THE HON’BLE SRI JUSTICE N.V. RAMANA AND THE HON’BLE SRI JUSTICE V. SURI APPA RAO C.M.A. No. 986 of 2010 Judgment: (Per N.V. Ramana,J) This C.M.A. is directed against the order dated 01.11.2010 passed by the II Additional Chief Judge, City Civil Court, Hyderabad, dismissing the application in I.A. No. 275 of 2010 in O.S. No. 51 of 2010 filed by the appellant herein-plaintiff in the suit, praying to grant interim injunction restraining respondent No.2-Bank and its officers from proceeding to make payment to respondent No.1, under the seven bank guarantees mentioned therein. The learned counsel for the appellant contends that since the appellant has supplied the equipment to respondent No.1 as per the specifications mentioned in the contract awarded to them, respondent No.1 is not entitled to encash the bank guarantee. He submitted that on the earlier occasions, respondent No. 1 has fraudulently got the bank guarantee extended, but the Court below without considering this conduct of the respondents, committed an error in not injuncting respondent No.2-bank from making payment to respondent No.1 by encashing the bank guarantees. The learned counsel appearing on behalf of respondent No.1 did not dispute the supply of equipment by the appellant, but it is his specific case that the control and relay panels fixed by the appellant in the equipment do not meet the specifications prescribed in the contract. He further contended that the appellant has not completed the work programming of numerical relay, which has to be done in the presence of the departmental officers. He further contended that since the appellant in clause 10 of the contract agreed to provide unconditional guarantee for the material supplied for its satisfactory operation for a period of one year from the date of commissioning and 18 months of the date of dispatch, whichever is earlier, it is not open to the appellant to contend that respondent No.1 is not entitled to encash the bank guarantee. The learned counsel for the appellant, however, sought to contend that for the equipment supplied by them, to become operational, respondent No.1 has to install software, and unless software is installed, the equipment would not become operational, and it being no part of the obligation under the contract for the appellant to install/provide software in the equipment so to make it operational, it is not open to respondent No.1 to contend that as the appellant failed to install software and make the equipment operational, they are entitled to encash the bank guarantee. Heard the learned counsel for the appellant and the learned counsel for respondent No. 1 and perused the order under appeal. Though the appellant contends that they supplied the equipment as specified in the purchase orders and thus respondent No.1 is not entitled to encash the bank guarantee, the same is disputed by respondent No.1 and it is the case of respondent No.1 that the equipment has not become operational because the appellant did not install software in the control panel. Though the appellant contends that it is the respondent No.1 who has to install software in the equipment, so as to make it functional and it is no part of their obligation under the purchase orders, to install software in the equipment to make it functional, but whether the equipment to be supplied by the appellant under the purchase orders is inclusive of software installation so as to make it operational or exclusive is a matter that has to be considered at the time of trial. But, the question as to whether respondent No.1 is justified in seeking to encash the bank guarantee for the failure of the appellant to bring the equipment operational may be considered in the light of the recitals in the purchase orders particularly when it is the case of the appellant that the contract would come to an end the moment they supplied the equipment and that respondent No.1 is fraudulently extending the bank guarantee, while it is the case of respondent No.1 that in view of clause 10 in the purchase orders, the bank guarantee furnished by the appellant would extend to the satisfactory operation of the equipment. A perusal of the purchase orders dated 20.02.2007 under Exs.A5 and A6 placed by the 1st respondent on the appellant for the supply of equipment would show that the scope of the work includes design, manufacture, assembling, supply, inspection and testing at the works of the appellant before packing and dispatch of equipment complete in all respects, strictly in compliance with KPTCL Technical specification and any modifications or changes required by KPTCL for Package-48 Package-54. Further, clause 10 of the purchase orders reads that the equipment/material shall be unconditional guaranteed for satisfactory operation for a period of one year from the date of commissioning and 18 months of the date of dispatch whichever is earlier. Thus, the contents of the purchase orders would prima facie indicate that the scope of work entrusted to the appellant includes not only supply of equipment, but also its performance guarantee. However, the question as to whether the unconditional bank guarantee furnished by the appellant would come to an end upon their supplying equipment as per the purchase order or would extend till the appellant brings the equipment into satisfactory operation, has to be considered based on the evidence to be let in by the parties. However, as the contents of the purchase order prima facie indicated that the appellant agreed for unconditional guarantee for the operation of the equipment, the Court below felt it appropriate not to restrain respondent No.2 and its officers from making payment to respondent No.1 under the bank guarantees and more so, when no prejudice would be caused to the appellant, and further if there was any breach of the purchase order or contract, the appellant had the remedy of filing suit and claiming damages from respondent No.1. Even though the learned counsel for the appellant submitted that respondent No.1 is fraudulently extending the bank guarantee, the fact remains, except making a bald statement that respondent No.1 is fraudulently extending the bank guarantee, the appellant has not placed any material to prove such fraudulent conduct of respondent No.1. In fact, according to respondent No.1, the reason for their seeking extension of the bank guarantee is that the appellant failed to bring the equipment into operation, having supplied the equipment, and as in spite of issuing notice, the appellant failed to extend the bank guarantee, they sought to encash the same. Be that as it may, since no prejudice would be caused to the appellant if the bank guarantee is encashed and as the appellant has the remedy of filing suit to claim damages, in case of breach of contract, no exception can be taken to the order under appeal passed by the Court below, refusing to grant interim injunction restraining respondent No.2 and its officers from making payment to respondent No.1 under the bank guarantees. We find no merit in the appeal and the same is accordingly dismissed. No order as to costs. ___________________ N.V. RAMANA, J. ________________ V. SURI APPA RAO, J Dated: 27th December, 2010 IBL