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PETITIONER:

DWARIKESH SUGAR INDUSTRIES LTD.

Vs.

RESPONDENT:

PREM HEAVY ENGINEEING WORK

DATE OF JUDGMENT: 07/05/1997

BENCH:

K.S. PARIPOORNAN, K. VENKATASWAMI, B.N. KIRPAL

ACT:

HEADNOTE:

JUDGMENT:

J U D G M E N T

THE 7TH DAY OF MAY, 1997

Present:

Hon'ble Mr.Justice K.S.Paripoornan

Hon'ble Mr Justice K.Venkataswami

Hon'ble Mr Justice B.N.Kirpal

Harish N.Salve, Sr.Adv., Krishan Mahajan, P.H.Parekh, Ms.

Indu Varma, Advs. with him for the appellant

Sudhir Chandra, Sr.Adv., Manmohan, Sanjay Raghuvanshi, R.

Sasiprabhu, Advs. with him for the Respondents.

J U D G M E N T

The following Judgment of the Court was delivered:

KIRPAL. J.

Special leave granted.

Having been thrawted by orders of the court below in it

attempt to get encashment of the bank guarantees, issued by

the State Bank of India, Meerut Cantt. Branch (respondent

no.2) respondent no.l has led to the filing of this appeal

by aggrieved beneficiaries.

The appellant and respondent no.1 had entered into an

agreement on 27th July, 1994 whereby respondent no.1 was to

supply boiling house equipment the cost of which was Rs.

5.23 crores. The supply of equipment and material was to

start from 15 September, 1994 and the same was to be

completed by 10th August, 1995, as per the schedule of the

supply agreed to by the parties.

According to one of the clauses of the aforesaid

agreement respondent no.l had agreed to furnish bank

guarantees in favour of the appellant. Out of the above six,

only four bank guarantees were furnished including bank

guarantee no. 40/51 dated 1st December, 1994 for a sum of

Rs.26,15,000/- and bank guarantee no.40/47 dated 24th

November, 1994 for a sum of Rs.35 lacs. These are the bank

guarantees with which we are concerned in the present case.

Bank guarantee no.40/51 was issued to ensure timely delivery

of equipment and supply by respondent no. 1. The relevant

clauses of the said bank guarantee no.40/51 are as follows:

"In consideration of the premises

the Guarantor hereby

unconditionally and irrevocably

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undertake to pay to the Purchaser

on their first written demand and

without demur such a sum not

exceeding Rs.26,15,000/- (Twenty

six lacs fifteen thousand only) as

the purchasers may demand

representing 5% (five per cent) of

the contract price, and if the

guarantor fails to pay the sum on

demand the guarantor shall also pay

on the sum demanded interest at the

bank lending rates then prevailing

reckoned from the date of demand

till the date of payment.

2.The guarantor shall pay to the

purchaser on demand the sum under

clause 1 above without demur and

requiring the purchasers to invoke

any legal remedy that may be

available to them, it being

understood and agreed firstly that

the purchasers shall be the sole

judge of and as to whether the

sellers have committed breach(es)

of any of the terms and conditions

of the said agreement and secondly

that the right of the purchasers to

recover from the guarantor any

amount due to the purchasers shall

not be affected or suspended by

reasons of the fact that any

dispute or disputes have been

raised by the sellers with regard

to their Lability or that

proceedings are pending before any

Tribunal arbitrator(s) or Court

with regard to or in connection

therewith, and thirdly that the

guarantor shall immediately pay the

aforesaid guaranteed amount on

demand and it shall not be open to

the guarantor to know the reasons

of or to investigate or to go into

the merit of the demand or to

question or to challenge the demand

or to know any fact affecting the

demand, and lastly that it shall

not be open to the guarantor to

require the proof of the liability

of the seller to pay the amount

before paying the aforesaid

guaranteed amount to the purchasers

The other bank guarantee no.40/47 was originally issued

for a sum of Rs.51,70,000/- for securing advance payment.

The agreement contemplated the liability being gradually

reduced and on 28th August, 1995 this bank guarantee was

reduced for a diminished amount of Rs.33 lacs. The relevant

clause of this bank guarantee is as follows:

"In consideration of the premises

the guarantor hereby

unconditionally and irrevocably

undertakes to pay to the purchaser

on their first written demand and

without demur such a sum not

exceeding Rs.51,70,000/- (Rupees

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fifty one lacs seventy thousand

only) as the purchasers may demand

representing 10% (Ten per cent) of

the contract price, and if the

guarantor fails to pay the sum on

demand the guarantor shall also pay

on the sum demanded interest at the

bank lending rates then prevailing

reckoned from the date of demand

till the date of payment. Provided

that liability of the guarantor

hereunder shall reduce to the

extent of the advance adjusted

under clause 13 of the said

agreement.

The guarantor shall pay to the

purchaser on demand the sum under

clause 1 above without demur and

requiring the purchasers to invoke

any legal remedy that may be

available to the them, it being

understood and agreed firstly that

the purchaser shall be the sole

judge of and as to whether the

sellers have committed any

breach(es) of any of the terms and

conditions of the said agreement

and secondly that the right of the

purchasers to recover from the

guarantor any amount due to the

purchasers shall not be affected or

suspended by reasons of the fact

that any dispute or disputes have

been raised by the seller with

regard to their Liability or that

proceedings are pending before any

Tribunal, arbitrator(s) or court

with regard thereto or in

connection therewith, and thirdly

that the guarantor shall

immediately pay the aforesaid

guaranteed amount on demand and it

shall not be open to the guarantor

to know the reasons of or to the

investigate or to go into the

merits of the demand or to question

or to challenge the demand or to

know any facts affecting the

demand, and lastly that it shall

not be open to the guarantor to

require the proof of the liability

of the seller to pay the amount

before paying the aforesaid

guaranteed amount to the

purchasers".

According to the appellant respondent no.l did not

supply the equipment at site, within the time allowed, nor

replaced any of the defective items which, according to the

appellant, had resulted in the ate commencement of the trial

crushing in the mill. It is further the case of the

appellant that it had to make direct purchases of many

parts from other sources as the respondent no.1 had failed

to supply the equipment Ultimately by letter dated 21st

November, 1995 written to respondent no.2, the appellant

invoked the bank guarantee. The material portion of this

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letter was as follows:

"We wish to inform you that M/S

Prem Heavy Engineering Works (P)

Ltd. Ram Mill, Delhi Road, Meerut

have failed to fulfill the

condition of our agreement dated

27.7.1994 in so far as timely

supply of the machinery and

equipment under order with them .

"As per clause 14 of the supply

agreement M/s Prem - Heavy

Engineering Works (P) Ltd., Meerut

has failed to deliver the

equipments and its commissioning

within the scheduled time frame.

Now we hereby invoke the aforesaid

guarantee for Rs.26,l5,000/-(Rupees

twenty six lacs fifteen thousand

only) 5% of the contract value and

enclose here with the original

guarantee for your record. Kindly

hand over the Demand Draft in our

favour payable at Najibabad, Distt.

Bijnor, Uttar Pradesh towards the

invocation amount."

As on 28th November 1995 respondent no.1 had already

obtained and ex parte injunction restraining the encashment

of bank guaranteee, no payment was made to the appellant by

the bank.

Respondent no.1 then filed another injunction

application dated 12th January, 1996 with regard to the

second bank guarantee dated 24th November, 1994 which was

for a sum of Rs.33 lacs. It obtained an Ex parte injunction

in respect thereto on the same day. Being ignorant of this

the appellant wrote a letter dated 16th January, 1996 to

the respondent bank invokeing the said bank guarantee no.

40/47. In the said letter it was stated that respondent no.1

had failed to deliver the equipment as per the terms of

the agreement and that the appellant had bought equipment

from various markets due to which the advance amount which

had been paid to respondent no.1 in respect of which this

bank guarantee had been issued, remained unadjusted. The

bank was accordingly required to pay the said amount of

Rs.33 lacs.

According to the appellant it is only after 16th

January, 1996 that it became aware of the filing of the

aforesaid suit and the injunction application and it

entered appearance in Court on 18th January, 1996 even

though no notice had been served on it. As per the

appellant, there was delay in the disposal of the injunction

application, consequently it approached the High Court for

appropriate directions and the Allahabad High Court vide

order dated 10th may, 1996 directed the civil Judge,

Meerut Cantt, to dispose of the suit within the time fixed

by it .

By a detailed order dated 20th August 1996, the Second

Civil Judge (Sr. Division) Meerut vacated the ex parte

injunctions which had been granted and dismissed the

injunction applications. In arriving at this conclusion it

observed that respondent no.1 had not stated that the work

had been completed and nor was there any allegation of

cheating or fraud contained in the plaint which had been

filed. The trial court referred to a number of decisions

of this Court and came to the conclusion that there was no

basis, in law, for the grant of any interim prohibitory

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order.

The appellant on 22th August, 1996 again approached

the respondent bank for the encashment of the bank

guarantees, but without success.

Respondent no.1 then filed revision petition on. 257

of 1996 on 10th September. 1996 before the Allahabad High

Court challenging the order dated 20th August, 1996 of the

trial court. single judge of the Allahabad High Court took

up the revision petition and disposed it of on the same day

and after setting aside the order dated 20th August, 1996

it remanded the matter back to the trial court for a fresh

decision but, at the same time, directed that till the

disposal of injunction application the bank guarantees

in question shall not be invoked or encashed. The trial

court was directed to hear the parties within fifteen days

of the receipt of the order and to dispose of the injunction

application within fifteen days thereafter. Needless to

date, due to dilatory tactics adopted by respondent no1

which is evident from the documents available on the record

of this

"As per clause 14 of the supply

agreement M/s Prem - Heavy

Engineering Works (P) Ltd., Meerut

has failed to deliver the

equipments and its commissioning

within the scheduledtime frame.

Now we hereby invoke the aforesaid

guarantee for Rs.26,l5,000/-(Rupees

twenty six lacs fifteen thousand

only) 5% of the contract value and

enclose here with the original

guarantee for your record. Kindly

hand over the Demand Draft in our

favour payable at Najibabad, Distt.

Bijnor, Uttar Pradesh towards the

invocation amount."

As on 28th November 1995 respondent no.1 had already

obtained and ex parte injunction restraining the encashment

of bank guarantee, no payment was made to the appellant by

the bank.

Respondent no.1 then filed another injunction

application dated 12th January, 1996 with regard to the

second bank guarantee dated 24th November, 1994 which was

for a sum of Rs.33 lacs. It obtained an Ex parte injunction

in respect thereto on the same day. Being ignorant of this

the appellant wrote a letter dated 16th January, 1996 to

the respondent bank invoking the said bank guarantee no.

40/47. In the said letter it was stated that respondent no.1

had failed to deliver the equipment as per the terms of

the agreement and that the appellant had bought equipment

from various markets due to which the advance amount which

had been paid to respondent no.1 in respect of which this

bank guarantee had been issued, remained unadjusted. The

bank was accordingly required to pay the said amount of

Rs.33 lacs.

According to the appellant it is only after 16th

January, 1996 that it became aware of the filing of the

aforesaid suit and the injunction application and it

entered appearance in Court on 18th January, 1996 even

though no notice had been served on it. As per the

appellant, there was delay in the disposal of the injunction

application, consequently it approached the High Court for

appropriate directions and the Allahabad High Cour tvide

order dated 10th may, 1996 directed the civil Judge,

Meerut Cantt, to dispose of the suit within the time fixed

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by it .

By a detailed order dated 20th August 1996, the Second

Civil Judge (Sr. Division) Meerut vacated the ex parte

injunctions which had been granted and dismissed the

injunction applications. In arriving at this conclusion it

observed that respondnent no.1 had not stated that the work

had been completed and nor was there any allicgation of

cheating or fraud contained in the palaint which had been

filed. The rtial court referred to a number of decisions

of this Court and came to the conclusion that there was no

basis, in law, for the grant of any interim prohibitory

order.

The appellant on 22th August, 1996 again approached

the respondent bank for the encashment of the bank

guarantees, but without success.

Respondent no.1 then filed revision petition on. 257

of 1996 on 10th September. 1996 before the Allahabad High

Court challenging the order dated 20th August, 1996 of kthe

tial court. single judge of the Allahabad High Cout took

up the revision petition and disposed it of on the same day

and after setting aside the order dated 20th August, 1996

it remanded thre matter back to the trial court for a fresh

decision but, at the same time, directed that till the

disposal of injunction application the bank guarantees

in question shall not be invoked or cencashed. The trial

court was directec to hear the prties within fifteen days of

the receipt of the order and to dispose of the injunction

application lwithin fifteen days thereafter. Needless to

dtate, due to rdilatory tactics adopted by fespondent no1

which is evident from the documents available on the record

of this case, the said injunction application have not been

disposed of the till with the result that the injunction

granted by the single judge of the High court vide order

dated 10th September, 1996 still continues.

While allowing the civil revision the single judge

in his judgment did not think it necessary to refer to the

judicial diecisions which were cited before him. The

court observed that reference to the same was not

becessary because the trial court, who had observed that the

plaint did no contain any allegation with regard to fraud,

had not noticed that allegation of fraud was cantained in

the injuction application. The learned judge noticed that

the liability of bank under the guarantee was absolute

and that it was not supposed to question the authority of

the benificiary to encash the bank guarantee but observed

that the same " could not be the guideline for allowing the

defendant to encash the bank guarantee unless there was a

finding that the defendant was having undue enrichment

thereby".

The aforesaid decision of the High Court has been

assailed by Sh. Harish N. Salve, learned senior counsel for

the appellant, who has contended that the High Court fell

in serious error in ignoring and not in even feferrin g to

the decisions of this Court where the principles regarding

the grant of injunction in matters relating to encashment

of bank guarantees have been clearly spell out. Had this

been done, the learned counsel submits, the High Court could

not, in law, have continued with the temporary injunction.

Numerous decisions this Court rendered over a span

of nearly two decades have laid down and reiterated the

principles which the Courts must apply which considering

the question whether to grant an injunction which has the

effect of restraining the encashment of a bank guarantee. We

do not think iot necessary to burden this judgment by

referring to all of them. Some of the more recent

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pronouncements on this point where the earlier decisions

have been considered and reiterated are Svenska

Handelsbanken Vs. Toubro Ltd. Vs. Maharashtra State

Electricty Board and ors. [(1995) 6 SCC 68], Hindustan

Steel Works Construction Ltd. Vs. G.S. Atwal & co.

(Engineers) Pvt. Ltd. [(1995) 6SCC 76] and U.P. State Sugar

Corporation Vs. Sumac International Ltd. [(1997)1 SCC

568]. The gemeral principle which has been laid down by

this court has been summarised in the case of U.P. state

sugar Corporation's case as follows:

"The law relating to invocation of

such bank guarantees in by now well

ssettled. When in the course of

commercial dealings an

unconditional bank guarantee is

given or accepted, the beneficial

is entitled to realize suchj a bank

guarantee in terms thereof

ireespective of any pending

disputes. The bank giving such a

guarantee is bound to honlur, ir

as per its terms irrespective of

any dispute raised by its costomer.

The very purpose of giving such a

bank a bank guarantee would

othrwise be defeated. The courts

should, therefore, be slow in

granting an injunction to restrian

the realization of such a bank

guarantee. The courts have carvede

out only two exceptions. A fraud

in connection with such a bank

guarantee would vitiate the very

foundation with such a bank

guarantee would vitiate the very

foundation of such a bank

guarantee. Hence if thre is such a

fraud of which the beneficiary

seeks to take the advantage, he

can be restrained from doing so.

The second exception relates to

case where allowing the

encashment of an unconditional

bank guarantee would result in

irretrievable harm or injustice to

one of the parties concerned.

Since in most cases payment of

money under such a bank guarantee

would adversely affect the bank

and its customer at whose instance

the guarantee is given, the harm

or injustice contemplanted under

this head must be of such an

exceptional and irretrievable

nature as would override the terms

of the guarantee and the adverse

effect of such an injunction of the

guarantee and the adverse effect

of such an injunction on

commercial dealings in the

country."

Dealing with the queation of franud it has been held

that fraud has to be an established fraud. The following

observation of sir John Donaldson, M.R. in Bolivinter oil

SA V. Chase Manhattan Bank (1984) 1 All ER 351, are

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apposite:

"The wholly exceptional case where

an injunction may be granted is

where it is proved that the bank

knows that any demand for payment

already made or which may

threafter be made will clearly be

fraudulent. But the evidence must

be clear both as to the fact of

fraud and as to the bank's

knowledge .It would certainly not

normally be wufficient that rests

on the ujncorroborated statement of

the customer, for irreparable

damage can be done to a bank's

credit in the relatively brief time

which must clapse between the

granting of such an injunction

and an application by the bank to

have it charged."

(emphasis supplied)

The aforesaid passage was approved and followed by

this court in U.P. coooperative Federation Ltd. Vs. Singh

consultants and Engineers (P) Ltd. [(1988) 1 SCC 174].

The secondly exception to the rule of granting

injunction, i.e., the resulting of irretrievable injury,

has to be such a circumstance which would make it

impossible for the guarantor to reimburse himself, if he

ultimately succeeds. This will have to be decisively

established and it must be proved to the satisfaction of due

Court that there would be no possbility whatsoever of the

recoverv of the amount from the beneficiaIy. by way of

restitution.

In the instant case, as has been already noticed there

were two types of bank guarantees which were issued. Bank

Guarantee No. 40/51 for Rs.26,15,000/- was issued to issues

timely y performance of the agreement by respondent No. 1.

the relevant terms of this guarantee firstly makes it clear

that the that has unconditional and irrevocably undertaken

to pay to pay to the appellant, on written demand and

without demand, the amount demanded it. Secondly, Clause II

of the said guarantee clarifies that the payment shall be

made without demand and on the undertaking that the

appellant is to be sole judge whether the seller has

committed any breach. Consequently the right of the

appellant to recover the guaranteed amount is not to be

effected or suspended by reason of any dispute which can be

raised or pending before the courts tribunals or arbitrator

Thirdly the guarantor had no right to know the reasons of

or to investigate the merits of the demand or to question

or to challenge the demand or to know any fact affecting

the demand and lastly it was not open to the bank to

require the proof of the liability of respondent No.1 to pay

the amount before paying the aforesaid guaranteed amount

to the appellant.

The letter of invocation issued by the appellant

demanding the payment ot Rs.26,15000/- was in accordance

with the terms of bank guarantee No. 40/51 and the bank

was, threfore, under an obligation to honour its

undertaking and to make the payment . It, however, chose

not to fulfil its obligation. If the bank could not in law

avoid the payment, as the demand had bneen made in terms of

the banjk guarantee, as has been done in the present case,

then the court ought not to have issued an injunction

which had the effect of restraining the bank from

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fulfilling its contractual obligation in terms of the bank

guarantee. An injunction of the court ought not to be an

instrument which is used in nullifying the terms of a

contrant, agreement or undertaking which is used in

nullifying the terms of contract, agreement or undertaking

which is lawfully enforceable. In its aforesaid letter

dated 24th November, 1995 respondent no.1 had clearly

admitted that entire supply had not been made. In view

of this also the High court was not justified in

granting an injunction.

Bank guarantee No.40/97 dated 24th November, 1994,

which had been issued to secure the advance of Rs. 129.24

lacs which had been given by the appellant, was also

similar in terms to the earlier bank guarantee No. 40/51.

The main contract between the parties contemplated that the

amount of bank guarantee shall stand reduced on adjustment

being made. It is contended by Shri Sudhier Chandra,

learned counsel for the respondents that the full amount was

ginen adjusted and no amount remained outstanting and,

therefore, the bank guarantee No.40/47 could no longer be

regarded as alive . In support of this contention, the

learned counsel relied on the observations of this Court in

Larson & Turbo Ltd. Vs. Maharashtrata state Electricity

Board and ors. (1995) 6 SCC 68 where an injunction was

granted wheree the bank guarantee which was issued was to be

kept alive till the successful completion of trial

operations. our opinion, this decision can be of no

assistance to respondent no. 1 because in Larson & Turbo~s

case (supra) this Court found that the guarantee which had

been given by the bank was to ensure only till the

successful completion of the trail operations and the taking

over of the plant. The documents revealed that the

contractual terms in this regard has been complied with

and after successful completion of the trial operation,

the plant had admittedly been taken over. In view of this

Court that the terms of the bank gurantee did not permit

its invocation once the trial operation have been

successfully completed.

In the present case clause 3 of bank guarantee No.

40/47 relating to adjustment of the advance stipulated as

follows:

"The guarantee shall come into

force from the date thereof and

shall remain valid till the full

advance amount is adjusted under

Clause 13 of the said agreement

which according to the terms and

conditions of the said Agreement is

stipulated to be adjusted

proportionately from each bill of

the Sells against actual deliveries

of the machinery and equipment at

site but if the deliveries as

aforesaid have not been completed

by the Sellers within the said

period for any reason what soever

the Guarantor hereby undertakes

that the Sellers shall furnish a

fresh or renewed guarantee on the

Purchaser's proforma for such

further period as the purchaser's

may intirmate failing which the

guarantor hall pay to the

purchaser's a sum not execeeding

Rs. 51,70,000/-(Rupees Fifty one

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lacs seventy thousand only) or

the residual amount of balance

unadjusted advance left after

proprotionae adjustment in

acccordance with clause 1 above as

the purchaser may demand."

No plea was taken before the courts below and no

document has bcen shown to us by the respondents, which can

prima ficie indicate that the full amount to us by the

respondents, which can prima facie indicate that the full

amount of advance had been adjusted under Clause 13 of the

main contrant between the appellant and the defendant no.1

According to the appellants, the original guarantee was for

Rs. 51,70,000/- but the same, after adjustment of the

advance, in terms of clause 13 of the main agreement, stood

reduced to Rs.33,00,000/- This amount was still outstanding

and, therefore, the bank guarantee had not come to an end

and was rightly invoked.

Coming to the allegation of fraud, it is an admitted

fact that in the plant itself, there was no such allegation

was initially only in the first application for the grant of

injunction that in a paragraph it has been mentioned that

the appellant therein had invoked the bank guarantee

arbitrarity. this application contains no facts or

particulars in support of the allegation of fraud. A similar

bald averment alleging fraud is also contained in the

second application for injunction relating to bank guarantee

No. 40/47. This is not a case where defendant no. 1 had at

any time alleged fraud prior to the filing of injunction

application. The main contract, pursuant to which the bank

guarantees were issued, was not sought to be avoided by

alleged fraud, nor was it at any point of time alleged that

the bank guarantee was issued because any fraud had been

played by the appellant. We have no manner of doubt that the

bald assertion of fraud had been made solely with a view to

obtain an order of injunction . In the absencce of

established fraud and not a mere allegation of fraud and

that also having been made only in the injunction

application , the court could not, in the present case have

granted an injunction relating to the encashment of the

bank guarantees.

It is unfortunate that the High Court did not consider

it necessaly to rrfer to various judicial pronouncements of

this Court in which the principles which have to be fullowed

while examining an application for grant of interim relief

have been clearly laid down. The observation of the High

Court that reference to judicial decisions will not be of

much importance was cleart a me1hod adopted by it in

avoiding to fo11ow and apply the law as laid down by this

Court. Yet another scrious for which was carmnitted by the

High Court, in the present case, was not to examine the

tenns of the bank guarantee and consider the letters of

invocation which had been written by the appellant. If the

High Court had trail the trouble of examining the documents

on record, which had been referred to bv the trial court, in

its order refilsing to grant injunction, the court would not

have granted the interim injunction. We also do not find any

justification for the High Court in invoking the alleged

principle of adjust enrichment to the facts of the present

case and then deny the appettant the Iight to cncash the

bank guarantee. If the High Court had taken the trouble

to see the law on the point it would have been clear that

in encashment of bank guaranmtee the applicability of the

principle of undue enrichment has no application.

We are constrained to make these observation with

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regard to the manner in which the High Court had dealt with

this case because this is not an isolated cade where the

courts, while disobeying or not complying with the law

laid down by this Court , have at time been liberal in

granting injunctgion restraining encalhment of bank

guarantees.

It is unfortunate, that notwithstanding the

authoritative the pronouncements of this Court, the High

Courts and the courts subordinate thereto, still seem intent

on affording to this Court innumerable opportunities for

dealing with this area of law, thought by this Court to be

well settled.

When a position, in law, is well settled as a result of

judicial pronouncement of this Court, it would amount to

judicial impropriety to say the least, for the subordinate

courts including the High Courts to ignore the settled

decisions and then to pass a judicial ordor which is clearly

contrary to the setded legal position. Such judicial

adventurism cannot be permitted and we strongly deprecate

the tendency of the subordinate courts in not applying the

settled principles and in passing whimsical orders which

necessarily has the effect of granting wronful and

unwarranted relief to one of the parties. It is time that

this tendency stops.

Before concluding we think it appropriate to mention

about the conduct of the respondent - bank which has chosen

not to be in this case. From the facts stated hereinabove it

appears to us that the respondent bank has not shown

professional efficiaency, to say the least, and has acted in

a partisan manner with a view to help and assist respondent

no. 1. At the time when there was no restraint order from

any Court, the bank was under a legal and moral obligation

to honour its commitments. It, however, failed to do so. It

appears that the bank deliberately draged its feet so as to

enable respondent no.1 to secure favourable order of

injunctgion from the Court. Such conduct of a bank is

difficult to appreciate We do not wish to say anything more

but it may feel that it will be prejudicial in the event of

the appellant taking action against it.

For the aforesaid reasons this appeal is allowed. The

judgment and order of the Allahabad High Court dated 10th

September, 1996 in revision petition no.257 of l996 is set

aside and the order of the trial court datded 20th Auguat,

1996 dismissing the injunction application is restored. The

appellant would be entitled to cost which are quantified

at Rs.20,000/-.