IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 2970 OF 2006 IN SUIT NO. 1110 OF 1993 Trevor D’Souza and another. ... Plaintiffs. V/s. Landmark Builders and others. ... Defendants. Shailesh Shah with Ms.Usha Rahi i/b. Mayur Narendra & Co. for the plaintiffs. None for defendant Nos.1 and 4. E.P.Bharucha, senior counsel with Birendra Saraf and Sunil Tilokchandani i/b. M.K. Ambalal & Co. for defendant Nos.2 and 3. Shyam Mehta with Akshay Patil i/b. Apex Law Partners for defendant Nos.5, 6 and 7. CORAM: V.C.DAGA, J. CORAM: V.C.DAGA, J. CORAM: V.C.DAGA, J. DATED: 11th February 2008. DATED: 11th February 2008. DATED: 11th February 2008. P.C.: P.C.: P.C.: . This notice of motion is taken out by defendant Nos.4, 5 and 7 for taking their bank guarantee on record. Factual Matrix : Factual Matrix : Factual Matrix : -------------- -------------- -------------- 2. The factual matrix reveals that the plaintiffs filed suit for specific performance of the agreement dated 25th July, 1986 which they had entered into with defendant No.1. The defendant No.1 is the original developer of the suit property who had entered into a subject agreement with the plaintiffs. Defendant Nos.4 to 7 are the original lessees who have subsequently granted development rights to defendant Nos.2 and 3. 3. The plaintiffs had taken out Notice of Motion No.615/1993 for injunction and directions against defendant Nos.4 to 7, the prayer clause of which reads as under: "Defendants nos.4 to 7 to furnish security to the extent of Rs.10 lakhs to the satisfaction of the Prothonotary and Senior Master, High Court, Bombay within 4 weeks of this Order. However, if the Defendants failed to furnish security, prayer (a) of the Motion will stand granted to the Plaintiffs. If the security is furnished and accepted, as above, the Motion will stand dismissed." 4. The above notice of motion was heard by learned single Judge (D.J.Deshpande, J.) ( as he then was) who, vide his order dated 13th September, 1996, was pleased to disposed of the said notice of motion. The operative part of the order read as under: " Defendant Nos.4 to 7 to furnish security to the extent of Rs.10.00 lakhs to the satisfaction of the Prothonotary & Senior Master, High Court, Bombay within - 3 - four weeks of this order. However, if the defendants fail to furnish security, prayer (a) of the Motion will stand granted to the Plaintiff. If the security is furnished and accepted as above the Motion will stand dismissed. . Motion is disposed of accordingly." Pursuant to the aforesaid order, defendant Nos.4 to 7 were directed to furnish security to the extent of Rs.10 lakh to the satisfaction of the Prothonotary and Senior Master within four weeks from the date of the order. Failure on the part of defendant Nos.4 to 7 to furnish security relief in terms of prayer clause (a) of the said motion was deemed to have been granted. If the security is furnished and accepted as above, then the motion was to be treated as dismissed. 5. The defendant Nos.4 to 7 failed to furnish security within prescribed time. Consequently, motion was made for speaking to the minutes in Notice of Motion No.615/1993 so as to seek extension of time regarding orders dated 13th September, 1996 and 11th October, 1996. It appears that learned single Judge (D.G.Deshpande, J.) (as he then was), vide his order dated 18th - 4 - October, 1996, refused to extend time to furnish security. 6. The above order was the subject matter of challenge in the appeal before the Division Bench presided over by Shri M.B.Shah, C.J. (as he then was) being Appeal No.1165/1996. It appears that on 30th October, 1996, when the appeal came up for hearing, the appellate Court permitted the defaulting defendants/ appellants to furnish security as ordered by learned single Judge. It appears that, thereafter, bank guarantee of Rs.10 lakh was furnished by defendant Nos.4. 7. When the matter came up before the Division Bench/ appeal Court for further orders on 7th November, 1996, learned counsel for the appellants made a statement that bank guarantee as directed was already filed by respondent No.4 on 5th November, 1996. 8. In the above view of the matter, appeal Court held that nothing more was required to be done in the appeal. The Division Bench/ appeal Court ordered that prayer clause (a) of the notice - 5 - of motion would not remain in operation as ordered by the learned single Judge. It was also clarified that if respondent Nos.1 and 2 (plaintiffs herein) file separate appeal that would be considered on its own merits. In the result, appeal was partly allowed to the extent mentioned in the order dated 7th November, 1996. It appears that the said bank guarantee was accepted after disposal of the appeal by the Division Bench. The original plaintiffs did not file any appeal challenging rejection of prayer clause (a) of their motion being Notice of Motion No.615/1993. 9. The relevant part of the bank guarantee issued by Vijaya Bank, Bandra, furnished by defendant Nos.4 to 7 reads as under: "..... And the said Bank DOTH HEREBY FURTHER covenant and declare that this Guarantee shall remain in full force upto and inclusive of the 31st day of October, 1997 and if the above suit is not disposed of within the aforesaid period and for six months thereafter the said Bank hereby undertakes to renew this Guarantee from year to year until six months after the suit is finally heard and disposed of and the said Bank Doth hereby further covenant and declare that if the said Defendant No.4, i.e. Mr.Richard Gregory Marshall Fernandes, does not obtain and furnish the - 6 - renewal and renewals of this Guarantee for a further period of one year to the Prothonotary & Senior Master, High Court, Bombay and/or his/her successor or successors in office till the disposal of the above suit and for a period of six months after the expiry of each month thereafter, the entire amount of this Guarantee in default of obtaining and furnishing the renewal or renewals of this Guarantee in the manner and within the time aforesaid, shall become due and payable to the Prothonotary & Senior Master, High Court, Bombay and/or his/her successor or successors in office notwithstanding (i) that the said period of the Guarantee or renewal or renewals thereof has not expired; or (ii) that the period of the Guarantee or the renewal or renewals thereof has already expired or (iii) that the above suit is pending disposal and the said Bank shall without any demur or demand, action or objection forthwith by DD or Pay order forward the said amount to the Prothonotary & Senior Master, High Court, Mumbai. 10. It appears that the above bank guarantee was, initially, for a period of one year from the date of its issue i.e. 1st November, 1996 i.e. up to 31st October, 1997. Thereafter, it was not renewed for the period 1st November, 1997 to 30th April, 1998. Thereafter by letter dated 10th September, 1998, the bank guarantee was renewed for the period 1st May, 1998 to 30th April, 1999. It was further renewed up to 29th April 2000 vide letter dated 27th August, 1999. Thereafter, again vide letter dated 28th June, 2000 it was renewed - 7 - up to 20th April, 2001. It was further renewed up to 28th April, 2006 by letter dated 6th December, 2004. It was, thereafter, again renewed up to 28th April, 2008 by letter dated 15th July, 2006. This factual data would show that bank guarantee was renewed from time to time, barring intervening period mentioned above. Consequently, defendant Nos.4, 5 and 7 have taken out notice of motion with a prayer to take bank guarantee No.44/1996 on record. The explanation sought to be furnished for non-renewal of bank guarantee for one year was that the defendant Nos.4 to 7 were under bonafide impression that the bank must have renewed the bank guarantee as agreed. 11. Now, the present notice of motion is taken out by defendant Nos.4, 5 and 7 with the following prayer: "(a) That the Learned Prothonotary & Senior Master, High Court, Bombay, be directed to take on record Bank Guarantee No.44 of 1996 in the amount of Rs.10,00,000 (Rs.Ten Lakhs only) issued in favour of the Prothonotary & Senior Master, High Court, Mumbai in terms of the orders passed by His Lordship, the Hon’ble Mr.Justice D.G.Deshpande in Notice of Motion No.615 of 1993 in Suit No.1110 of 1993 on 13/9/1996 and 11/10/1996 and the order passed by their Lordships, Chief - 8 - Justice and Mr.Justice J.N.Patel on 30.10.1996." In support of notice of motion, affidavit duly sworn by one Mr.Raymond R. Fernandes dated 30th August, 2006 has been filed along with order dated 13th September, 1996 passed by the learned single Judge of this Court (D.G.Deshpande, J.( (as he then was), together with photo copy of the bank guarantee dated 1st November, 1996 issued by the Vijaya Bank, Bandra (W), Mumbai with letter dated 23rd August, 2006 extending the life of the bank guarantee dated 1st November, 1996 for the period form 1st May, 1998 to 28th April, 2008 coupled with some other documents. 12. The above notice of motion is opposed by the plaintiffs. To oppose the notice of motion, affidavit dated 25th September, 2006 duly sworn by one Mr.Andrey Trevor D’Souza styling herself as plaintiff No.2 is filed. The defendant No.3 has also filed affidavit so as to bring correct factual position on record. Submissions : Submissions : Submissions : ----------- ----------- ----------- - 9 - 13. The learned counsel for the applicant/ defendant Nos.4, 5 and 7 canvassed his submissions in consonance with the affidavit filed in support of the motion and prayers thereof. 14. Per contra, learned counsel for the plaintiffs has opposed the above motion contending that failure to furnish bank guarantee, prayer clause (a) of Notice of Motion No.615/1993 has revived as such injunction has become operative against defendant Nos.4, 5 and 7. He, thus, submits that the bank guarantee cannot be accepted. In other words, it cannot be taken on record. He, therefore, prayed for rejection of notice of motion in question. Consideration : Consideration : Consideration : ------------- ------------- ------------- 15. Having heard both parties, one fact is clear from the record that the bank guarantee, which was furnished by Vijaya Bank dated 1st November, 1986 (Exh.‘B’), the relevant portion of which has already been extracted hereinabove, records undertaking of the bank to renew the bank guarantee from time to time until the suit is - 10 - finally heard and disposed of by this Court. The said bank guarantee further covenants that, in the event defendant No.4 does not renew bank guarantee for further period of one year and/or fails to keep it renewed till disposal of the suit and six months thereafter, the entire amount of the bank guarantee shall become due and payable to the Prothonotary and Senior Master of this Court. It was, thus, obligatory on the part of Vijaya Bank to remit the amount of the bank guarantee to the Prothonotary and Senior Master of this Court as soon as there was default on the part of the defendant No.4 to get the bank guarantee renewed. If the bank failed to remit the amount, then it was the duty of the Prothonotary and Senior Master to make demand of the amount of the bank guarantee and to hold the proceeds thereof by way of security till disposal of the suit. Failure on the part of the Prothonotary and Senior Master to make demand in this behalf was a failure on the part of this Court to enforce the terms of the bank guarantee for which defendant No.4 cannot be held responsible, though it was the duty of defendant Nos.4 to renew bank guarantee. The mere failure on the part of defendant Nos.4 to renew - 11 - bank guarantee would not deprive the plaintiffs of their security since the amount of proceeds of bank guarantee was to be remitted by the bank to the Prothonotary and Senior Master. Consequently, the said bank guarantee or proceeds thereof were to operate as security during the pendency of the suit and for six months thereafter notwithstanding non-renewal of the bank guarantee. Needless to mention that act of Court i.e. failure on the part of the Prothonotary and Senior Master to invoke bank guarantee or make demand from the bank cannot go in prejudice to the plaintiff’s security. Consequently, the contention of the plaintiff that the prayer clause (a) of the Notice of Motion No.615/1993 has revived has no basis. 16. Apart from the above, with the tender of security and acceptance thereof, Notice of Motion No.615/1993, technically, stood dismissed. The order of dismissal became final. Order rejecting prayer (a) for injunction became final and conclusive. Right to challenge the dismissal of the notice of motion was reserved in favour of the plaintiffs by the Division Bench vide its order dated 7th November, 1996. The plaintiffs did not - 12 - avail that liberty. With the result, the order once having become final and conclusive cannot revive automatically unless life is infused therein by the specific order of the Court. 17. It was open for the plaintiffs to take out appropriate motion for modification of the order or to pray for relief of interim injunction independently. 18. In the motion taken out by defendant Nos.4, 5 and 7, the contention sought to be advanced by the plaintiffs to oppose motion is unsustainable and liable to be rejected. 19. In the result, Notice of Motion No.2790/2006 is made absolute with no order as to costs. 20. At this stage, learned counsel appearing for the plaintiffs prayed for stay of this order. However, looking to the nature of the order, it is not necessary to stay effect and operation of the order. In this view of the matter, prayer made in this behalf is rejected. - 13 - (V.C.DAGA, J.) (V.C.DAGA, J.) (V.C.DAGA, J.)