The fate of a suit against encashment of bank guarantee still hangs in balance after almost two decades: The Supreme Court of India
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. One of the reasons for interference could be egregious fraud. The fraud must be relatable to the bank guarantee. The aforesaid has been held by the Supreme Court of India in the case of Atlanta Infrastructure Ltd v. Delta Marine Company & Ors. [SLP (C) No. 14979 of 2020] which was decided by the single judge bench comprising Justice Sanjay Kishan Kaul on 19July 2021.
The facts of the case are as follows. Respondent No.1, the original plaintiff, preferred an appeal before the learned Addl. District Judge, Khurda. On 18.11.2019, the appellate court passed an interim order restraining the release of payment of bank guarantee. Meanwhile, respondent No.1 moved an application under Order 41 Rule 27 of the CPC seeking admission of copy of the report of expert opinion dated 4.12.2019 under Section 45 of the Evidence Act. They sought to place on record some documents of the appellant with an objective of signature comparison. Such a request was rejected by the learned ADJ, Khurda vide order 18.02.2020. The aforesaid fact was brought to the notice of this court on 27.10.2020. Noticing the mockery made out of the proceedings, for stay of encashment of bank guarantee, a report was called. The aforesaid fact was brought to the notice of this court on 27.10.2020. Noticing the mockery made out of the proceedings, for stay of encashment of bank guarantee, a report was called. The application under Order 41 Rule 27 CPC preferred by the respondent was predicated on a reasoning that some interrogatory had been put to the appellant which would show that a fraud was sought to be played on the Court.
The court perused the facts and arguments presented along with the documentary evidence. It was hence declared by the court that ” our view, the argument of the respondent No.1 is fallacious. Learned counsel for the respondent No.1 admits that what he was trying to show is that the signatures of the officers of the appellant on documents do not match with the vakalatnama or some other documents which would in turn show that the appellants had been acting fraudulently in a different matter. However, this has nothing to do with the issue relating to the signatures of the representatives of the appellant, which they do not deny. We perceive this to be another endeavour on part of the respondent No.1 to unnecessarily keep prolonging the issue and somehow prevent encashment of the bank guarantee. In view of the aforesaid, we set aside the impugned order and dismiss 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. The appeal is, accordingly, allowed leaving the parties to bear their own costs.”