Usha Mehra ( 1 ) M/s. Victor Cable Industries Ltd. submitted the tenderdocument, with the respondent M/s. Engineering Projects (1) Ltd. (in short EPI ). Itwas in response to the notice inviting tender issued by respondent EPI for thesupply of cables in respect of Rayalseems Thermal Power Project of the Andhrapradesh State Electricity Board. On account of the deemed export status of theproject exemption from payment of excise duty was available to respondent EPI. This was so reflected in the purchase conditions appended to the tender enquiry. The sales tax was to be paid extra at actuals as applicable against the documentaryevidence. The petitioner s tender was accepted on 30/03/1993. The order forsupplying power cable at a total value of Rs. 77,04,210. 65 paise was placed on thepetitioner. Alongwith the order, terms and conditions of payment were annexed. Delivery was to be made within a period of four to five months. This order was tobe followed by a detailed order to be released later on. ( 2 ) IT is the case of the petitioner that the total value of the contract amountquoted was at price at Ex-works. It did not include the cost of frieght, excise dutyand sales tax because the project had been granted a deemed export status. As perthe payment terms appended to the order placed on the petitioner, the petitionerwas to furnish two Bank guarantees, namely. Bank guarantee for an amountequivalent to the advance payment received by the petitioner which was to beinterest free; and the second bank guarantee for 10% of order value as security. 65%of the order price was to be paid through an irrevocable letter of credit to beestablished by the respondent buyer in favour of the petitioner / supplier at Delhi. The balance 25% of the order price was to be paid within 30 days of the receipt ofthe equipment at project site against the performance bank guarantee of 10%) oftotal value of the project. It is further the case of the petitioner that by the letterfurnished subsequently there was a variation in respect of the clauses relating topayment of excise duty. As against the clause in the purchase conditions appendedto the tender enquiry, it exempted the excise duty on account of deemed exportstatus of the project. But in the subsequent letter a clause was added changing theearlier clause. As against the clause in the purchase conditions appendedto the tender enquiry, it exempted the excise duty on account of deemed exportstatus of the project. But in the subsequent letter a clause was added changing theearlier clause. By the new Clause it was stated therein that the EPI shall pay exciseduty at actuals against documentary proof i. e. gate pass and supplier shall furnishdis-claimer certificate in favour of EPI. The excise duty would be payable by thesupplier, the excise duty and sales tax component constituted as high as 40% of thepurchase order amounting to Rs. 30 lakhs. Because of the change in the stipulatedcondition, the petitioner was financially prejudiced. This was protested by thepetitioner indicating therein that petitioner was ready and willing to perform thecontract provided the bills raised in respect of sales tax and excise duty were paidthrough a bank in accordance with delivery schedule. This shows it was the EPIwho committed breach as a result of which the petitioner suffered irreparable less. Moreover the EPI did not open the letter of credit which was a pre-requisite of thesupply of cables. For the approval of technical requirements the EPI causedconsiderable delay. Under the terms of the bank guarantee, the EPI could onlyinvoke the security guarantee if it could be established that it had suffered any lossor damage. Before invoking this guarantee EPI was to specify and quantify theloss/damage suffered by it. So far as Advance Bank Guarantee is concerned, thesame was given against manufacture of the material. According to petitioner since,the respondent failed to open the letter of credit which was a condition precedenthence the respondent cannot invoke this bank guarantee also. The very invocationis bad in law. ( 3 ) THIS application has been contested by the EPI, inter aha, on the groundthat banker s liability to honour the guarantee is absolute. No allegation of fraudhas been pleaded. Rather it is the petitioner who is guilty of fraud and mis-representation, therefore, not entitled to any relief. The petitoiner accepted the ordersent by talex which was to be followed by terms of the agreement. The petitionerby accepting the order in fact accepted the terms and conditions which were to besent subsequently. Petitioner is now estopped from raising any issue against thecondition relating to excise duty and sales tax. The petitoiner accepted the ordersent by talex which was to be followed by terms of the agreement. The petitionerby accepting the order in fact accepted the terms and conditions which were to besent subsequently. Petitioner is now estopped from raising any issue against thecondition relating to excise duty and sales tax. Failure to make supplies as per theorder placed is a patent breach of the contract because of which the respondent isentitled to encash the bank guarantees. The petitioner cannot withhold the interestfree advance given by the respondent for manufacturing the material. Since, thepetitioner failed to supply the material hence respondent is within its right toinvoke the bank guarantee. Even otherwise the contract stood terminated w. e. f. 7/04/1994 and there is no possibility of the same being implemented by thepetitioner, therefore, the respondents are entitled to encash the bank guarantees. ( 4 ) I have heard Mr. Arun Jaitley, Senior Advocate for the petitioner andmr. Ashok Aggarwal for the respondent. Admittedly two bank guarantees werefurnished. One bearing number BG-53/93 for Rs. 7,70,500. 00 dated 19/05/1993. It was furnished by the petitioner against the advance given by the respondent formanufacturing the goods. The second was performance/ security guaranteebearing number BG-52/93 for Rs. 7,70,500. 00 dated 17/05/1993. Both theseguarantees were invoked by EPI vide separate letters of the same date i. e. 2 6/10/1993. Reading of these letters would show that the bank guarantees wereordered to be encashed because of non-perfomnanceof the contractual obligationsby the petitioner. According to respondent the encashment of advance bankguarantee was due to the non-manufacturing of the cables by the petitioner. Thepetitioner instead of commencing the process of manufacturing insisted that letterof credit be opened which was not a condition precedent for manufacturing of thecables. The advance was given to the petitioner to manufacture the cables and keepthem ready for delivery as per schedule. But the petitoner took an arbitrary andillegal stand that it would start production only after the letter of credit is opened. In fact there was no nexus in the opening of the letter of credit and manufacturingof cables. Opening of the letter of credit was never a condition precedent for themanufacturing of cables. The advance was given with the clear stipulation that thepetitioner would start manufacturing the cables without delay. However, theinspection done by the respondent revealed that neither the manufacturing processno production started. Opening of the letter of credit was never a condition precedent for themanufacturing of cables. The advance was given with the clear stipulation that thepetitioner would start manufacturing the cables without delay. However, theinspection done by the respondent revealed that neither the manufacturing processno production started. Therefore, the respondent was justified in invoking thisbank guarantee against the advance granted for that purpose. The resplendentissued letters to the petitioner to expedite the supply and the manufactured cablesbe made available for inspection. In this regard Mr. Aggarwal drew my attentionto letters dated 7/07/1993 and 1 6/07/1993 by which the petitioner wassupplied the revised technical particulars of PRLS cables duly approved for furthernecessary action at petitioner s end. After receipt of technical particulars it was forthepetitioner to have manufactured the cables. But from the fax messages whichhave been produced on record show that till 0ctober,1993 cables had not beenmanufactured. Reference can be had to fax message of 16/08/1993, 18thaugust, 1993 and 18t18th 0ctober,1993 respectively. Vide fax messages dated 1 6/08/1993 and 1 8/08/1993 which are reproduced as under, it is clear thatthe advance of Rs. 7,70,500. 00had not been utilised for the purpose of this contractfax Message (fated 16/08/1993 : REF OUR FAX ORDER DTD 30. 3. 93 REF SUPPLY OF POWER CABLES FORRAYALASEEMA CHP STOP AS PER THE ORDER YOU WERE TO SUPPLYCABLES WITHIN 4/5 MONTHS FROM DATE OF ORDER STOP WE-ON OURPART HAVE RELEASED TEN PERCENT ADVANCE AGAINST SUBMISSIONOF DATA SHEET AND OTHER DOCS AS EARLY AS JUNE 93 1. L. ALMOSTTWO AND HELD MONTHS BACK STOP APPROVAL OF DATA SHEET HASBEEN COMMUNICATED VIDE OURLETTER OF 16 TH JULY 93 STOP PLINFORM US THE DETAILED STATUS OF MANUFACTURING AND EXPECTEDDATE OF INSPECTION OF CABLES AS APSEB HAS VIEWED THIS DELAY I NSUPPLY VERY SERIOUSLY STOP REPLY PER RETURN TLX SO THAT PSTN 0fsupplies CAN BE INFORMED TO APSEB ALSO STOP. Fax message dated 18/08/1993 : REFER OUR ORDER DTD 30. 3. 93 FOR SUPPLY OF POWER CABLESACCOUNT RAYALSEEMA PROJECT (.) AS PER THE DELIVERY CLAUSE OFTHE PO THE TOTAL CABLES WERE TO BE SUPPLIED BY YOU WITHIN 4-5months FROM THE DATE OF TELEX ORDER (.) THE ADVANCE AS PERTHE ORDER WAS PAID TO YOU IN THE MONTH OF IUNE AFTERRECEIVING THE BGS IN ORDER FROM YOU (.) THE DATA SHEET OF THE CABLE. AFTER LOT OF COMMENTS AND EXCHANGE OF THE SAME BETWEEN EPIAND YOU WERE FINALLY APPROVED BY THE CONSULTANT AND THEDECISION WAS COMMUNICATED TO YOU VIDE OUR LETTER DATED16. 7. 93 (.) PLEASE NOTE THAT NO OTHER INFORMATION IS PENDINGWITH EPI EXCEPT CABLE THAT YOU HAVE TO SUPPLY THE CABLESWHICH IS CAUSING GREAT CONCERN TO US (.) WE HAVE TO COMMISSION THE PLANT IN THE LAST WEEK OF SEPT. , AS SUCH YOU AREREQUESTED TO PUT YOUR ALL OUT EFFORTS AND MAKE SURE THAT ALLTHE CABLES ARE DELIVERED TO WPI BY END SEPT,1993 HOWEVER THIS ISWITHOUT PREJUDICE TO THE TERMS AND CONDITIONS OF THE P0 (.)KINDLY CONFIRM THE MFC. STATUS OF THE CABLE PER RETURN FAX (.)REGARDS. ( 5 ) IT was the term of the bank guarantee that it the sub-contractor failed toutilise the said advance for the purpose of this contract then the said advance withinterest thereon becomes recoverable by EPI and the bank would pay this amountwithout demur. Inspite of these telexes when the petitioner did not utilise thisadvance for the contract as is apparent from petitioner s own letter dated 8th0ctober,1993 which is reproduced as under. VCIL/c-918/93/ 8/10/1993m/s. Engineering Projects (1) Ltd. ,"kailash" Building,k. G. Marg,new Delhi - 110001dear Sirs,kind Attn. : Mr. lameel Ahmedproject Managersub: Your P. O. DLI/mmd/199/415/powerdated 24. 9. 1993 for LTcable. forrayalseema CHP. We refer to your fax dated 24. 9. 1993 on the following references:epi VICTOR 464. htmit appears that all the correspondences made after 23. 2. 1993 has not beenreferred in your above fax. We would like to refer only one letter of oursbearing reference No. VCIL/c-918/93 dated 6/07/1993, a copy of which isbeing enclosed herewith for your ready reference. We are still awaiting clarification from your side. you will appreciate thatwithout having a properly established payment terms including the paymentof excise duty and sales tax and also refixation of delivery period, we are notin a position to take up the order in our production plant. Kindly expedite aswe are very keen to start manufacturing cables against this order. Thanking you and assuring you of our best attention at all times. Yours faithfuly,for VICTOR CABLES INDUSTRIES LTD. (A. K. SANYAL)CHIEF EXECUTIVE (MKTG) ( 6 ) THE EPI was left with no alternative but to issue final warning vide fax dated18th 0ctober,1993 which is reproduced as under. Fax message dated 18/10/1993 : REF OUR FAX ORDER NO. DLI/ MMD/ 199/415/power DTD. 30. Yours faithfuly,for VICTOR CABLES INDUSTRIES LTD. (A. K. SANYAL)CHIEF EXECUTIVE (MKTG) ( 6 ) THE EPI was left with no alternative but to issue final warning vide fax dated18th 0ctober,1993 which is reproduced as under. Fax message dated 18/10/1993 : REF OUR FAX ORDER NO. DLI/ MMD/ 199/415/power DTD. 30. 3. 93reg POWER CABLES FOR RAYALASEEMA CHP STOP WE HV RECVD YRLATEST LTR NO. VCIL/c/918/93 DTD. 8/10/1993 STOP. PL NOTE WE HV RELEASED AN ADVANCE OF RS. 7. 70 LAKHS DURINGJUNE 93 TO ENABLE YOU GO AHEAD WITH MANUFACTURING WHICH ISTHE CONTRACTUAL PURPOSE OF ADVANCE OF THIS LARGE MAGNITUTESTOP GIVE INSPECTION CALL FOR THE POWER CABLES WITHIN NEXT 2/3 DAYS AS THE SAME IS URGENTLY NEEDED AT SITE STOP IF WE DO NOTRECEIVE THE SATISFACTORY RESPONSE FROM YOUR END WE SHALL BEASKING YOUR BANKERS TO ENCASH THE ADVANCE BG STOP. ( 7 ) EVEN after this fax message when the advance was found not to have beenutilised the EPI had no alternative but to invoke the advance bank guarantee. Asper the terms of this advance bank guarantee, the bank is under obligation to paythe amount. Supreme Court in similar circumstances in the case General Electrictechnical Services Company Inc. v. M/s. Punj Sons (P) Ltd. , AIR 1991 SC 1994 heldthat: "the bank could not be restrained by Court from making payment as perundertaking given by it in the absence of fraud or special equities in the formof preventing irretrievable injustice between the parties. Therefore, theencashment of the bank guarantee could not be refused on the ground that thecontractor has failed to make a reference to mobilisation advance in the letterseeking encashment of the bank guarantee and it amounted to suppression ofmaterial facts, in the sense that the mobilisation advance was under thecontract to be recovered from the running bills. Secondly, the bank is notconcerned with the outstanding amount payable by the contractor under therunning bills. The right to recover the amount under the running bills has norelevance to the liability of the bank under the guarantee. The liability of thebank remained in tact irrespective of the recovery of mobilisation advance orthe non-payment under the running bill. "( 8 ) MR. ARUN Jaitley appearing for the petitioner tried in vein to refute the factthat the advance given for manufacturing purposes had not been utilised by thepetitioner. The liability of thebank remained in tact irrespective of the recovery of mobilisation advance orthe non-payment under the running bill. "( 8 ) MR. ARUN Jaitley appearing for the petitioner tried in vein to refute the factthat the advance given for manufacturing purposes had not been utilised by thepetitioner. According to him the petitioner vide his letter dated 31/05/1993clearly indicated that the cables had in fact been manufactured. I am afraid thereading of this letter does not support this argument, rather by a subsequent letterof 8/10/1993, the petitioner conceded that he had not started the process ofmanufacturing the cables and he would not do so unless and until the terms ofpayment were settled. Without first getting the terms settled, he would not executethe work. Further he insisted that the letter of credit be opened first and until thatis done he would not be in a position to supply the requisite material. Therefore, inview of the subsequent stand taken by the petitioner as is clear from his letter,mr. Jaitley s reliance on the letter dated 31/05/1993 is irrelevant. The subsequent exchange of letters between the parties clearly disprove the case of Mr. Jaitleythat the petitioner had manufactured the cables. In fact from the reading of variousletters quoted above, it is clear that the petitioner had not utilised the advance forthe purpose of this contract. As regards the terms of payment, the relevant clauseis 16. 2. Clause 16. 2 of the terms and conditions (Annexure 1) ideals with the scopeof supplies and price conditions. It reads that 65% of the order price was to be paidon presentation of invoice, inspection reports and proof of despatch against theletter of credit. But so far as the manufacturing process was concerned, neither thesettlement of payment schedule nor the letter of credit was a pro-condition. Thebank guarantee nowhere stipulated that advance was to be utilised only whenterms of payment were settled. Reading of clauses 16. 1 and 16. 2, prima facie showthat the letter of credit could be a pre-condition for the purpose of despatch ordelivery of cables, but not for the purpose of manufacturing of cables. Since thepetitioner failed to prove that the cables had in fact been manufactured by him andthe advance had been utilised for the purpose of this contract, therefore, to mymind, the EPI was within its right to invoke the bank guarantee. Since thepetitioner failed to prove that the cables had in fact been manufactured by him andthe advance had been utilised for the purpose of this contract, therefore, to mymind, the EPI was within its right to invoke the bank guarantee. The petitioner hasfailed to make out any case of restraining the bank and or the respondent fromencashing the bank guarantee No. 52/93 dated 17/05/1993 for Rs. 7,70,501 ). 00 ( 9 ) NOW turning to the performance guarantee bearing No. BG-53 of 1993 forrs. 7,70,500. 00date 17/05/1993, we have to see what it stip ulatecd. One of theterms of 1:1-1 guarantee reads as under :- "we the Indian Overseas Bank, Pusa Road Branch, New Delhi-110 008 (hereinafter referred as the said Bank ) a company under the Companies Act,1956 and having our Head Office at 762, Anna Salai, Madras do hereby unconditionally and irrevocably undertake and agree to indemnify and keep indemnified the EPl from time to time to the extent of Rs. 7,70,500. 00 (Rupees Sevenlacs seventy thousand five hundred only) against any loss or damage, costs,charges and expenses caused to or suffered by or that may be caused orsuffered by EPl by reason of any breach or breaches by the said contractor ofany of the terms and conditions contained in the said contract and or anyamount becoming due for non-performance and/ or penalty as assessed byepl and to unconditionally pay the amount claimed by EPl on demand andwithout demur. " ( 10 ) IN order to invoke this bank guarantee called the performance guaranteeit was for the respondent/epi to prima facie prove that the petitioner hadcommitted a breach of the contract and consequent thereto it has suffered lossesand damages. The Supreme Court in General Electric Technical Services Companyinc. (supra) has considered the law on the invocation of the performance guarantee. Apex Court laid down the guidelines on the basis of which the Court would bejustified in restraining the bank from paying under the bank guarantee. The Supreme Court in General Electric Technical Services Companyinc. (supra) has considered the law on the invocation of the performance guarantee. Apex Court laid down the guidelines on the basis of which the Court would bejustified in restraining the bank from paying under the bank guarantee. Theseguidelines have been laid in the case of U. P. Cooperative Federation Ltd. v. Singhconsultants And Engineers (P)Ltd. , (1988)1 SCC 174 wherein Sabyasachi Mukherji, (as his lordship then was) observed that in order to restrain the operation either ofirrevocable letter of credit or of confirmed letter of credit or of bank guarantee,there should be serious dispute and there should be good prima fade case of fraudand special equities in the form of preventing irretrievable injustice between theparties. Otherwise, the very purpose of bank guarantees would be negatived andthe fabric of trading operations will get jeopardised". It is only in exceptional casethat is to say in case of fraud or in case of irretrievable injustice, the Court shouldinterfere. The demand by the party is under the bank guarantee and as per theterms thereof. The bank has to pay and the bank cannot be restrained by the Courtat the instance of a party in the absence of fraud or special equities in the form ofirretrievable injustice between tile parties. Therefore, keeping this principle of lawin view and also the decision of the Supreme Court in the case of Centax (India) Ltd. v. Vinmar Impex Inc. and Ors. , (1986) 4 SCC 136 , wherein it was held that bank sliability under letter of guarantee or indemnity is absolute. We have to appreciatethe facts of this case. ( 11 ) THE question which arises for consideration is whether any fraud or anyirretrievable injustice has been caused to the petitioner by any act of the respondentepl. It is in that circumstance that the bank can be restrained otherwise therespondent would be within its right to recover the bank guarantee and the bankhas no right to object to the same. ( 12 ) MR. Arun Jaitley, appearing for the petitioner contended that since therespondent changed the terms and conditions of the contract unilaterally after theacceptance of the contract and after placing the order for supply of the cables, itamounts to committing fraud by the EPI on the petitioner. As per the tenderdocument i. e. the purchase conditions. Clause 8. ( 12 ) MR. Arun Jaitley, appearing for the petitioner contended that since therespondent changed the terms and conditions of the contract unilaterally after theacceptance of the contract and after placing the order for supply of the cables, itamounts to committing fraud by the EPI on the petitioner. As per the tenderdocument i. e. the purchase conditions. Clause 8. 0 indicated that excise duty wasnot applicable in this supply order as the same was exempted for deemed exportcontract. Clause 12. 3 of this very purchase conditions stipulated that the pricequoted was not including the component of excise duty on finished products as thesame was exempted from payment of excise duty for deemed export products. The term of payment in this document find mention at Clause 14. 0 and 14. 1. Clause14. 3 deals with despatch of equipment from the manufacturer s work. It stipulatedthat 65% of the ordered price was to be made on presentation of invoice, inspectionreport and proof of despatch against the L/c payment. It also stipulated that EPIwas to establish an irrevocable letter of credit in favour of the petitioner at Delhi New Delhi. Mr. Jaitley contended that both these terms i. e. excise duty on accountof the benefit under the deemed export contract and the terms of payment wereunilaterally changed by the EPI after having placed the order of supply on thepetitioner. This unilateral change worked against the financial interest of thepetitioner. It not only amounted to fraud by EPI but also delayed the execution ofthe work. Because of this unilateral action of the EPI, petitioner s right which hadaccrued stood deprived. Thus if accepted this changed condition would havesuffered huge financial losses. Hence equity demanded that the agreed term be notchanged unilaterally after acceptance of the offer by EPI. In order to support hiscontentions that there was a unilateral change in the terms of the contract after theorder was placed, Mr. Jaitley drew my attention to a letter dated 6/11/1992. In this letter the petitioner specifically pointed out to the EPI that no exciseduty shall be payable as the equipment is required for a project which enjoysdeemed export status and that the EPI should issue necessary exemption certificatefor the same. lt was also made clear in Clause/of this letter that the despatch wouldbe against the L/c confirmed on petitioner s bankers. This was followed by a letterdated 31/05/1993. lt was also made clear in Clause/of this letter that the despatch wouldbe against the L/c confirmed on petitioner s bankers. This was followed by a letterdated 31/05/1993. lt was mentioned in this letter to the EPI to establish L/c forexecution of the aforesaid order and that the validity of the L/c which was comingto an end on August, 1993 be extended. Mr. Jaitley, therefore, contended that inorder to show his bonafide and also to prove that the petitioner was ready andwilling to perform the contract he wrote an other letter on 5/06/1993. Vide thisletter Technical Data was submitted for approval. After the technical data sheetfor the ordered cable was submitted and when no reply was received a reminderwas issued on 15/06/1993 seeking early approval of the data. This shows thatit was the respondent who had been taking time in according the approval. As aresult of this delay the delivery period could not be adhered to. Vide letter dated 30/06/1993, a reminder to the EPI was asked intimating that almost two monthshad elapsed when technical data sheet was submitted for approval but no reply hadbeen received. Vide letter dated 6/07/1993, it was brought to the notice e" theproject Manager, EPI that since EPI was not issuing the exemption certificate topetitioner, excise duty became payable by the EPI alongwith the sales tax. Hencepayment terms automatically imply that 65% of the ex-works value of the goodsalongwith 100%i excise and sales tax shall be made available to the petitioneragainst the said letter of credit confirmed on their bankers. Vide this letter thepetitioner pointed and raised an issue with the EPI that 65% ex-works value of theorder must include sales tax as per their offer. Since now according to EPI exciseduty is also become payable, the same shall also be incorporated in the 65% of thevalue. This was reiterated vide their letter dated 8/04/1993 and asked the EPIto confirm the same. It was made clear vide this letter that in the absence of anyreply, the petitioner would not be in a position to carry out the contract. It wasfurther made clear that the payment should be made available to the petitioneragainst the excise duty and sales tax preferably under the letter of credit. The 65%value of goods plus 100% excise duty and sales tax or alternatively a co-operationfrom their side was a must. It wasfurther made clear that the payment should be made available to the petitioneragainst the excise duty and sales tax preferably under the letter of credit. The 65%value of goods plus 100% excise duty and sales tax or alternatively a co-operationfrom their side was a must. It was asked that the excise duty and sales tax be paidimmediately against the documents negotiated through bank within seven daysfrom the date of submission of such documents. It was also indicated that thecomponent of excise duty and the sales tax worked out to 40% of the value of thegoods and, therefore, payment of the same was necessarily required to be ensured. Further the delivery period on account of non-settlement of these important issuescould not be adhered hence period of delivery be extended. Moreover technicaldata sheet submitted on 11/05/1993 for approval had in fact not been receivedtill 6/07/1993. Therefore, it was pointed out that in view of the arbitrary standtaken by the respondent it became necessary for the petitioner to get clarificationon these points from EPI and that EPI should confirm that 100% of the sales taxamount shall be paid to the petitioner while 65%) ex-works value of the goodssupplied. That delivery period of five months be counted from the date ofconfirming this request, and that an irrevocable site clear L/c against the order bemade available. Mr. Jaitley states that these points were never cleared nor answeredby the respondent. These points raise very serious dispute. These points go to theroot of the contract. The component of sales tax and excise worked out to 40% andif the change as suggested by the respondent has not been clarified the petitionerwould suffer huge financial losses. It amounted to fraud on the part of therespondent. Having placed the order, EPI could not change unilaterally thoseclauses which had a financial remefication. Having done so it committed fraudupon the petitioner. If without getting clarification goods had been supplied, thepetitioner would have suffered an irretrievable injustice. The special equity is alsoin favour of the petitioner. Petitioner vide its letter dated 8/10/1993 writtento the EPI made it clear that without having a properly established payment termsincluding the payment of excise duty and sales tax and also refixing deliveryperiod, the petitioner was not in a position to take up the order in their productionplant. Inspite of these reminders, the respondent failed to clarify the position. Petitioner vide its letter dated 8/10/1993 writtento the EPI made it clear that without having a properly established payment termsincluding the payment of excise duty and sales tax and also refixing deliveryperiod, the petitioner was not in a position to take up the order in their productionplant. Inspite of these reminders, the respondent failed to clarify the position. Instead issued a telex dated 18/10/1993 asking for the inspection of thegoods without first confirming and clarifying the points raised. Hence EPI is notjustified in invoking the bank guarantee. ( 13 ) MR. Aggarwal on the other hand appearing for the EPI contended thatthese clarifications were given vide letter dated 7/07/1993. It was pointed outthat EPI had not taken two months time in approving the data sheet. It was madeclear that the petitioner should expedite the supply. This was followed by telexs of16th August and 18th August, 1993 and a letter dated 17/09/1993. In allthese communications, petitioner was made aware that since contractual obligations had not been completed, therefore, petitioner should arrange to get the bankguarantees extended, ( 14 ) AFTER hearing the Counsel for the parties and perusing the documentaryevidence, at least one thing which clearly emerge is that after placing the order forsupply of cables, the EPI changed the conditions qua the excise duty and the termof payments. Admittedly in the telex message dated 30/03/1993 vide whichorder was placed it had been mentioned that detailed order shall be released lateron, but that by itself would not give any right to the EPI to alter the essential termsof the agreement which had a financial remefications. No new term could beaddedunilaterally. As already observed above, the petitioner had quoted the rateskeeping in view that the price shall not include the component of excise duty onfinished products. If by specific order, the respondent changed the condition itnaturally worked out to be a financial detriment to the petitioner. To my mind,petitioner has made out a prima fade case of special equity in his favour. Itamounts to special equity because no essential term of the tender document couldbe changed unilaterally particularly when it had financial repercussions. Even thequerries raised by the petitioner as quoted above were never replied by therespondent. For the delay in the approval of the technical data sheet the period ofdelivery had also not been extended, which request was repeatedly made by thepetitioner. Even thequerries raised by the petitioner as quoted above were never replied by therespondent. For the delay in the approval of the technical data sheet the period ofdelivery had also not been extended, which request was repeatedly made by thepetitioner. Therefore, keeping all these factors in view, I am of the considered viewthat prima fade case of special equity has been made out by the petitioner. Accordingly the respondent cannot be allowed to encash the bank guarantee. It isa fit case where the bank can be injuncted and restrained from encashing theperformance guarantee bearing No. BG-53/93 for Rs. 7,70,500. 00 dated 17/05/1993 subject of course to the condition that petitioner shall keep this bank guaranteealive till the disposal of the suit. With these observations, the application stands disposed of.