JUDGMENT : Assailingthe order dated 21.12.2010 passed by District Judge, Jabalpur in Civil Suit No.3-A/2008, the defendant No.1/appellant has filed this appealunder Order 43 Rule 1(r) of CPC whereby the application under Order 39 Rule 1and 2 read with Section 151 of CPC has been allowed granting injunction in favour of plaintiff/respondent No.1. 2.The plaintiff/respondent No.1 filed a suit for declaration that the invocationof the bank guarantee by defendant No.1/appellant is illegal and fraudulent witha further prayer to issue perpetual prohibitory injunction against thedefendants from invoking the Bank Guarantees and its encashment. It is saidthat defendant No.1 is a society registered under the Societies RegistrationAct, 1860 and the defendant No.2 Bank issued the Bank Guarantees in favour of defendant No.1 for and on behalf of theplaintiff. The defendant No.1/appellant invited bids through tender forengagement of the civil contractors, to carry out the work of construction ofvarious buildings at Oriental Institute of Science & Technology and Oriental Engineering College , Jabalpur .The plaintiff submitted its bid on 13.3.2009 of the total sum ofRs.15,03,12,004/- which was accepted by defendant No.1 and a Letter Of Intent(in short “the LOI”) was issued on 21.04.2009. In clause 31 of LOI it isstipulated that the mobilization advance of Rs.1.00 crore will be given to the Contractor against the bank guarantees for an equalamount. The interest at the bank rate applicable to Devi Shakuntala Thakral Charitable Foundation (presently @ 10%) will be chargeable from the Contractoron the said amount. The mobilization advance shall be recovered and adjusted inthe running account bills @ 5% of the total amount of the bill and the balancein the settlement of final bill. As per pleadings of the plaint, settlement ofthe third final bill would be adjusted from third running bill onwardssubmitted by the plaintiff on pro-rata basis. Plaintiff agreed to furnish thebank guarantee to defendant No.1 for securing the mobilization advance whichmay be encashed after settlement of the final billsubmitted by the plaintiff in terms of the contract, if any amount remainsunadjusted towards mobilization advance and if the plaintiff fails to pay thesame then the defendant No.1 has been secured by the bank guarantee. Theplaintiff submitted five bank guarantees each amounting to Rs.20 ,00,000 /- to defendant No.1 issued by defendant No.2. Out ofthe said five bank guarantees, the bank guarantee dated 28.04.2009 amounting toRs.20.00 lacs was returned to plaintiff on adjustmentof Rs.20.00 lacs from the running bills. Theplaintiff submitted five bank guarantees each amounting to Rs.20 ,00,000 /- to defendant No.1 issued by defendant No.2. Out ofthe said five bank guarantees, the bank guarantee dated 28.04.2009 amounting toRs.20.00 lacs was returned to plaintiff on adjustmentof Rs.20.00 lacs from the running bills. Theremaining four bank guarantees amounting to Rs.80.00 lacs were with the defendant No.1. The plaintiff has not submitted the final bill, however the issue of determination of the remainingunadjusted amount against mobilization advance does not arise. It is said thatthe defendant No.1 by its letter dated 19.07.2010 wrongly, fraudulently andillegally invoked all the four remaining bankguarantees for the reason of unsatisfactory performance of the contract. It issubmitted that the bank guarantees were given to secure re-payment of themobilization advance and not for the performance of the work, however such bankguarantees cannot be invoked or encashed due to thealleged non-performance. It is further said that the bank guarantee wasconditional bank guarantee and its invocation is contrary to the contract andwholly illegal. The defendant No.2 bank by its letter dated 26.07.2010 informedthe plaintiff regarding the letter of invocation issued by the defendant No.1and requested to respond to the same. A detailed reply was submitted by theplaintiff vide letter dated 27.07.2010 to the defendant No.2 explaining thatthe invocation of bank guarantee by defendant No.1 is illegal, fraudulent andwrong. It is further said that if defendant No.2 proceeds for encashment of thesaid bank guarantee in favour of defendant No.1, itwill cause a serious prejudice to the goodwill of the plaintiff. It is alsosaid that the conduct of the defendant No.1 is completely dishonest and he hasalso made an attempt to commit the similar fraudulent act with M/s L& T andM/s Datt Builders in relation to which legalproceedings are pending in various courts. Thus special equities lie in favour of the plaintiff and in fact he shall sufferirretrievable injustice if the invocation of the bank guarantees is allowed. Inthese circumstances, prayer was made to grant injunction restraining thedefendants from invoking or encashing the bank guaranteesduring the pendency of the suit. 3.The plaint allegations have been denied by the defendant No.1 raising apreliminary objection of jurisdiction of the court at Jabalpur . It is said that as perLetter of Intent the jurisdiction lies with the Bhopal Court and the suit cannot be maintained in view ofthe arbitration clause in agreement and due to which the plaintiff may raisethe dispute before the arbitrator. It is said that as perLetter of Intent the jurisdiction lies with the Bhopal Court and the suit cannot be maintained in view ofthe arbitration clause in agreement and due to which the plaintiff may raisethe dispute before the arbitrator. It is said that the defendant No.1 has notcommitted any fraud as alleged. In the said reply, the process of tender,issuance of common LOI and different work orders for construction of variousbuildings at Oriental Institute of Science and Technology and OrientalEngineering College, Jabalpur have not been disputed.It is merely said that the answering respondent has not committed any fraud.After issuance of the LOI the plaintiff has not adhered to the terms &conditions as agreed. Even on reminder and caution for unsatisfactoryperformance of the work, not having satisfactory progress, the mobilizationamount was not being utilized in the ratio, thus the bank guarantee has beeninvoked by defendant No.1 through defendant No.2 in accordance with law. Theallegation as alleged with respect to fraud has been denied. It is said that thebank guarantee was unconditional and irrevocable, however the defendant No.2 isnot required to go into the dispute between the plaintiff and the defendant No.1 and rightly been encashed by the defenendant No.2 on 7.8.2010 itself prior to passing theorder of injunction. In view of the said, it is urged that prayer for temporaryinjunction as made by the plaintiff may be refused. 4.The Trial Court referring the letter of invocation dated 19.7.2010 issued bydefendant No.1 and the terms of the bank guarantee found that the bankguarantee was issued for mobilization of the advance payment but the invocationhas been prayed for due to non-performance of the satisfactory work. It hasalso found that for non-performance of the contract, no bank guarantee has beenissued for invocation, however recorded a prima facie finding that invocationof the bank guarantee due to non-performance of the contract is illegal. It hasfurther been observed that summons of the suit were received by the defendantson 05.08.2010 and the bank guarantees were encashed on 07.08.2010 after receiving of summons, however the invocation and encashmentis contrary to the purpose for which the bank guarantee was issued, anddirected to deposit the amount of bank guarantee i.e. Rs.80.00 lacs with interest at the bank rate maintaining the statusquo ante as prevalent on the date of filing of the suit. 5. 5. Shri Brian Da Silva, learned senior counsel referring clause 31 and 33 ofthe LOI contends that the mobilization advance is against the bank guaranteefor an equal amount which will be recoverable and adjustable in the runningbills @ 5% of the total amount of the bill and the balance in the settlement offinal bill. The LOI was issued in duplicate which was signed by the plaintiff.In terms of clause 31.1 the plaintiff has not completed the work within thetime limit, however the performance remained unsatisfactory. The plea of fraudas taken is based on the surmises and unless it is established, the invocationin terms of the unconditional bank guarantee is permissible. Learned seniorcounsel referring para 3 and 9 of the bank guaranteecontended that the Punjab National Bank was agreed unconditionally andirrevocably to pay Rs.20.00 lacs on first writtendemand made by the defendant No.1 and without demur, the dispute raised by thecontractor in any suit or arbitration or proceedings pending in any court isirrelevant. If the written demand is made by the defendant No.1, it shall beconclusive evidence for re-payment as agreed by the said bank guarantee. It isfurther submitted that the bank guarantee was unequivocal and unconditionalwithout demur or objection and conclusive, however on making demand, theencashment has rightly been made by the Bank in terms of the contents of thebank guarantee. In support of the said contention, reliance has been placed onthe decision of Division Bench of this Court in the case of Biaora Infrastructure Pvt. Ltd., Indore (M/s) Vs. State of M.P. & others reported in I.L.R .[ 2011]M.P., 1141. Learned Senior counsel further contends that in the matter of grantof injunction in the case of encashment of bank guarantee various principleshave been laid down by the Apex Court in the case of Hindustan Construction Co.Ltd. Vs. State of Bihar and others (1999) 8 SCC 436 , whereby it is clear thatif the bank guarantee is unequivocal and on unconditional terms to pay theamount without any demur or objection irrespective of any dispute, the courtwould refrain from issuing the injunction. In the present case, the bankguarantee is unconditional and unequivocal, thereforeit has rightly been encashed . State of Bihar and others (1999) 8 SCC 436 , whereby it is clear thatif the bank guarantee is unequivocal and on unconditional terms to pay theamount without any demur or objection irrespective of any dispute, the courtwould refrain from issuing the injunction. In the present case, the bankguarantee is unconditional and unequivocal, thereforeit has rightly been encashed . However, the trialCourt committed an error granting injunction that too in the nature ofmandatory injunction to re-deposit the encashed amount of bank guarantee along with interest which is not in accordance to law.He further resting upon the aforesaid submissions on the Apex Court decision inthe case of Reliance Salt Ltd. Vs. Cosmos Enterprises and another (2006) 13 SCC599, urged that mere breach of contract would not lead to conclusion of fraud.The fraud which vitiates the contract must have nexus with the acts of theparties prior to entering into the contract. In the present case, the act asalleged is subsequent to issue a Letter of Intent, therefore it would not constitute a fraud. The discrepancies in the bills ornon-submission of the detailed account in respect of business cannot be aground for denial of the encashment of the bank guarantee at the instance ofthe promisor . In support of the said submission,reliance has been placed on the decision of Apex Court in the case of MahatmaGandhi Sahakra Sakkare Karkhane Vs. National Heavy Engineering Co-operative Ltd.and another, (2007) 6 SCC 470 . In addition to the same, it is urged that thebank guarantee is separate and independent contract than the contract ofconstruction as per the judgment of the Apex Court in the case of HindustanConstruction Co. Ltd. (supra), however encashment of the bank guarantee hasrightly been allowed by the bank in view of the unconditional, unequivocal andirrevocable bank guarantee in favour of the defendantNo.1. The Trial Court misunderstood the aforesaid bunch of judgment of the Apex Court in the case of Hindustan Construction Co.Ltd. (supra) while granting the injunction, therefore,by allowing the appeal, the order impugned may be set aside. 6.Per contra Shri Jivesh Nagrath and Shri R.K. Sanghi , learned counsel appearing on behalf of respondentNo.1 referring various paragraphs of the plaint and clause (31) of the LOIdated 21.04.2009 contended that the bank guarantee is for a specific purposei.e. “mobilization advance” as apparent from clause 2, 3 and 4 of the bankguarantee issued by the defendant No.2 in favour ofdefendant No.1. The said bank guarantee cannot be invoked or encashed for non-performance of the contractsatisfactorily. It is submitted that as per the letter dated 19.7.2010 issuedby the defendant No.1 for encashment of the bank guarantee, it is clear thatdue to non-performance of the contract, encashment wasprayed for and allowed by the defendant No.2 bank contrary to the terms of theLetter of Intent and Bank Guarantee. It is submitted that as per para 8 and 9 of the plaint allegations, it is clear thatthe bank guarantee was executed for mobilization advance, thus encashment ofthe said bank guarantee may be made when any amount remained unadjusted infinal bill. In para 11, it is said that the bankguarantee was a conditional one and it could be invoked only to adjust theunadjusted mobilization advance. Learned counsel referring para 21 submitted that the action of defendant No.1 is completely fraudulent,illegal and contrary to the terms of the bank guarantees for the reasons asspecified therein. In para 22 it is also said thatthe defendant No.1 is in occupation to deceit other contractors also making anattempt to encash their bank guarantees to which thedisputes are pending in various courts, however special equities lie in favour of plaintiff. In support of the said contention,reliance is placed on the decision of Hindustan Construction Co. Ltd. (supra)and urged that if the bank guarantee has been furnished against mobilizationadvance then its invocation will have to be in accordance to the terms of thebank guarantee or else it is fraudulent. It is further submitted by him thatafter service of summons of the suit, the bank has encashed the bank guarantee, however the Trial Court deriving the power under Order 7Rule 7 of CPC passed an order maintaining the status-quo ante exercising thediscretion in the light of the judgment of the Apex Court in the case of Pasupuleti Venkateswarlu Vs. TheMotor & General Traders, (1975) 1 SCC 770 as well as the decision of thiscourt in the case of Ajra Habib Vs. B.K. Gupta, Divisional Commercial Manager, Central Railway, Jabalpur , 2002(2) MPLJ 384 . Lastly,placing reliance on a decision of the Apex Court inthe case of Wander Ltd. And another Vs. TheMotor & General Traders, (1975) 1 SCC 770 as well as the decision of thiscourt in the case of Ajra Habib Vs. B.K. Gupta, Divisional Commercial Manager, Central Railway, Jabalpur , 2002(2) MPLJ 384 . Lastly,placing reliance on a decision of the Apex Court inthe case of Wander Ltd. And another Vs. Antox India P. Ltd., 1990 (Supp) SCC 727, it is urged that the discretion asexercised by the Trial Court granting injunction to maintain the status-quoante is not liable to be interfered with until and unless it is shown that thediscretion so exercised is arbitrary, capricious or perverse. If the trialCourt has exercised the discretion reasonably in a judicious manner, theinterference with the discretion exercised by the Trial Court is notpermissible. In view of the foregoing, it is urged that maintaining the orderpassed by the Trial Court, appeal filed by the appellant may be dismissed. 7.After having heard learned counsel appearing on behalf of the parties andbefore dealing with the issue raised in the appeal, itis desirable to consider the principle of law laid down by the Apex Court in the matter of grant of injunction forinvocation of the bank guarantee. The Apex Court in the case of Hindustan Construction Co. Ltd. (supra) has observed in para 14, 21 and 22 as under: “14.This condition clearly refers to the original contract between the HCCL and thedefendants and postulates that if the obligations, expressed in the contract,are not fulfilled by HCCL giving to the defendants the right to claim recoveryof the whole or part of the "advance mobilization loan", then theBank would pay the amount due under the guarantee to the Executive Engineer. Byreferring specifically to clause 9, the Bank has qualified its liability to paythe amount covered by the guarantee relating to "advance mobilizationloan" to the Executive Engineer only if the obligations under the contractwere not fulfilled by HCCL or the HCCL has misappropriated any portion of the"advance mobilisation loan". It is in thesecircumstances that the aforesaid clause would operate and the whole of theamount covered by the " mobilisation advance" would become payable on demand. The bank guarantee thus could beinvoked only in the circumstances referred to in clause 9 whenever the amountwould become payable only if the obligations are not fulfilled or there ismisappropriation. It is in thesecircumstances that the aforesaid clause would operate and the whole of theamount covered by the " mobilisation advance" would become payable on demand. The bank guarantee thus could beinvoked only in the circumstances referred to in clause 9 whenever the amountwould become payable only if the obligations are not fulfilled or there ismisappropriation. That being so, the bank guarantee could notbe said to be unconditional or unequivocal in terms so that the defendantscould be said to have had an unfettered right to invoke that guarantee anddemand immediate payment thereof from the Bank. This aspect of thematter was wholly ignored by the High Court and it unnecessarily interferedwith the order of injunction, granted by the Single Judge, by which thedefendants were restrained from invoking the bank guarantee. xxx xxx xxx 21.As pointed out above, Bank Guarantee constitutes a separate, distinct andindependent contract. This contract is between the Bank and the defendants. Itis independent of the main contract between HCCL and the defendants. Since thebank guarantee was furnished to the Chief Engineer and there is no definition of"Chief Engineer" in the bank guarantee nor is it provided thereinthat "Chief Engineer" would also include Executive Engineer, the bankguarantee could be invoked by none except the Chief Engineer. The invocationwas thus wholly wrong and the Bank was under no obligation to pay the amountcovered by the "performance guarantee" to the Executive Engineer. 22 .We have scrutinised the factspleaded by the parties in respect of both the bank guarantees as also thedocument filed before us and we are, prima facie, of the opinion that the lapsewas on the part of the defendants who were not possessed of sufficient fundsfor completion of the work. The allegation of the defendants that HCCL itselfhad abandoned the work does not, prima facie, appear to be correct and it isfor this reason that we are of the positive view that the "specialequities" are wholly in favour of HCCL.” Inthe case of Reliance Salt Ltd. (supra), the Apex Court held as under:- “16.A bare perusal of the contents of the bank guarantee shows that there is noescape from arriving at a conclusion that the guarantee furnished was anunconditional one. It not only provided for loss or damage in case of breach ofcontract, but also loss or damage by reason of non-settlement of bills. Suchbills under the agreement of consignment were to be settled within a period of30 days. It not only provided for loss or damage in case of breach ofcontract, but also loss or damage by reason of non-settlement of bills. Suchbills under the agreement of consignment were to be settled within a period of30 days. In the event the bills are not settled within the period stipulated inthe agreement, the parties intended, as it appears from the tenor of the bankguarantee, that the same would constitute a breach of contract. 17 .A claim which is denied or disputed, in the event ofnecessity for determination of the lis , may not befound to be correct. If appellant was to allege a breach of contract in aproperly framed suit, Respondent 1 could also allege the breach of contract onthe part of appellant herein. Breach of contract by reason of supply ofinferior quality of tea or salt or delay in supply or a short supply may rendera party responsible for damages for commission of breach of contract, but,breach of contract alone does not lead to the conclusion that a fraud had beencommitted thereby. It is contended that commission of fraud would include anyact to deceive but then such act must be confined to acts committed by a partyto a contract with intention to deceive another party or his agent or to inducehim to enter into a contract. Fraud, which vitiates the contract, must have anexus with the acts of the parties prior to entering into the contract.Subsequent breach of contract on the part of a party would not vitiate thecontract itself. 21. Although, the learned trial Judge as also the High Courtobserved that the bank guarantee was inviolable after lapse of 30 days fromdate of the bill, as stipulated therein, on its own terms the Bank was bound topay the amount in question on its invocation, subject of course to thefulfillment of the other conditions laid down therein. It could not haverefused to honour its commitment only because thepurported accounts were not settled between the parties or the accountsfurnished to the court were wrong ones. ” Inthe case of Mahatma Gandhi Sahakra Sakkare Karkhane (supra), the Apex Court has held as under : - “22.If the bank guarantee furnished is an unconditional and irrevocable one, it isnot open to the bank to raise any objection whatsoever to pay the amounts underthe guarantee. ” Inthe case of Mahatma Gandhi Sahakra Sakkare Karkhane (supra), the Apex Court has held as under : - “22.If the bank guarantee furnished is an unconditional and irrevocable one, it isnot open to the bank to raise any objection whatsoever to pay the amounts underthe guarantee. The person in whose favour theguarantee is furnished by the bank cannot be prevented by way of an injunctionin enforcing the guarantee on the pretext that the condition for enforcing thebank guarantee in terms of the agreement entered between the parties has notbeen fulfilled. Such a course is impermissible. The seller cannot raise thedispute of whatsoever nature and prevent the purchaser from enforcing the bankguarantee by way of injunction except on the ground of fraud and irretrievableinjury. 28.What is relevant are the terms incorporated in the guarantee executed by thebank. On careful analysis of the terms and conditions of the guarantee in thepresent case, it is found that the guarantee to be an unconditional one. Therespondent, therefore, cannot be allowed to raise any dispute and prevent theappellant from encashing the bank guarantee. The merefact that the bank guarantee refers to the principal agreement withoutreferring to any specific clause in the preamble of the deed of guarantee doesnot make the guarantee furnished by the bank to be a conditional one.” Inthe case of Daewoo Motors India Limited Vs . Union ofIndia and others, (2003) 4 SCC 690 , the Apex Court has held as under:- “Forencashment of bank guarantee the bank cannot have any valid resistance, exceptof course, in a case of fraud. The bank guarantee furnished by the Bank is anunconditional and absolute bank guarantee. The clause in the bank guaranteespecifically provides that the demand made by the President of India shall beconclusive as regards the amount due and payable by the Bank under thisguarantee and the liability under the guarantee is absolute and unequivocal. Inthe face of the clear averments, it is trite to contend that the bank guaranteeis a conditional bank guarantee. Therefore, the Bank has no case to resist theencashment of the bank guarantee. Inthe face of the clear averments, it is trite to contend that the bank guaranteeis a conditional bank guarantee. Therefore, the Bank has no case to resist theencashment of the bank guarantee. It is true that the bank guarantee has to beread in conjunction with the terms of the contract but when the bank guaranteeitself is in absolute terms, the agreement between the Company and the firstrespondent would be of no avail to the Bank.” 8.In view of the foregoing, it is well settled that in the case of unconditionalbank guarantees, interference by the court is warranted only when there isestablished fraud and irretrievable damage to the promisee .The terms of the bank guarantee are extremely material since the bank guaranteeis the independent contract between the bank and the beneficiary, however boththe parties would be bound by the terms thereof. An unconditional bankguarantee could be invoked in terms of the said bank guarantee by the person inwhose favour it was given. The bank guarantee cannotbe encashed if it is conditional and for theinconsistent purpose. The breach of the terms of the contract alone does notlead to a conclusion that a fraud has been committed. The discrepancies in thebills or non-submission of the detailed account in respect of business wouldnot be a ground for denial of the encashment of the bank guarantee. Thus inview of the aforesaid principle of law, it is to be seen whether the injunctiongranted by the Trial Court due to violation of the terms of the bank guaranteeon making the demand for encashment due to satisfactory non-performance of thecontract to which no bank guarantee was furnished is justified. It is to befurther seen whether the status quo ante granted by the Trial Court maintainingthe position as exists on the date of filing of the suit exercising thediscretion is reasonable and judicious or not. 9.In view of the aforesaid legal position, the facts of the present case,conditions of the bank guarantee, the demand for which the encashment is prayedfor is required to be seen. Undisputedly, the plaintiff was assigned theconstruction work after following the due process of tender and the LOI wasissued on 21.04.1999. Clause 31 of the said LOI is relevant which relates tothe mobilization advance for which the bank guarantee was furnished by theplaintiff. Undisputedly, the plaintiff was assigned theconstruction work after following the due process of tender and the LOI wasissued on 21.04.1999. Clause 31 of the said LOI is relevant which relates tothe mobilization advance for which the bank guarantee was furnished by theplaintiff. Clause 31 of the LOI is reproduced as thus : - “31.0A mobilization advance of Rs.1.00 crore only (Rupeesone crore only) will be given to the Contractoragainst bank guarantee for an equal amount. An interest at the bank rateapplicable to Devi Shakuntala Thakral Charitable Foundation (presently @ 10% willbe chargeable from the Contractor. The advance will be recovered & adjustedin the running account bills @ 5% of the total amount of the bill & thebalance in the settlement of final bill.” Infurtherance to the said clause Rs.1.00 crore mobilization advance was received by the plaintiff from the owner and in lieu thereoffive bank guarantees each consists of Rs.20.00 lacs were furnished in favour of the owner. In terms ofclause 31 of LOI, one bank guarantee of Rs.20.00 lacs was returned because the said amount was adjusted as specified in the saidclause. All the bank guarantees are of similar terms, however to determine theissue that such bank guarantee was a conditional one, or unconditional one, isrequired to be taken note of. The relevant terms of the bank guarantee arereproduced as under:- “WHEREASM/s Wig Brothers (India) Pvt. Ltd. having its Head Office at 618,, Sector-21A, Faridabad – 121001 (hereinafter called “The Contractor”)has undertaken, in pursuance of Letter of Intent (LOI)No.DSTCF/2009/JBP/WO/12717 dated 21.04.09 to execute the work of constructionof various buildings at Oriental Institute of Science and Technology andOriental Engineering College at Jabalpur pertainingto Devi Shakuntala Thakral Charitable Foundation Bhopal (Hereinafter called“The Owner”) And WHEREAS it has been stipulated by you in the said LOI that theContractor shall furnish you with Bank Guarantees of equivalent amount byrecognized bank for mobilization advance of Rs.10000000/- only (Rupees One Crore only) equivalent to five percentage of the contractvalue to be paid by M/s Devi Shakuntala Thakral Charitable Foundation to M/s Wig BrothersIndia Pvt. Ltd. An interest at the bank rate applicable to Devi Shakuntala Thakral Charitable Foundation (Presently 10% per annum subject to change from time totime) will be chargeable from the Contractor on reducing balance. The advancewill be recovered and adjusted in the running account bills @5% of the totalamount of the bill, on Pro Rata basis. The advancewill be recovered and adjusted in the running account bills @5% of the totalamount of the bill, on Pro Rata basis. 2.Against the payment of mobilization advance to the contractor by the owner thisdeed of guarantee executed by the Punjab National Bank, constituted under theBanking Regulation Act, 1949 having its Central Office at 7, Bhikajikama Place, new Delhi and a Branch at 74, Janpath , New Delhi (hereinafter referred to as “The Bank”)in favour of Devi Shakuntala Thakral CharitableFoundation for an amount not exceeding Rs.2000000/- only (Twenty lacs only) part of Rs.100000000/-/- only (Rupees One Crore only) at the request of M/s Wig Brother (India) Pvt.Ltd. a Company duly regulated under the Companies Act, 1956 and having headoffice at Wig House 618, Sector- 21A, Faridabad (herein after referred to as “The Contractor”). 3.THEREFORE We,Punjab National Bank, hereby affirm that we Guarantors and responsible to you, onbehalf of the “Contractor” upto a total ofRs.2000000/- only (Rupees Twenty Lacs only) limitedto the balance of the unadjusted agreed advance and interest thereof. 4.This guarantee shall come into force simultaneously with the receipt of the advancepayment or part thereof by the contractor and the liability of the Bank shallstart, but will be limited to cover the only the unadjusted amount of theadvance and interest secured to the respective guarantee that may be actuallyremaining to be recovered by the owner from the Contractor.” xxx xxxxx xxxx 10.In view of the foregoing facts it is apparent that in terms of clause 31 of LOIthe bank guarantee was furnished by the plaintiff. As per clause (2) of thebank guarantee it is clear that it is against the payment of the “mobilizationadvance”. The Punjab National Bank unconditionally andirrevocably agreed to pay the amount of Rs.20.00 lacs on written demand without demure an amount as specified therein “limited to thebalance” of the unadjusted agreed advance and interest thereof. Clause (4)makes it clear that encashment would be “limited to cover the only unadjustedamount of the advance and interest secured to the respective guarantee and maybe actually remaining to be recovered by the owner from the contractor”. Thesaid bank guarantees have been encashed by the bankin view of the letter of demand dated 19.7.2010 written by the President for Devi Shakuntala Thakral Charitable Foundation. Thesaid bank guarantees have been encashed by the bankin view of the letter of demand dated 19.7.2010 written by the President for Devi Shakuntala Thakral Charitable Foundation. By the said letter thedemand has been made in the following terms: “IK.L. Thakral , son of Late Shri H.R. Thakral , resident of Devi Shakuntala Thakral Charitable Foundation, Oriental Campus, Thakral Nagar , Raisen Road, Bhopal –462021 (M.P.) hereby invoke the encashment of all the above mentioned four BankGuarantees. Each Bank guarantee is of the value of Rs.20.00 lakhs ,thus you have to remit us full amount of Rs.80.00 lakhs ( Rs . Eighty lakhs only) forthese four Bank Guarantees. Iwould like to add here that I am duly authorized by Devi Shakuntala Thakral Charitable Foundation to invoke the encashment of these Bank Guarantees. As theContractor has not given due performance under the Contract, it has beendecided that these Bank Guarantees should be invoked and the Bank may berequested to remit full amount of the Bank Guarantees. You are requested tokindly take immediate necessary action and remit the amount of Rs.80.00 lakhs to our Account No.52741010000040, IFSC Code: ORBCO105274,Oriental Bank of Commerce, E.C. Oriental Institute of Science & Technology, Thakral Nagar , Bhopal.” 11.In the facts of the present case, as stated in para 8and 9 of the plaint, it is apparent that the bank guarantee has been given formobilization advance with a view to secure the said amount. If any amountremains unadjusted towards mobilization advance after settlement of the finalbill then only the bank guarantee may be invoked. As per para 9 of the plaint, the said mobilization advance @5% is required to be deductedfrom the third running bill which is continuing and the final bill has not yetbeen commenced. From para 11, it is clear that fiveguarantee were given out of which one has been returned on adjustment of themobilization advance to the extent of such amount and four are remaining whichhave been encashed . In para 21(c) it is said that the bank guarantee cannot be invoked due tonon-performance. All these facts have not been specifically denied in thewritten statement and it is merely stated that the said averments are admittedin the context of the documents. Thus it is clear that the encashment of thebank guarantee has been done for non-performance of the contract while the bankguarantee was given towards mobilization advance. All these facts have not been specifically denied in thewritten statement and it is merely stated that the said averments are admittedin the context of the documents. Thus it is clear that the encashment of thebank guarantee has been done for non-performance of the contract while the bankguarantee was given towards mobilization advance. 12.In view of the foregoing, it is apparent that the invocation of the bankguarantee was sought for by defendant No.1 due to satisfactory nonperformanceof the contract as per the decision taken by the Board of Directors of Devi Shakuntala Thakral Charitable Foundation. Thus, it can safely be heldthat the bank guarantee was not unconditional, and, in fact, it wasunconditional bank guarantee for the specific purpose of mobilization advanceand its encashment is only for a limited purpose to balance the unadjustedagreed advance and interest thereof. From the demand letter and as per thereply filed by the defendant No.1 in the court, it is apparent that theencashment was sought for satisfactory non-performance of the contract makingvarious allegations. Thus, in the facts of the present case and in view of thelaw laid down by the Apex Court in the case of Hindustan Construction Co. Ltd. (supra), in the opinion of thisCourt, the Trial Court has not committed any error restraining defendants frominvocation and encashment of the bank guarantee. In the said case, the Apex Court held that the bank guarantee constitute aseparate distinct and individual contract between the bank and to thebeneficiary. Both the parties are bound by the terms of the said bankguarantee. If it is encashed contrary to the saidterms, injunction granted by the Single Bench restraining encashment was foundjustified. The judgments as relied upon by the learned counsel Shri Brian Da Silva Reliance SaltLtd. (supra), Daewoo Motors India Limited (supra) and Mahatma Gandhi Sahakra Sakkare Karkhane (supra) are distinguishable on facts because inthose cases unconditionally the bank guarantee was revoked for the purpose towhich it was furnished. As discussed herein above, in the facts of the presentcase the bank guarantee so furnished by the plaintiff is a conditional onewhich cannot be invoked or encashed other than thepurpose for which it was furnished. Thus it is a clear violation of the termsof the bank guarantee to which the injunction has rightly been granted by theTrial Court. As discussed herein above, in the facts of the presentcase the bank guarantee so furnished by the plaintiff is a conditional onewhich cannot be invoked or encashed other than thepurpose for which it was furnished. Thus it is a clear violation of the termsof the bank guarantee to which the injunction has rightly been granted by theTrial Court. 13.Now the question arises regarding viability, reasonableness and thejudiciousness of the order of the Trial Court in the matter of grant ofinjunction of status quo ante directing the defendant No.1 to deposit the encashed amount with defendant No.2 Bank along with theinterest. 14.In the present case the Trial Court found a prima facie case due to violationof the terms of the bank guarantee and its encashment after service of summonof the suit by the bank authorities. It was found that thesummon of the suit was served on 5.8.2010 while the bank guarantee was encashed on 7.8.2010 after receiving the summon. Theencashment of the bank guarantee given for mobilization advance can be encashed only when the final bill is prepared and theamount remains to be paid by the Contractor to the owner. Undisputedly thestage of final bill has not yet resumed. In the said context, in the opinion ofthis Court, Rule 7 of Order 7 of CPC may be profitably referred whereby it isclear that every plaint shall state specifically the relief which the plaintiffclaims either simply or in the alternative, and it shall not be necessary toask for general or other relief which may always be given as the Court maythink just to the same extent as if it had been asked for and the same ruleshall apply to any relief claimed by the defendant in his written statement. 15.In view of the aforesaid discussions, it is apparent that even after service ofsummons of the suit the bank guarantee has been encashed in favour of defendant No.1 violating the terms andconditions of the bank guarantee, however the Trial Court directed to maintainthe status quo as it exists on the date of filing of the suit. Admittedly onthe date of filing of the suit and issuance of summons the bank guarantees werenot encashed and it has been encashed later for the purpose other than to which it was furnished. In suchcircumstances, Apex Court in the case of Pasupuleti Venkateswarlu (supra) has held as under : - 4.We feel the submissions devoid of substance. Admittedly onthe date of filing of the suit and issuance of summons the bank guarantees werenot encashed and it has been encashed later for the purpose other than to which it was furnished. In suchcircumstances, Apex Court in the case of Pasupuleti Venkateswarlu (supra) has held as under : - 4.We feel the submissions devoid of substance. First about thejurisdiction and propriety vis-a-vis circumstanceswhich come into being subsequent to the commencement of the proceedings. It is basic to our processual jurisprudence that theright to relief must be judged to exist as on the date a suitor institutes thelegal proceeding. Equally clear is the principle that procedure is the handmaidand not the mistress of the judicial process. If a fact, arising after the lis has come to court and has a fundamental impact on theright to relief or the manner of moulding it, isbrought diligently to the notice of the tribunal, it cannot blink at it or beblind to events which stultify or render inept the decretal remedy. Equity justifies bending the rules of procedure, where no specificprovision or fair play is violated, with a view to promote substantial justice-- subject, of course, to the absence of other disentitling factors or justcircumstances. Nor can we contemplate any limitation on this power to take noteof updated facts to confine it to the trial Court. If the litigation pends , the power exists, absent other special circumstancesrepelling resort to that course in law or justice. Rulings on this point arelegion, even as situations, for applications of this equitable rule are myriad.We affirm the proposition that for making the right or remedy claimed by theparty just and meaningful as also legally and factually in accord with thecurrent realities, the Court can, and in many cases must, take cautiouscognizance of events and developments subsequent to the institution of theproceeding provided the rules of fairness to both sides are scrupulouslyobeyed. On both occasions the High Court, in revision, correctly took thisview. The later recovery of another accommodation by the landlord, during the pendency of the case, has as the High Court twice pointedout, a material bearing on the right to evict, in view of the inhibitionwritten into sECTION10 (3) (iii) itself. On both occasions the High Court, in revision, correctly took thisview. The later recovery of another accommodation by the landlord, during the pendency of the case, has as the High Court twice pointedout, a material bearing on the right to evict, in view of the inhibitionwritten into sECTION10 (3) (iii) itself. We are not disposed to disturb thisapproach in law or finding of fact.” 16.Thus, as per the processual jurisprudence if thecourt has passed an order maintaining status-quo ante and directed to pay the encashed amount of bank guarantee against defendant No.1along with the interest, such an order appears to be just, reasonable andjudicious in the facts of this case. In view of the discussion as made hereinabove, in the opinion of this Court, the conclusions arrived at by the TrialCourt do not appear to be arbitrary, capricious or perverse warrantinginterference in the facts and circumstances of the case. 17.In view of the discussions as made herein above, the appeal is devoid of any substance, hence it is dismissed upholding the order passedby the Trial Court granting injunction in favour ofthe plaintiff. In the facts and circumstances of the case, parties are directedto bear their own costs.