Food Corporation Of India vs Dena Bank on 18 December, 2003

Food Corporation Of India vs Dena Bank on 18 December, 2003

Equivalent citations: AIR2004MP158, 2004(2)ARBLR477(MP), III(2004)BC103,

2004(2)MPHT38

JUDGMENT

Ashok Kumar Tiwari, J.

1. This appeal has been filed under Section 96 of the Code of Civil Procedure against the decree of
10th Additional District Judge, Indore granted in Original Civil Suit No. 85-B/88 vide which the suit
filed by the appellant/plaintiff under Order 37 of Code of Civil Procedure has been dismissed.

2. Plaintiffs case is that defendant No. 1 Dena Bank, Indore executed bank guarantee for Rs.
4,50,725/- on 31-5-1978 in favour of plaintiff in lieu of cash deposit required from M/s. Surana
Commercial Company, Indore (hereinafter referred to as 'Contractor'). Thereafter, the bank
guarantee was renewed from time to time. The contractor defaulted in due performance of the
contract, therefore, the defendants were asked to release the guarantee amount, but the defendants
wilfully and illegally avoided the payment in respect of the aforesaid bank guarantee. Hence, the suit
was filed to recover the amount of Rs. 4,50,725/- being the amount of the guarantee and Rs.
2,50,152.37 p being the interest at the rate of 18% on the aforesaid amount from 27-10-1978 to
27-11-1981 and Rs. 100/- as notice fees and expenses.

3. Defendant entered into appearance and applied for leave to defend, which was granted on
17-7-1985 and 23-8-1985 was fixed for filing the written statement. On 23-8-1985 defendant, instead
of filing the written statement, filed an application under Section 34 of the Arbitration Act.
Thereafter, plaintiff filed reply to the aforesaid application on 24-2-1988 and case was fixed on
8-4-1988 for arguments on the application.

4. While the case was pending for arguments on the application filed under Section 34 of the
Arbitration Act, defendant filed photostat copies of the award dated 5-4-1988 and the order dated
7-4-1989 passed by the Delhi High Court. Thereafter, defendant/respondent No. 1 filed an
application under Section 32/33 of the Arbitration Act and learned Lower Court vide impugned
order dated 4-3-1993 dismissed the suit of plaintiff/appellant holding in the light of award and the
order of Delhi High Court that the suit is not maintainable.

5. From the above discussion, it appears that the learned Lower Court has adopted a strange
procedure in deciding the suit. Defendant No. 1 applied for leave to defend and leave was granted
and he was directed to file written statement. Written statement was never filed and instead of filing
written statement, defendant filed application under Section 34 of the Arbitration Act which
remained pending for sufficiently long time and without that application being disposed of, another

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 Food Corporation Of India vs Dena Bank on 18 December, 2003

application under Section 32/33 of Arbitration Act was filed and learned Lower Court dismissed the
suit holding that contract entered in between the plaintiff - Food Corporation of India and M/s.
Surana Commercial Company has been concluded, therefore, the suit is not maintainable.

6. It is evident from the above discussion that there is no legal evidence to arrive at the conclusion at
which learned Lower Court has arrived. No evidence of any kind has been adduced even the written
statement was not filed while the defendant was directed to file written statement. Any document
has not been proved. The finding of the learned Lower Court seems to be based on the photostat
copies of the award and the order of the Delhi High Court, which have not been even exhibited.
Thus, the order passed by the learned Lower Court is not based on any legal evidence and is liable to
be set aside.

7. Hence, this appeal is allowed. The order and decree passed by the 10th Additional District Judge,
Indore is set aside and the case is remanded to the Lower Court for disposing it in accordance with
the law. However, no order as to costs is made. Plaintiff shall remain present on 27-1-2004 before
the Trial Court. The Court shall issue notice to respondent and proceed to decide the case in
accordance with the law as expeditiously as possible.

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