is the only prayer made in the present application.

8. Hence,
application is rejected.

9. At this
stage, Mr. Joshi, learned senior counsel, prayed for suspending the
operation of the order and continuance of the interim relief for some
time so as the enable his client to approach before the higher forum.

10. Considering
the facts and circumstances,earlier interim relief shall continue
till 25.8.2010.

(Jayant
Patel, J. )

(Smt.

Abhilasha Kumari, J.)

sudhir

   

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