| 1 |
In several judgments, it has been held that courts ought not to grant i*****ction to restrain encashment of bank guarantees or letters of credit. Two exceptions have been mentioned – (i) fraud and (ii) irretrievable damage. If the plaintiff is prima facie able to establish that the case comes within these two exceptions, temporary i*****ction under Order 39, Rule 1 CPC can be issued. It has also been held that the contract of the bank guarantee or the letter of credit is independent of the main contract between the seller and the buyer. This is also clear from Articles 3 and 4 of UCP (1983 Revision). In case of an irrevocable bank guarantee or letter of credit the buyer cannot obtain i*****ction against the banker on the ground that there was a breach of the contract by the seller. The bank is to honour the demand for encashment if the seller pima facie complies with the terms of the bank guarantee or letter of credit, namely, if the seller produces the doc***ents enumerated in the bank guarantee or the letter of credit. If the bank is satisfied on the face of the doc***ents that they are in conformity with the list of doc***ents mentioned in the bank guarantee or the letter of credit and there is no discrepancy, it is bound to honour the demand of the seller for encashment. While doing so it must take reasonable care. It is not permissible for the bank to refuse payment on the ground that the buyer is claiming that there is a breach of contract. Nor can the bank try to decide this question of breach at that stage and refuse payment to the seller. Its obligation under the doc***ent having nothing to do with any dispute as to breach of contract between the seller and the buyer……” |
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(underlining added) |
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Again in Himadri Chemicals Industries Ltd. v. Coal Tar Refining Co.: (2007) 8 SCC 110, the Supreme Court held as under:- |
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“14. From the discussions made hereinabove relating to the principles for grant or refusal to grant of i*****ction to restrain enforcement of a bank guarantee or a letter of credit, we find that the following principles should be noted in the matter of i*****ction to restrain the encashment of a bank guarantee or a letter of credit : |
| 5 |
(i) While dealing with an application for i*****ction in the course of commercial dealings, and when an unconditional bank guarantee or letter of credit is given or accepted, the beneficiary is ent**led to realise such a bank guarantee or a letter of credit in terms thereof irrespective of any pending disputes relating to the terms of the contract. |
| 6 |
(ii) The bank giving such guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer. |
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(iii) The Courts should be slow in granting an order of i*****ction to restrain the realization of a bank guarantee or a letter of credit. |
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(iv) Since a bank guarantee or a letter of credit is an independent and a separate contract and is absolute in nature, the existence of any dispute between the parties to the contract is not a ground for issuing an order of i*****ction to restrain enforcement of bank guarantees or letters of credit. |
| 9 |
(v) Fraud of an egregious nature which would vitiate the very foundation of such a bank guarantee or letter of credit and the beneficiary seeks to take advantage of the situation. |
| 10 |
(vi) Allowing encashment of an unconditional bank guarantee or a letter of credit would result in irretrievable harm or injustice to one of the parties concerned.” |
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– |
| 12 |
`Part**ion’ is a re-distribution or adjustment of pre-existing rights, among co-owners/coparceners, resulting in a division of lands or other properties jointly held by them, into different lots or portions and delivery thereof to the respective allottees. The effect of such division is that the joint owners***p is terminated and the respective shares vest in them in severalty. A part**ion of a property can be only among those having a share or interest in it. A person who does not have a share in such property cannot obviously be a party to a part**ion. `Separation of share’ is a species of ‘part**ion’. When all co-owners get separated, it is a part**ion. Separation of share/s refers to a division where only one or only a few among several co-owners/coparceners get separated, and others continue to be joint or continue to hold the remaining property jointly without division by metes and bounds. For example, where four brothers owning a property divide it among themselves by metes and bounds, it is a part**ion. But if only one brother wants to get his share separated and other three brothers continue to remain joint, there is only a separation of the share of one brother. In a suit for part**ion or separation of a share, the prayer is not only for declaration of plaintiff’s share in the suit properties, but also division of his share by metes and bounds. This involves three issues: (i) whether the person seeking division has a share or interest in the suit property/properties; (ii) whether he is ent**led to the relief of division and separate possession; and (iii) how and in what manner, the property/properties should be divided by metes and bounds? |
| 13 |
In a suit is for part**ion or separation of a share, the court at the first stage decides whether the plaintiff has a share in the suit property and whether he is ent**led to division and separate possession. The decision on these two issues is exercise of a judicial function and results in first stage decision termed as `decree’ under Order 20 Rule 18(1) and termed as `preliminary decree’ under Order 20 Rule 18(2) of the Code. The consequential division by metes and bounds, considered to be a ministerial or administrative act requiring the physical inspection, measurements, calculations and considering various permutations/ combinations/alternatives of division is referred to the Collector under Rule 18(1) and is the subject matter of the final decree under Rule 18(2). The question is whether the provisions of Limitation Act are inapplicable to an application for drawing up a final decree. |
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Rule 18 of Order 20 of the Code of Civil Procedure (`Code’ for short) deals with decrees in suits for part**ion or separate possession of a share therein which is extracted below: |
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“. Decree in suit for part**ion of property or separate possession of a share therein.– Where the Court pa***es a decree for the part**ion of property or for the separate possession of a share therein, then, — |
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(1) if and in so far as the decree relates to an estate a***essed to the payment of revenue to the Government, the decree shall declare the rights of the several parties interested in the property, but shall direct such part**ion or separation to be made by the Collector, or any gazetted subordinate of the Collector deputed by him in this behalf, in accordance with such declaration and with the provisions of section 54; |
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(2) if and in so far as such decree relates to any other immovable property or to movable property, the Court may, if the part**ion or separation cannot be conveniently made without further inquiry, pa*** a preliminary decree declaring the rights of the several parties, interested in the property and giving such further directions as may be required.” |
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The terms ‘preliminary decree’ and ‘final decree’ used in the said rule are defined in Explanation to section 2(2) of the Code and reads thus : |
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“A decree is preliminary when further proceedings have to be taken before the suit can be completely disposed of. It is final when such adjudication completely disposes of the suit. It may be partly preliminary and partly final.” |
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Section 54 of the Code dealing with part**ion of estate or separation of share, relevant for purposes of Rule 18(1) reads thus: |
| 21 |
“Where the decree is for the part**ion of an undivided estate a***essed to the payment of revenue of the government, or for the separate possession of a share of such an estate, the part**ion of the estate or the separation of the share shall be made by the Collector or any gazetted sub-ordinate of the Collector deputed by him in this behalf, in accordance with the law (if any) for the time being in force relating to the part**ion, or the separate possession of shares, of such estates.” |
| 22 |
Rule 13 of Order 26 of the Code dealing with Commissions to make part**ion of immovable property, relevant for purposes of Rule 18(2) reads thus : |
| 23 |
“Where a preliminary decree for part**ion has been pa***ed, the Court may, in any case not provided for by section 54, issue a commission to such person as it thinks fit to make the part**ion or separation according to the rights as declared in such decree.” |
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We may now turn to the provisions of the Limitation Act, 1963. Section 3 of the Act provides that subject to sections 4 to 24, every suit inst**uted, appeal preferred and application made after the prescribed period shall be dismissed. The term ‘period of limitation’ is defined as the period of limitation prescribed for any suit, appeal or application by the Schedule to the Act (vide clause (j) of section 2 of the Act). The term “prescribed period” is defined as the period of limitation computed in accordance with the provisions of the said Act. The Third Division of the Schedule to the said Act prescribes the periods of limitation for Applications. The Schedule does not contain any Article prescribing the limitation for an application for drawing up of a final decree. Article 136 prescribes the limitation for execution of any decree or order of civil court as 12 years when the decree or order becomes enforceable. Article 137 provides that for any other application for which no period of limitation is provided elsewhere in that division, the period of limitation is three years which would begin to run from the time when the right to apply accrues. It is thus clear that every application which seeks to enforce a right or seeks a remedy or relief on the basis of any cause of action in a civil court, unless otherwise provided, will be subject to the law of limitation. But where an application does not invoke the jurisdiction of the court to grant any fresh relief based on a new cause of action, but merely reminds or requests the court to do its duty by completing the remaining part of the pending suit, there is no question of any limitation. Such an application in a suit which is already pending, which contains no fresh or new prayer for relief is not one to which Limitation Act, 1963 would apply. These principles are evident from the provisions of the Code and the Limitation Act and also settled by a series of judgments of different High Court over the decades (See : for example, Lalta Prasad vs. Brahma Din [AIR 1929 Oudh 456], Ramabai Govind v. Anant Daji [AIR 1945 Bom. 338], Abdul Kareem Sab vs. Gowlivada S. Silar Saheb [AIR 1957 AP 40], A. Manjundappa v. Sonnappa & Ors. [AIR 1965 Kar. 73], Sudarsan Panda & Ors. v. Laxmidhar Panda & Ors. [AIR 1983 Orissa 121], Laxmi v. A.Sankappa Alwa [AIR 1989 Ker. 289]. We may also draw support from the judgments of this Court in Phoolchand vs. Gopal Lal [AIR 1967 SC 1470], Hasham Abbas Sayyad v. Usman Abbas Sayyad & Ors. [2007 (2) SCC 355] and Bikoba Deora Gaikwad v. Hirabai Marutirao Ghorgare [2008 (8) SCC 198]. |
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