JUDGMENT Mr. G.S. Sandhawalia, J. (Oral) - The present regular second appeal has been filed by the defendant-bank which is aggrieved against the judgments of the Courts below directing it to pay a sum of Rs.20,47,342.47 alongwith 12% interest per annum on the principal amount from the date of filing of the suit till realization of the entire decretal amount. The suit for recovery was based on the basis of three bank guarantees dated 15.04.1998 for Rs.5 lacs, 06.05.1988 for Rs.5 lacs and 08.07.1988 for Rs.10 lacs. 2. The plaintiff had filed the suit for recovery on the strength of the said bank guarantees which were furnished by the supplier M/s. Dany Dairy & Food Engineers Ltd., Dehradun Road, Saharanpur through the defendant- Bank. The said bank guarantees were extended till 31.03.1990 and due to the violation of the terms of the contract, the plaintiff had demanded encashment of bank guarantees vide letter dated 12.02.1990, telegrams dated 26.02.1990, 27.02.1990 and 28.02.1990. The said demand of encashment was acknowledged by the bank to its Branch Manager on 06.03.1990 and the bank offered to pay by 15.03.1990. The plaintiff also raised demand on 21.03.1990 and the Chairman and Managing Director of the Bank was also requested vide letter dated 28.03.1990 and telax dated 29.03.1990 was also sent for the payment of the bank guarantees, but in vain. A notice dated 28.03.1990 was also served upon the defendants. Accordingly, the plaintiff has claimed interest @ 18% p.a. from 12.02.1990 to 31.03.1990 which comes to Rs.47,342.47. The defendant-bank raised several pleas regarding jurisdiction and non-joinder of necessary parties including the fact that the terms of the agreement had not been complied with by the plaintiff and there was a breach on his behalf and a sum of Rs.6,81,000 was recoverable from the plaintiff-company by the supplier. 3. The Trial Court, after taking into consideration the agreement between the parties, noticed the clauses of the bank guarantee and came to a conclusion that a demand had been made upon the bank and keeping in view the judgment of the Hon’ble Supreme Court of India rendered in Hindustan Steel Works Constructions Ltd. vs. Tarapore and Co. and another, AIR 1996 Supreme Court 2268, held that it being an independent contract between the bank and the beneficiary, the bank could not withhold the payment. and another, AIR 1996 Supreme Court 2268, held that it being an independent contract between the bank and the beneficiary, the bank could not withhold the payment. It was also noticed that no particulars of fraud had been given in the written statement and it was settled proposition of law that in the absence of fraud, the bank was not entitled to deny the benefit to the beneficiary. 4. On the issue of jurisdiction, it was noticed that the bank had communicated Exs. P-15 and P-16 to the plaintiff-company at Rajpura with acknowledgment that the bank guarantees had been issued in the favour of the plaintiff and accordingly the Trial Court held that the Court at Rajpura had jurisdiction. Eventually, the suit was transferred from Rajpura for administrative reasons to Fatehgarh Sahib, where it has been finally decided. 5. On the issue of non-joinder of parties, it was held that the bank had filed an application for impleadment of M/s. Dany Dairy & Food Engineers Ltd., Dehradun Road, Saharanpur and the same had been dismissed. The revision filed by the bank had also met the same fate. Accordingly, the said issue was decided in favour of the plaintiff by holding that M/s. Dany Dairy & Food Engineers Ltd., Dehradun Road, Saharanpur was not a necessary party and accordingly, the suit was decreed. 6. In appeal, the lower Appellate Court, after noticing the judgment of the Hon’ble Supreme Court of India in Hindustan Steel Works Constructions Ltd. (supra), held that the appellants had no role to settle the dispute between the plaintiff and M/s. Dany Dairy & Food Engineers Ltd., Dehradun Road, Saharanpur and the appellant-bank being a public institution, had tried to escape its liability for a period of 19 years and caused immense loss not only to the plaintiff but also to the public. The Lower Appellate Court also commented upon the liability of the officer in default at the relevant time when the payment of the bank guarantee was refused and said that it should also be looked into and suitable action shall be taken against the said officer and accordingly dismissed the appeal with costs of Rs.5,000/-. 7. The bank does not seem to have learnt a lesson and in order to protect the concerned officer, the present appeal has been filed in this Court. 7. The bank does not seem to have learnt a lesson and in order to protect the concerned officer, the present appeal has been filed in this Court. It is pertinent to notice that the trial Court judgment is dated 23.05.2000 and the judgment and decree of the lower Appellate Court is dated 16.09.2009. While issuing notice of motion on 17.12.2009, this Court stayed the execution of the impugned decree on the ground that M/s. Dany Dairy & Food Engineers Ltd., Dehradun Road, Saharanpur was a necessary party and had not been impleaded. 8. Subsequently on 05.05.2010, it transpired that the impugned decree has already been satisfied meaning thereby that during the intervening period of 9 years when the appeal was pending before the Lower Appellate Court, the amount had already been recovered by the plaintiffs. However, the bank in its move to protect its officer, filed the present appeal. Admittedly, the action of the bank in trying to side with M/s. Dany Dairy & Food Engineers Ltd., Dehradun Road, Saharanpur has already been noticed by the Courts below that they had not satisfied the claim of the bank guarantee on the ground that the plaintiff was at fault. This action of the bank was totally unjustified as the furnishing of the bank guarantee was a totally independent contract and the bank had nothing to do with the dispute between the supplier and the plaintiff. It also transpires that the bank went to the extent of filing an application for impleadment of M/s. Dany Dairy & Food Engineers Ltd., Dehradun Road, Saharanpur and thereafter had also filed a revision petition before this Court which was also dismissed. 9. Thus from the above sequence of events, it goes on to show that the bank has been unnecessarily litigating and has also caused loss to public money by being forced to pay interest @ 12% p.a. from the date of first demand. It seems that just because the Lower Appellate Court had directed the bank to fix the responsibility upon the concerned official, the present regular second appeal has been filed in spite of the fact that the amount stood already paid to the plaintiffs. There has been further wastage of public money since a huge amount of Court fees to the tune of almost Rs.22,335 has been affixed in the present appeal. 10. There has been further wastage of public money since a huge amount of Court fees to the tune of almost Rs.22,335 has been affixed in the present appeal. 10. The Hon’ble Apex Court in Bank of India vs. Nagina Constructions (I) Pvt. Ltd. and others, [2008(4) LAW HERALD (SC) 2429] : (2009) 1 PLR 510 has observed that bank guarantees are bound to be honoured by the banks on unconditional demand and the bank is bound to honour its commitment and pay the amount of guarantee as the entire commercial and business transactions would come to a grinding halt if such principle is not followed. The relevant observations of the Hon’ble Apex Court are reproduced below:- “14. It is unfortunate that a nationalized bank is finding excuses for refusing to make the payment on totally untenable and frivolous grounds. The Division Bench was fully justified in making observations regarding the conduct of the nationalized bank. The entire trust, faith and confidence of people depend on the conduct and credibility of the nationalized bank. In the present day world, the national and international commercial transactions largely depend on bank guarantees. In case the banks are premitted to dishonour their commitments by adopting such subterfuges, the entire commercial and business transactions will come to a grinding halt. This principle has been reiterated in large number of cases by this court. We do not deem it appropriate to burden this judgment by reiterating all those judgments.” 11. Keeping in view of the above facts and circumstances of the case and the fact that no substantial question of law arises for consideration before this Court, the present appeal is dismissed with costs of Rs.5,000 in addition to what has already been directed by the lower Appellate Court. The costs be deposited with High Court Legal Services Committee. ------------