Friday, November 5, 2021

appeal under Section 29 of the Protection of Women from Domestic Violence Act’ 2005

 

District : Howrah.

In the Court of the Learned Additional District Session Judge, at Uluberia, Howrah. Orisha Trunk Rd, Sizberia, Kalibari, Uluberia, Howrah, West Bengal 711315.

 

                                                Criminal Appeal no.                 of 2021

 

                                                          In the matter of :

An appeal under Section 29 of the Protection of Women from Domestic Violence Act’ 2005;

 

AND

 

In the matter of :

Impugned Order dated 21-08-2021, passed in Misc. Case no. 174 of 2020, by the Ld. ACJM, Uluberia.

 

AND

 

In the matter of :

1.   Sri Arnab De, Son of Sri Apurba Kumar De, aged about 40 years, residing at B1/4 003, Peerless Prantik Housing Complex, Sonarpur, Police Station – Narendrapur, District – South 24 Parganas, Kolkata – 700150, Mobile Number : 9860943019.

 

2.   Smt. Sutapa De, Wife of Sri Apurba Kumar De, residing at B1/4 003, Peerless Prantik Housing Complex, Sonarpur, Police Station – Narendrapur, District – South 24 Parganas, Kolkata – 700150,

 

3.   Shri Apurba Kumar De, Son of Late Haran Chandra De, residing at B1/4 003, Peerless Prantik Housing Complex, Sonarpur, Police Station – Narendrapur, District – South 24 Parganas, Kolkata – 700150,

   _____________Appellants.

 

-      Versus -

 

1.   The State of West Bengal;

 

2.   Smt. Tithi De Adhikary, Wife of Sri Arnab De, and Daughter of Sri Somnath Adhikary, residing at Village – East Burikhali, Post Office – Burikhali, Police Station – Bauria, District – Howrah - 711310,

                                                                    _________Opposite Parties.

 

The humble petition on behalf of the appellants above named most respectfully;

 

 

SHEWETH :

 

1.   That no appeal under Section 29 of the Protection of Women from Domestic Violence Act’ 2005, has ever been filed, pending or rejected by this Learned Court. No proceeding has ever been placed before the Hon’ble High court Calcutta. This is the First time appeal under Section 29 of the Protection of Women from Domestic Violence Act’ 2005, before this Learned Court.

 

2.   That the Opposite Party no.2, herein preferred an application under Section 12 of the Protection of Women from Domestic Violence Act’ 2005, before the Learned ACJM, Uluberia, which has been registered as Misc. Case no. 174 of 2020, against the appellants herein.

 

3.   That the appellants made their appearance in the said Misc. Case no. 174 of 2020, before the Learned ACJM, Uluberia, upon receipt of the notice under Section 13 of the Protection of Women from Domestic Violence Act’ 2005. The Appellants filed their answer being Written Objection or Show Cause with the mandatory Affidavit concerning the assets and Liability, etc.

 

4.   That in the said Misc. Case no. 174 of 2020, the Opposite Party no.2, herein has preferred one application for interim relief being an application on affidavit under Section 23 of the Protection of Women from Domestic Violence Act’ 2005, thereby praying for monetary relief only. The appellants filed their answer being Written objection or Show cause against the relief prayed for by the opposite party no.2, herein, before the Learned ACJM, Uluberia.

 

5.   That the application under Section 23 of the Protection of Women from Domestic Violence Act’ 2005, has been taken up for hearing by the Learned ACJM, Uluberia, and consequently passed necessary Order dated 21-08-2021, in Misc. Case no. 174 of 2020, and thereby directed the Respondent to pay maintenance allowance as monetary relief of Rs. 18,000/- p/m to the opposite party no.2, herein.

 

2.           That being high aggrieved and dissatisfied with the order dated 21-08-2021, in Misc. Case no. 174 of 2020, passed by the Learned ACJM, Uluberia, the appellants beg to prefer this appeal under Section 29 of the Protection of Women from Domestic Violence Act 2005 before your Honour on the following amongst other on the following :

 

GROUNDS

 

I.             FOR THAT the Order and Judgement passed by The Learned Court below is whimsical, harsh, arbitrary and is based on surmises and conjectures and as such the same is liable to set aside;

 

II.           FOR THAT the Learned Court below failed to appreciate that the Order has been passed whimsically in a mechanical manner without going into the merits of the case and the same will vitiate trial of the proceeding;

 

III.          FOR THAT very surprisingly the Learned Court below did not take note of the earning of the Opposite Party no.2, herein. The Opposite Party no.2, categorically stated in her affidavit of Assets declaration that She is earning a sum of Rs. 13,732/- ( Rupees Thirteen Thousand and Seven Hundred Thirty Two ) only being Net Income per month from her Employer Tata Consultancy Services. Her Total Earning per month is as Rs. 16,560/- ( Rupees Sixteen Thousand and Five Hundred and Sixty ) only, per month, and the opposite party no.2, given a copy of her salary slip to substantiate such facts of her earning before the Learned Court below;

 

IV.         FOR THAT the Learned Court below did not accommodate the facts of the appellants that the appellant no.1, incurred huge expenses towards House Rent in Pune being work place at Pune, EMI for Car, Insurances, and most emergent medical expenses of old aged parents at Kolkata;

 

V.           FOR THAT the Opposite Party no.2, is a Working Lady and thereby She is Earning sufficiently to maintain herself;

 

VI.         FOR THAT the Learned Court below did not take any facts of the appellants while passing the impugned Order dated 21-08-2021, in Misc. Case no. 174 of 2020;

 

VII.        FOR THAT the Opposite Party no.2, herein withdraw Matrimonial Suit no. 238 of 2020, initiated by herself against the appellant no.1, herein, in the Court of the Learned Additional District Judge 1st Court Uluberia;

 

VIII.      FOR THAT the Opposite Party no.2, herein withdraw a proceeding under Section 125 of Cr.P.C. initiated by herself against the appellant no.1, herein in the Court of the Learned Additional Chief Judicial Magistrate, Uluberia;

 

IX.         FOR THAT the Learned Court below siding with the Opposite Party no.2, herein which resulted in  erroneous impugned order;

 

X.           FOR THAT the Learned Court below erred in law vis-à-vis in facts of the case;

 

XI.         FOR THAT the Learned Magistrate observation and the purported order is under the violation of natural justice;

 

XII.       FOR THAT the impugned Order is otherwise bad in law and liable to be set aside.

 

6.     That the grounds stated above, the aforesaid order is liable to be set aside or vacated in the interest of administration of Justice.

 

  1.   That the other ground/grounds will be agitated at the time of hearing of this appeal.

 

8.               That the appellants enclosing herewith the Original Certified Copy of the Order dated 21st day of August’ 2021, passed in Misc. Case no. 174 of 2020, passed by the Learned Additional Chief Judicial Magistrate, Uluberia, Howrah.

 

9.               That the appellants enclosing herewith the followings :

 

a)    Affidavit of Assets by the Opposite Party no. 2;

b)   Payslip of the Opposite Party no.2;

 

10.          That the appellants crave leave to produce necessary documents before the Learned Court at the time of hearing.

 

11.          That this memo of appeal is made bona-fide and for the interest of administration of justice.

 

Under the aforesaid facts and circumstances, the appellant most humbly prays that Your Honour may graciously be pleased to admit the appeal, call for the Lower Court Case Records, issue notices upon the Opposite Parties and upon hearing be pleased to set aside the impugned Order dated 21st day of August 2021, passed in Misc. Case no. 174 of 2020, by the Learned Additional Chief Judicial Magistrate, Uluberia ;

 

-And-

 

Pending hearing of the appeal further be pleased to stay the operation and or effect of the Order dated 21st day of August 2021, in Misc. Case no. 174 of 2020, before the Learned Court of Additional Chief Judicial Magistrate, Uluberia ;

 

-And/or -

 

to pass such further Order/Orders and or necessary Order/Orders as Your Honour may deem fit and proper for the end of Justice.

 

And for this act of kindness, Your appellants as in duty-bound shall ever pray.

 

 

 

 

 

 

 

 

VERIFICATION

 

 

I, Arnab De, the appellant no.1, herein, do hereby declare and say that the statement made in  paragraphs 1 to __________are true to the best of my knowledge and the rest are my humble submission before this Learned Court. 

 

I signed this verification on

this    day of              2021

at the Court Premises

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affidavit

 

I, Sri Arnab De, Son of Sri Apurba Kumar De, aged about 40 years, by faith Hindu, by Occupation Service, residing at B1/4 003, Peerless Prantik Housing Complex, Sonarpur, Police Station – Narendrapur, District – South 24 Parganas, Kolkata – 700150, West Bengal, do hereby solemnly declare and affirm as follows :

 

1.   That I am competent to swear this affidavit, and I am authorized to swear this affidavit on behalf of the appellant no.2, and 3, who are my father and mother respectively.

2.   That I am the appellant no.1, herein in the present proceeding, before the Learned Court.

3.   That I am conversant and acquainted with the material facts as stated in the foregoing paragraphs of my Written Objection / schow cause.

4.   That the statements as made by me in the foregoing paragraphs in the written objection are true to the best of my knowledge and belief.

5.   That all the above statements are true to the best of my knowledge and belief.

 

 

 

 

DEPONENT

Identified by me,

 

Advocate.

Prepared in my Chamber,

 

Advocate

Date : __________________2021.

Place : Uluberia Court Premises.

NOTARY

English Script of Statement of witnesses recorded Under Section 161 of Cr.P.C. in Bengali Languages

 

Statement of ASI - Subir Sen of Siliguri Police Station in C/w Siliguri Police Station Case no. 1318/20, dt. 25-10-2020, U/S. 21 ( C ) NDPS Act recorded U/S 161 Crpc.

 

Being asked I am telling you that in terms of the order of CI yesterday at about 4 pm in the afternoon. I went to a NAKA checking headed by our SI Sajal Roy. I was accompanied by the entire team of our Police Station, in our car Sajal Babu informed us about the purpose of our visit. He told us that a pick up van having registration no. WB73D/8392 was carrying huge amount of Brown Sugar. The said Vehicle had been heading towards Siliguri. The passenger on the said Vehicle is engaged in illegal business. The said Vehicle was supposed to go towards Jhankar More. Accordingly we started NAKA Checking near Traffic point near Jalpai More at Burdawan Road. After a few while we stopped the said Vehicle. In terms of the Order of Sajal Babu, we surrounded the car. The said Vehicle was carrying 2 male passengers namely Md. Noor Alam ( Driver ) and Md. Swain and a female passenger namely Khirul Nessa, was sitting on the left side in the front row. Sajal Babu informed them in writing about the purpose of interception of their Car, and he informed them that the car would be searched. In the mean-time Two independent witnesses namely Md. Islam and Uday Das were called and both of them agreed to be present at the time of search & seizure. As a Gazated Officer, the IC Sri Sujit Chakraborty was informed about the entire situation and was further requested to be present at the site during search and seizure to be conducted according to wishes of the passengers of the said Vehicle. Thereafter in presence of the IC and the independent witnesses the Vehicle was searched legally. During searching a nylone bag containing a Garlic packet with one Kg Brown Sugar was found below the front seat of the vehicle. Being asked the three passengers of the vehicle admitted that they are engaged for a long time smuggling Brown Sugar. Thereafter the said seized article was weighed and it was found to be one kilogram. It was packed.

SI J.K. Roy

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Statement of ASI – Siben Sarkar of Siliguri Police Station in C/w Siliguri Police Station Case no. 1318/20, dt. 25-10-2020, U/S. 21 ( C ) NDPS Act recorded U/S 161 Crpc.

 

On being asked I am telling you that in terms of the order of Siliguri PS MCC No. 6209/20 dated 25-10-2020, I went to a raid at about 4 pm headed by SI Sajal Roy of our Police Station. Other than me there were ASI Siben Sarkar, LASI Shrabani Saha, and other force. When we boarded our car Sajal Babu informed us about a source information which says that a pickup van having registration no. WB73D/8392 heading towards Siliguri was carrying huge illegal brown sugar. We were informed that the said Vehicle would be going to Jhankar More from Nauka Ghat. Accordingly we started NAKA checking on burdawan road near Jalpai More traffic point. After a little while we start the said Vehicle and surrounded it. The said Vehicle was carrying two male passengers namely Md. Noor Alam, Md Swain, and female passenger namely Md. Khairul. Sajal Babu served them Notice under NDPS Act and requested two independent witnesses to be present there and they were present with writing. Sajal Babu requested IC Shri Sudip Chakraborty of our Police Station to be present in the spot as a Gazeted Officer and he agreed to it and presented himself on the spot. In presence of IC Sudip Chakraborty and other independent witnesses, the two male and one female passengers of the said vehicle were searched. During searching one nylone bag containing a packet of garlic was found below the seat in front row. One plastic zipper inside the garlic bag was found containing about one kilogram brown sugar. Being asked the passengers of the vehicle informed that they were carrying brown sugar and they do this business. Sajal Babu weigh the said brown sugar in presence of the IC and the independent witnesses and prepared seizure and labeled them. We took signatures of the witnesses and the accused persons, and arrested the accused persons and then we return to the Police Station.  

SI J.K. Roy

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Statement of LASI – Shrabani Sarkar of Siliguri Police Station in C/w Siliguri Police Station Case no. 1318/20, dt. 25-10-2020, U/S. 21 ( C ) NDPS Act recorded U/S 161 Crpc.

 

On being asked I am telling you that in terms of the order of Siliguri PS MCC no. 6209/20, dt. 25-10-2020. I went to a raid at about 4 pm with the leadership of SI Sajal Roy of our Police Station. Other officers and force and me were present. We boarded our car. Sajal informed us that a pick up vehicle having registration no. WB73D/8392, was carrying huge amount of illegal brown sugar. The vehicle was coming towards Jhankar More from Nauka Ghat. Accordingly we started NAKA Checking on Bardhaman Road at Jalpai More. Within a few moments vehicle was stopped on bardhaman road near Jalpai More Trafic. The said vehicle was carrying two male and one female passengers. Sajal Babu informed them while the car has been stopped and issued notice to search them legally. The passengers were Md. Noor Alam, Md. Swain, and Khairul Nessa. Sajal Babu requested IC Siliguri PS to be present on the spot as a Gazated Officer. IC Sir Sri Sudip Chakraborty came to the spot, I searched the female passenger and others searched the male passengers. A nylone bag containing garlic was found on the foot space of the car. a zipper plastic bag containing item of intoxication like brown sugar was inside the said garlic bag. On being asked by Sajal Babu they told that the said item was brown sugar. Sajal Babu then weigh the said item and it was one kilogram. 10 gram of the said item was separated to make it a sample and seized one kilogram brown sugar other items and the car in presence of IC Sir. During search and seizure two independent witnesses were present. Then Sajal completed search, seizure and labeling of entire items. All of us signed in the seizure list. Independent witnesses also signed in the seizure. Then Sajal Babu arrested them for illegal trading of brown sugar and we returned.

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Statement of Md. Islam (29) S/O. Lt. Md. Ayub of Santosh Nagar, Ward no. 05, P.S. Siliguri, in C/w Siliguri Police Station Case no. 1318/20, dt. 25-10-2020, U/S. 21 ( C ) NDPS Act recorded U/S 161 Crpc.

 

On being asked I am telling you that on 25-10-2020, I was returning from Jalpai More to my residence. And that time suddenly car of the IC of Siliguri PS came in front of me. Sajal Babu was known to me previously. I was requested that a pick up vehicle containing brown sugar would come. I was requested in writing to be present during search and seizure in case brown sugar is found. In terms of his request I was waiting with them on the road at Jalpai More. Thereafter they stopped a pick up a van which was coming from Nauka Ghat. The vehicle was carrying a Driver, a female passenger, and a male passenger. They were deported from the car and the car was searched when one kilogram of brown sugar like item in a garlic bag. Sajal weigh the said item and told that it was brown sugar. Then Police took custody of the said three passengers I know the female passenger whose name is Khairul Nessa, wife of Md. Tamanna and whose is in the Gwala Pati. IC of the Police Station was present at that time, then Sajal Babu seized and labeled the items and the car in my presence and told us to sign as witnesses, and I sign that. Then the Police took the said three persons and the seized items to the Police Station from Jalpai More. I do not know anything more in this matter.

Recorded by

J.K. Roy

Dt. 02-01-21

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Statement of Uday Das @ Malaiya, S/o. Sudir Das of Tikiya Para, Ward no. 28, P.S. Siliguri, in C/w Siliguri Police Station Case no. 1318/20, dt. 25-10-2020, U/S. 21 ( C ) NDPS Act recorded U/S 161 Crpc.

 

On being asked I am telling you that on 25-10-2020, in the afternoon I had gone to Jalpai More to meet my friend. But I could not see my friend I met with the PC Party of Siliguri Police Station at Jalpai More. I knew the Police personnel Sajal Babu of PC Party, requested me in writing to be present during search and seizure of a pickup vehicle containing huge amount of brown sugar. Accordingly I waited with them. After a few time a pick up vehicle of white color having registration number WB73D 8392 was carrying three passengers including a female was coming. Police started searching the said three persons. Police found a packet of brown sugar inside a garlic bag from inside the said vehicle. Then Sajal Babu weigh the said items and packed them and weigh was found to be one kilo gram. And that time IC of the Police Station was present there.  The three passengers inside the vehicle were Khairul Nessa, Md. Noor, Md. Wasin, and they admitted that brown sugar was coming from Malda. Then Sajal Babu confiscated the pickup vehicle, brown sugar and garlic and the bags, and packed them. We were requested to sign and accordingly we signed the se4izure list and Police took Custody of the three persons and took then to Police Station from Jalpai More.

Recorded by

J.K. Roy

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Statement of Md. Islam, S/o. Late Md. Dyud of Santosh Nagar, W. No. 05, P.S. Siliguri, in C/w Siliguri Police Station Case no. 1318/20, dt. 25-10-2020, U/S. 21 ( C ) NDPS Act recorded U/S 161 Crpc.

 

On being asked I am telling you that on 25-10-2020, at about 4:30 pm SI Sajal Babu of Siliguri Police Station seized a car having registration number WB73D 8392, one thousand gram brown sugar and three paersons, Md. Noor Alam, Md. Wasin, and Khairul Nessa, near Jalpai More. I signed that seizure list, this is what I want to say.

Recorded by me

S.I. M. Mazumder

Camp at Jalpai More

15-01-2021

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Statement of Uday Das @ Maldia S/o Sudhir Das of Tikiapara, W. No. 28, P.S. Siliguri, in C/w Siliguri Police Station Case no. 1318/20, dt. 25-10-2020, U/S. 21 ( C ) NDPS Act recorded U/S 161 Crpc.

 

On being asked I am telling you that on 25-10-2020, at about 4:30 pm SI Sajal Babu of Siliguri Police Station, near Jalpai More seized a Car there is registration no. WB73D 8392, and one thousand gram brown sugar like item, they were arrested. I signed the said Seizure list. This is what I want to say.

Recorded by me

S.I. M. Mazumder

Camp at Jalpai More

15-01-2021

 

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Statement of Sri Sudip Chakraborty Inspector of Police, P.S. Siliguri, District Darjeeling in C/w Siliguri Police Station Case no. 1318/20, dt. 25-10-2020, U/S. 21 ( C ) NDPS Act recorded U/S 161 Crpc.

I am telling you that on 25-10-2020, at six past 4 pm SI Sajal Roy of my Police Station informed me that huge amount of brown sugar was coming. Then being informed I went to Jalpai More and a vehicle bearing registration number WB73D 8392, was seized and one thousand gram brown sugar was seized from Md. Noor Alam, Md. Wasin, and Khairul Nessa. They were arrested and brought to the Police Station and gave their statement. This is what I thought to say.

Recorded by me

S.I. M. Mazumder

15-01-2021

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Statement of SI Jimut Kanti Roy ( Previous IO ), P.S. Siliguri, District Darjeeling in C/w Siliguri Police Station Case no. 1318/20, dt. 25-10-2020, U/S. 21 ( C ) NDPS Act recorded U/S 161 Crpc.

 

I am telling you that on 25-10-2020, IC of Siliguri Police Station handed over the said case to me for investigation. The accused persons namely Md. Noor Alam, Md. Wasin, and Khairul Nessa, were sent to the Learned Siliguri Court and a Car having registration number  WB73D 8392, and one thousand gram brown sugar were seized from them. To test the item if it is brown sugar or not the sample has been sent to Laboratory, and I have given the case diary for investigation in terms of the order of the IC primarily I was the Investigating Officer of this case. This is what I know.

Recorded by me

S.I. M. Mazumder

15-01-2021

 

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Statement of Bappa Ghosh ( Photographer), P.S. Siliguri, District Darjeeling in C/w Siliguri Police Station Case no. 1318/20, dt. 25-10-2020, U/S. 21 ( C ) NDPS Act recorded U/S 161 Crpc.

 

On being asked I am telling you that I took photograph during inventory of the seized one thousand gram brown sugar before the Learned Court, and I have handed over all papers to the investigating officer SI Jimut Kanti Roy Sir. This is what I know.

Recorded by me

S.I. M. Mazumder

15-01-2021

 

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Statement of Sri Sanatan Singha Officer in Charge of Central Malkhana SPC, P.S. Siliguri, District Darjeeling in C/w Siliguri Police Station Case no. 1318/20, dt. 25-10-2020, U/S. 21 ( C ) NDPS Act recorded U/S 161 Crpc.

 

On being asked I am telling you that on 25-12-2020, SI Jimut Kanti Roy of Siliguri Police Station handed over the sealed Items of the said case to me for keeping it in MAALKHANA whose CMR number 50 / 20, dated 25-12-2020. This is what I know.

Recorded by me

S.I. M. Mazumder

15-01-2021

 

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Bank Guarantees And Injunction on its Invocation

 



Bank Guarantees And Injunction on its Invocation

A Bank Guarantee (“BG”) is a common mode of securing payment of money in commercial dealing as the beneficiary, under the guarantee, is entitled to realize the whole of the amount under that guarantee in terms thereof, irrespective of any pending dispute between the person on whose behalf the guarantee was given and the beneficiary. Since the BG represents an independent contract between the bank and the beneficiary, both the parties are bound by the terms thereof. The invocation, thus, has to be in accordance with the terms of the guarantee, or else, the invocation itself would be bad in law.

Types of Bank Guarantees

The two types of BGs are: (i) Unconditional BGs; (ii) Conditional BGs. An Unconditional BGs ensure the payment to the beneficiary “unconditionally and irrevocably” on beneficiary's first demand upon invoking the guarantee. The Conditional BG has certain conditions which once fulfilled, the Conditional BG can be invoked by the beneficiary. One has to pay attention to language of the guarantee so as to determine which kind of guarantee is it. Some guarantees though mention the words “unconditionally and irrevocably,” they qualify such expressions with a condition or a situation upon occurring of which the underlying guarantee becomes encashable. In such circumstance, the BG in question would be categorized as a Conditional BG. Therefore, the terms of guarantee are extremely material.

Invocation of Bank Guarantees

The beneficiary needs to invoke the BG on or before the expiry date of the guarantee. If the Bank does not receive any claim on or before the validity period mentioned, the Bank is discharged from its liability. The beneficiary needs to send a letter to the Bank stating the circumstances that arose leading to the encashment of the guarantee. However, how can the party on whose behalf the guarantee was drawn injunct the beneficiary from encashing the guarantee? For this very purpose, there have been a catena of judgments which are briefly discussed herein below.

Injunction on invocation of Unconditional Bank Guarantee

Usually a plain reading of the provisions of a standard unconditional bank guarantee reflects that the guarantor undertakes to pay without demur which makes the demand conclusive and binding.1 Some bank guarantees make the beneficiary a sole judge in regard to invocation and enforcement of bank guarantee, which leaves the decision of invocation to the absolute discretion of that beneficiary.2 The guarantor must pay without having any regards to the dispute pertaining to the main contract and the court would be precluded from embarking on an enquiry pertaining to the prima facie nature of the respective claim of litigating parties relating to the main dispute.3

In U.P. Co-op. Federation Ltd. v. Singh Consultants and Engineers (P) Ltd.4, the obligation was undertaken by the Bank to repay the amount on “first demand” and “without contestation, demur or protest and without reference to such party and without questioning the legal relationship between the party in whose favour guarantee was given and the party on whose behalf guarantee was given.” The Hon'ble Supreme Court held that the Bank was obligated to pay the moment a demand was made without protest and contestation, irrespective of any dispute between the parties. The Hon'ble Court further held that in such a case, the party on whose behalf the guarantee was given was not entitled to an injunction restraining the bank in performance of its guarantee.

A New York Supreme Court case was referred to in U.P. Co-op. Federation Ltd. (Supra), wherein an act that constituted as fraud was dealt with. In the matter of Sztejn v. J. Henry Schroder Banking Corp, which was a case wherein the facts were as follows:

  • the Claimant's action before the New York Supreme Court was to restrain the payment or presentment for payment of drafts under a letter of credit issued to secure the purchase price of Hob Bristles bought by the Claimant from the beneficiary of the credit;
  • the beneficiary shipped some material and presented drafts and other related documents for payment by the issuing bank;
  • the Claimant alleged that the material shipped was not Hog Bristles but cow hair and other worthless material, rubbish. Although the documents tendered appeared to conform to the credit, they contained material false representations of facts;
  • the defendant bank had brought a Motion to Dismiss the Complaint on the ground that the facts did not constitute a cause of action (for the purposes of the motion, the allegations in the complaint were deemed to be established).

The New York Supreme Court held that there was a fraud (pertaining to the documents tendered for invocation) which disclosed a cause of action which entitled the party to an injunction to stop payment. This was, therefore, a case where the beneficiary knew and believed he had shipped rubbish/ worthless material but nevertheless made a false representation to the bank that he was entitled to payment for hog bristles.

In light of such stringent law, there are only two narrow exceptions where injunction on invocation of unconditional bank guarantee can be granted viz:

  1. Fraud of an egregious nature as to vitiate the entire underlying transaction, of which the bank has notice, and
  2. Special equities in the form of preventing irretrievable injustice between the parties.

Fraud

While referring to the definition of “Fraud” as provided under Section 17 of the Contract Act, 1872, the Supreme Court in Reliance Salt Ltd. v. Cosmos Enterprises,6 held that commission of fraud would include any act committed by a party to deceive another party or his agent or to induce him to enter into a contract. And the burden of proving such fraud lies upon the party making such allegation.

Nature of Fraud – In the matter of U.P. State Sugar Corporation v. Sumac International Ltd.7, the Hon'ble Supreme Court held that a fraud in connection with an unconditional bank guarantee be such that “it vitiates the very foundation of such a bank guarantee.” [Emphasis added.] No other fraud is good enough to meet the test, and moreover, the Bank needs to have notice of such fraud. The Hon'ble Supreme Court held that since the bank pledges its own credit involving its reputation, it had no defense for declining the payment except in case of fraud. The Supreme Court further held that the nature of fraud should be of an “egregious nature as to vitiate the entire underlying transaction.8 Further, such fraud must be committed by the beneficiary, and not by somebody else.9

Even in the matter of Hindustan Steelworks Construction Ltd. v. Tarapore & Co.10, while referring to the judgment in U.P. Co-op. Federation Ltd. (Supra), the Hon'ble Supreme Court held that the exception of fraud needs to have the effect of vitiating the entire underlying transaction. The Supreme Court further held that the fraud, whether at the time of execution of the contract or on account of circumstances or events subsequent thereto, the fraud must be of an egregious nature so as to vitiate the entire underlying transaction or such that would vitiate the very foundation of such a bank guarantee.

Special equities - irretrievable injustice

The second exception relates to the cases where in allowing the encashment of an unconditional bank guarantee would result in irretrievable harm or injustice to one of the parties concerned. The harm or injustice contemplated under this head must be of such an exceptional and irretrievable nature that it would override the terms of the guarantee and the adverse effect of such an injunction on commercial dealings in the country would be severe.11

Injunction on invocation of Conditional Bank Guarantee

If bank guarantee is conditional, the beneficiary cannot have unfettered right to invoke the guarantee and the court can issue an injunction against invocation of the guarantee in view of the facts of the case. Where a bank guarantee is a conditional one, the invocation thereof would have to be in strict conformity with the conditions on which the guarantee is issued.

In the matter of Hindustan Construction Co. Ltd. v. State of Bihar and Ors.12, the bank guarantee in question had used the expression “agree unconditionally and irrevocably” to guarantee payment to the beneficiary on his first demand without any right of objection. But the said expression was immediately qualified by a condition which referred to the original contract between the parties. The condition stipulated that if certain obligations under the contract are not fulfilled by the party on whose behalf the BG was issued, then a right would accrue to the beneficiary to claim recovery of the whole or part of the guarantee amount.

The Hon'ble Supreme Court in the aforesaid matter held that in case of conditional guarantee, the beneficiary could not be said “to have an unfettered right to invoke that guarantee and demand immediate payment thereof.” It further held that the condition stated in the bank guarantee needs to be fulfilled in order for the beneficiary to invoke the conditional bank guarantee. The Supreme Court then reversed the judgment and order passed by the Division Bench of the Hon'ble Bombay High Court to the extent where it is vacated the injunction order granted by the Ld. Single Judge in respect of the conditional bank guarantee.

Conclusion

The different set of parameters for granting injunction to invocation of a conditional bank guarantee and an unconditional bank guarantee, as set out by the judiciary, is apparent from the above review of various judgments. Barring the exceptions in case of the unconditional BGs and barring the non -fulfillment of conditions in case of the conditional BGs, the Banks are obligated to honour the demand for guaranteed amount made by the beneficiary. Because the opposite would cause irreparable damage to the trust in commerce and would deprive vital oxygen to the money supply which is necessary for the economic growth.

Our View

In light of the aforesaid discussion, a question arises as to what sort of averments need to be present in the petition seeking injunction. Here are our pointers:

For an unconditional bank guarantee

  • The contentions of Fraud or the need for special equities are required to be specifically pleaded and proved.
  • Mere assertion or allegation or conjecture of fraud, without any evidence, would not be sufficient. All the necessary and clear evidence in the proof of fraud must be necessarily pleaded and produced.
  • The facts of the case should depict that fraud committed by the beneficiary is of such nature that it destroys the entire underlying transaction.
  • There should be a serious dispute involved and a prima facie case of fraud. A case has to be made out that there is a need for grant of special equities in the form of injunction to prevent irretrievable injustice to the parties involved.
  • It is necessary that at the time of the invocation of the BG, the Bank should have the notice of the fraud. Moreover, such fact of notice along with its evidence has to be averred in the petition.

For conditional bank guarantee

  • The facts and circumstances where the conditions as stated or referred to in the conditional bank guarantee have not been fulfilled, must be pleaded in the petition seeking an injunction.
  • Sufficient evidence with regards to such unfulfilled conditions must be pleaded and produced.
  • A case highlighting the prejudice which would be caused if the payment under BG is permitted must be made out.

Footnotes

1Mahatma Gandhi Sahakra Sakkare Karkhane v. National Heavy Engg. Co-op. Ltd., (2007) 6 SCC 470.

2M/s. S. Satyanarayana & Co. v. M/s. West Quay Multiport (Private Limited), 2015 SCC OnLine Bom 3352.

3Consortium of Deepak Cable India Pvt. Ltd. v. Teestavalley Power Transmission Ltd. 2014 SCC OnLine Del 4741.

4. (1998) 1 SCC 174; Also see: Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd. (1997) 6 SCC 450; M/s. ABG Ports Limited v. M/s. PSA International Pte Limited (Appeal (L) No. 727 of 2012, Bombay High Court, judgement dated 21st November, 2012).

6. (2006) 13 SCC 599

7. (1997) 1 SCC 568; Also see: Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd. (1997) 6 SCC 450

8. Also see General Electric Technical Services Co. Inc. v. Punj Sons (P) Ltd., (1991) 4 SCC 230

9. Id.

10. (1996) 5 SCC 34

11U.P. State Sugar Corporation v. Sumac International Ltd., (1997) 1 SCC 568.

12. (1999) 8 SCC 436; followed by Jacsons Veeners & Panels Pvt. Ltd. v. State Bank of Travancore & Anr., 2009 SCC OnLine Ker 4210.