Kkspun INDIA LTD vs. Ofb Tech Private Limited & Ors.

Facts

M/S KKSPUN India Ltd. (Plaintiff) filed a suit seeking a permanent injunction to prevent the invocation and encashment of 24 bank guarantees totaling Rs. 41,21,57,263/-, provided to OFB TECH PRIVATE LIMITED (Defendant No. 1) under six purchase orders. The Plaintiff claimed to have supplied goods worth Rs. 81,86,32,711/- against e-invoices and e-way bills generated on the GST portal. The Plaintiff alleged that Defendant No. 1 fraudulently sought to adjust the entire mobilization advance against these supplies, leaving the Plaintiff without any advance despite supplying goods and providing bank guarantees. Defendant No. 1 issued demand letters to the banks (Defendants Nos. 2-6) to invoke these guarantees, falsely claiming the Plaintiff failed to fulfill its commitments. An ex parte ad interim injunction was initially granted by the High Court on May 13, 2022, restraining the banks from releasing funds under the guarantees, which was later upheld. However, an appeal filed by Defendant No. 1 led to the Division Bench vacating the injunction on February 1, 2023.

Held

The Court noted that the Plaintiff's counsel had instructions to withdraw the suit. This decision was based on the fact that the Division Bench had already refused an injunction regarding the bank guarantees in an earlier order dated February 1, 2023, and this decision was upheld by the Supreme Court via an order dated February 5, 2024. Therefore, the Court found no basis to continue the suit for injunctive relief concerning the bank guarantees. The suit was dismissed as withdrawn with liberty granted to the Plaintiff to pursue its remedies in accordance with the law. No specific findings were made on the merits of the Plaintiff's claims regarding the alleged fraudulent adjustment of mobilization advance or false claims by Defendant No. 1, as the suit was withdrawn.

Key Issues

1. Whether the Plaintiff is entitled to a permanent injunction restraining the invocation and encashment of bank guarantees amounting to Rs. 41,21,57,263/- provided to Defendant No. 1 under six purchase orders, given the alleged fraudulent adjustment of mobilization advance and false claims of non-performance by Defendant No. 1. Petitioner/Plaintiff's Contentions: The Plaintiff argued that Defendant No. 1 fraudulently sought to invoke the bank guarantees by falsely claiming non-fulfillment of purchase order commitments, after improperly adjusting the entire mobilization advance against goods supplied. The Plaintiff relied on the initial ex parte ad interim injunction granted by the Court. Revenue/State's Contentions: The judgment does not record specific contentions from the revenue or state. However, Defendant No. 1, in its appeal, successfully argued that the case did not justify a stay on the encashment of bank guarantees, a position later upheld by the Supreme Court.