THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO C.C.C.A. NO. 298 OF 2003 Date: 19-07-2011 Between: General Manager (Commercial & Industrial Credit), Bank of India, Mumbai. .. Appellant And Nizam Sugar Factory Ltd., Hyderabad. .. Respondent THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO C.C.C.A. NO. 298 OF 2003 JUDGMENT: The defendant in O.S.No.1162 of 1993 is the appellant herein. The suit was filed for recovery of a sum of Rs.1,50,000/- with interest at 18% per annum. The allegations in the plaint are an order for supply of gunny bags worth Rs.3,50,000/- was placed with M/s Titaghar Jute Factory and the factory furnished a bank guarantee issued by the defendant for Rs.1,50,000/-, which was valid from 12.07.1989 upto 30.04.1990 and it was extended from time to time till 31.10.1991. As the company has not supplied the material, emergency purchases were made and the bank guarantee was invoked but the defendant did not honour the same and after giving a legal notice the suit was filed. The defendant filed a written statement contending that the bank guarantee was valid upto 30.04.1990 and subsequently it was extended till 31.01.1991. The plaintiff has invoked the bank guarantee on 30.01.1991 and it was received on 01.02.1991. The plaintiff has not invoked the bank guarantee after the extended period and a letter was issued only on 03.12.1991. Therefore, in view of the above circumstances, the defendant is not liable to pay the amount. Basing on the above pleadings, the following issues were framed for trial: 1. Whether the bank guarantee in question was invoked within time? 2. If so, whether the plaintiff is not entitled to the suit amount as claimed? 3. To what relief? On behalf of the plaintiff, P.W.1 was examined and marked Exs.A- 1 to A-5 and on behalf of the defendant, no oral or documentary evidence was adduced. After considering the evidence on record, the lower Court decreed the suit on 28.02.2003 for the suit sum with costs at 18% per annum from the date of suit till the date of decree and at 12% till realization on Rs.1,50,000/-. Aggrieved by the said judgment and decree, the present appeal is filed. The points that arise for consideration are: 1. Whether the plaintiff has invoked the bank guarantee legally and whether the defendant failed to honour the same? 2. Whether the plaintiff is entitled to the suit amount? 3. Whether the judgment and decree passed by the learned II Senior Civil Judge, City Civil Court, Hyderabad is legal and sustainable? 4. To what relief? POINTS 1 to 4: The facts are not in dispute. A bank guarantee was originally given by the defendant on the basis of the customer, which was valid upto 30.04.1990 and it was periodically extended till 31.10.1991. It is also not in dispute that the letter of invocation was given by the plaintiff on 30.01.1991 and it was received on 01.02.1991. According to the claim of the appellant since the bank guarantee, which was invoked under letter dated 30.01.1991 has already expired and the letter was received on 01.02.1991, the plaintiff shall again invoke the bank guarantee after 31.01.1991 and in this case there was no such invocation and the bank is not liable to pay the same. From the admitted facts, the bank guarantee was extended from 31.01.1991 after the original period upto 30.01.1991 is over. Therefore, there is continuity of the bank guarantee for the liability of the customer. There is no material on record to show that there are any conditions to the contra when the extension was granted to the knowledge of the plaintiff. Though, reliance is sought to be made on Ex.A-2, whereunder it was stated that the renewal from 31.07.1991 to 31.10.1991 is given, it reads that unless the claim of demand in writing is made on or before 31.10.1991 the rights under the guarantee will be forfeited. This Ex.A-2 does not show that if there is any claim made earlier or a fresh claim has to be made. Evidently, the claim was made prior to 31.10.1991 since it is admitted that the letter was let on 30.01.1991 under Ex.A-3 even prior to the expiry of the original guarantee. The guarantee was not returned and the bank has also not refused to honour the invocation when it claims to have received Ex.A-3 on 01.02.1991 on the ground that the original guarantee has expired and, therefore, there is no liability and that the extended period from 31.01.1991 will not renew to the benefit of the plaintiff. It was only after the expiry of the extended period of guarantee on 31.10.1991 and also the original request was not rejected. It was only during the year 1992-93 the correspondence started from the defendant about the non-liability. There is nothing on record to show that the defendant has bona fidely acted and informed the plaintiff that the invocation of bank guarantee on 30.01.1991 is not valid. In fact, such a plea will not be open to the defendant since by the time the letter was received, there was already extended bank guarantee to be effective from 31.01.1991. The decision reported in the case of M/s Ansal Properties & Industries (P) Ltd. v. Engineering Projects (India) Ltd.[1] relied on by the learned counsel for the appellant has no bearing to the facts of this case. Therefore, the lower Court has rightly considered the issues and passed a decree, which does not call for any interference. The appeal deserves to be dismissed. Accordingly, the appeal is dismissed with costs. ________________________ N.R.L.NAGESWARA RAO, J 19-07-2011 MR THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO C.C.C.A. NO. 298 OF 2003 Date: 19-07-2011 MR [1] II (1998) BC 397