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1999 DIGILAW 396 (KAR)

K. BASAVARAJ v. STATE BANK OF HYDERABAD, KOPPAL, RAICHUR DISTRICT

1999-07-28

MOHAMED ANWAR

body1999
( 1 ) THIS revision by defendant 1 is directed against the judgment and money decree dated 15-4-1995 of the Court of the learned Civil Judge, Small Causes, Koppal, passed in S. C. No. 3 of 1994 decreeing the suit of R-1 (hereinafter referred to as "the plaintiff-Bank") as prayed against petitioner ("d-1" for short) and R-2 ("d-2" for short ). ( 2 ) CERTAIN undisputed and admitted facts are as stated under: d-l was an "a Class Contractor", who was undertaking contract work of Public Works department ("p. W. D. " for short) in Koppal Taluk of Raichur District. He had dealings with the plaintiff-Bank since 1983. At his request and on his application, the plaintiff-Bank had issued ex. P. 1 Bank guarantee dated 14-7-1988 for a sum of Rs. 28,740. 00 in favour of the Executive engineer, P. W. D. , Raichur ("executive Engineer" for short) in connection with the execution of certain contract work of the latter that was entrusted to D-l. Initially, that Bank guarantee was issued for a period of one year commencing from 14-7-1988 which stood extended from time to time at the instance of D-l upto 13-7-1991 as borne out by the deeds of extension of guarantee produced at Ex. P. 5 and Ex. P. 6. Ex. P. 2 Counter Indemnity Bond dated 14-7-1988 was also executed by D-1 in favour of the plaintiff-Bank. D-2, as surety for the said Bank guarantee facility made available to D-l by the plaintiff-Bank, executed "guarantor's Agreement", Ex. P. 4 dated 14-7-1988 in its favour. ( 3 ) WHEN Ex. P. 1 Bank guarantee was in currency in favour of the Executive Engineer, the latter addressed a letter at Ex. P. 11 dated 21-5-1991 to the plaintiff-Bank with reference to his earlier letter dated 11-4-1991 requesting the plaintiff-Bank to renew the said Bank guarantee upto 31-7-1993 as the said contract work was not yet completed by D-l Contractor. Then, with reference to Ex. P. 11, plaintiff-Bank addressed a letter at Ex. P. 12 dated 4-6-1991 to D-l contractor reminding him of his failure to get his loan accounts adjusted with the Bank and pleading its inability to grant further renewal of the Bank guarantee in favour of the beneficiary executive Engineer. Thereafter, Ex. Then, with reference to Ex. P. 11, plaintiff-Bank addressed a letter at Ex. P. 12 dated 4-6-1991 to D-l contractor reminding him of his failure to get his loan accounts adjusted with the Bank and pleading its inability to grant further renewal of the Bank guarantee in favour of the beneficiary executive Engineer. Thereafter, Ex. P. 15 letter No. AB/cash/bg/91-92/1200, dated 11-7-1991 was sent by the Executive Engineer to the plaintiff-Bank putting forth his claim to the guarantee amount of Rs. 28,740/- under Ex. P. 1. When D-1 failed to respond to the communication of the plaintiff-Bank, the latter then released the said guarantee amount of Rs. 28,740/- payable under ex. P. 1 and paid over the same to the beneficiary Executive Engineer on 2-11-1991 through its cheque. Thereafter, an amount of Rs. 8,000/- which was lying in D-1's account with the plaintiff-Bank was adjusted by it towards the said amount and the suit in O. S. No. 58 of 1992 was originally instituted by it against both defendants in the Court below for recovery of the balance of Rs. 15,235. 50 with future interest at 22% to be calculated at quarterly rests from 2-11-1991 till realisation and for costs. ( 4 ) IN the Court below, plaintiffs suit was contested by D-l alone while D-2 remained ex parte. In his written statement, D-l has chosen to deny his liability to pay the suit claim to the plaintiff-Bank mainly on the ground that Ex. P. 1 Bank guarantee was not invoked by the beneficiary Executive Engineer while it was in force, but the same was invoked after the expiry thereof, and, therefore, the plaintiffs suit was liable to be dismissed. ( 5 ) THE plaintiff, in proof of its claim adduced the evidence of its Manager P. W. 1 Jayathirtha and documents Exs. P. 1 to P. 22 were brought in evidence through him. D-l also gave his rebuttal evidence as D. W. 1. No documentary evidence was produced by him. ( 6 ) ON evaluation of the evidence placed on record by both sides, the learned Trial Judge recorded his affirmative findings on the material points holding that the plaintiff-Bank has satisfactorily proved its claim, and, therefore, he passed the impugned judgment and decree. ( 7 ) THE learned Counsel for petitioner D-1 submitted that admittedly the currency of Ex. ( 6 ) ON evaluation of the evidence placed on record by both sides, the learned Trial Judge recorded his affirmative findings on the material points holding that the plaintiff-Bank has satisfactorily proved its claim, and, therefore, he passed the impugned judgment and decree. ( 7 ) THE learned Counsel for petitioner D-1 submitted that admittedly the currency of Ex. P. 1 bank guarantee in favour of the beneficiary Executive Engineer stood expired on 13-7-1991 and the payment of the guarantee amount of Rs. 28,740 was made by the plaintiff to the beneficiary executive Engineer on 2-11-1991. Assailing the legality and validity of the impugned decree, he canvassed only one ground of objection for my consideration. It was that, under Ex. P. 1, the plaintiff-Bank was not under any obligation to make any payment to the Executive Engineer after expiry thereof. e. , after 13-7-1991 and that defendants were liable to indemnify the plaintiff under Ex. P. 3. Counter Indemnity and Ex. P. 4, Guarantor's Agreement, respectively, in respect of only such of the payments, if any, made by it to the Executive Engineer which were paid on or before tbe said expiry date. e. , 13-7-1991. He argued that since the said amount paid by the plaintiff to the Executive Engineer on 2-11-1991 was after the expiry date of Ex. P. 1 bank guarantee, defendants cannot be held liable to indemnify the plaintiff-Bank with respect thereto. So arguing, the petitioner's Counsel maintained that the impugned decree of the Court below cannot be sustained and the same is liable to be reversed. ( 8 ) LEARNED Counsel for respondent-plaintiff argued otherwise in support of the impugned judgment and decree, contending that once the claim under Ex. P. 1 was invoked by the beneficiary Executive Engineer before its expiry date,. e. , 13-7-1991, the plaintiff-Bank was legally bound to make payment of the said amount to the latter and the subsequent date of such payment is wholly immaterial for the Bank to discharge its liability under Ex. P. 1. ( 9 ) ON careful consideration of the rival contentions put forward by both sides, I find sufficient legal force and weight in the submission of the learned Counsel for the plaintiff-Bank. As rightly contended by him, what was material for the beneficiary to enforce his claim under Ex. P. 1. ( 9 ) ON careful consideration of the rival contentions put forward by both sides, I find sufficient legal force and weight in the submission of the learned Counsel for the plaintiff-Bank. As rightly contended by him, what was material for the beneficiary to enforce his claim under Ex. P. 1 bank guarantee was that the demand for the payment thereunder must be put forth by him on or before the date of its expiry. The moment such a demand was made with the plaintiff-Bank, it gives rise to its liability to meet the same which liability subsisted in law till it was discharged regardless of the fact whether or not the currency of the Bank guarantee Ex. P. 1 expired. It would be a valid demand which the plaintiff-Bank will be obliged under Ex. P. 1 to fulfil in discharge of its legal liability thereunder. The demand for payment put forth by the Executive engineer being before the expiry date of Ex. P. 1, the plaintiff-Bank was bound to make payment of the guarantee amount to the former and that that payment was made by it after the expiry date of Ex. P. 1 is wholly an irrelevant and immaterial circumstance. Therefore, the payment so made to the Executive Engineer by the plaintiff-Bank being a valid payment under Ex. P. 1, both defendants are bound to indemnify the latter by virtue of their Counter Indemnity at Ex. P. 3 and the Guarantor's Bond at Ex. P. 4, respectively. Mere factum of payment of the said amount at a later date made to the Executive Engineer pursuant to the latter's demand for the said payment vide his letter dated 11-7-1991 at Ex. P. 15 does not absolve the defendants from their liability to indemnify the plaintiff-Bank, by virtue of Ex. P. 3 and Ex. P. 4. Therefore, the Trial Court is legally justified in decreeing the plaintiffs suit on the basis of the aforestated plaintiff's believable evidence on record. In that view of the matter, I find no merit in this revision. ( 10 ) HENCE, for the reasons aforesaid, the revision is dismissed. Parties to bear their own costs.