ORDER

This appeal by special leave arises from the judgment of the Division Bench of the Bombay High Court made on October 30-31, 1979 in Appeal No. 163/71.

2. The first respondent-Manganese Ore (India) Ltd. laid the suit against the appellant and M/s. Emmenor Export Traders, the first defendant to recover the suit amount in the sum of Rs.1,69,000/- and odd. The trial Court in Special Suit No. 91/69 by judgment and decree dated April 30, 1971 decreed a sum of Rs.1,66,191.10 as against the first defendant. On appeal by the first respondent, the High Court reversed the decree as against the appellant and made the appellant liable to pay over the same. When the leave was granted by this Court, the appellant was directed to deposit the decretal amount and the first respondent was given liberty to withdraw the amount on furnishing adequate security to the satisfaction of the Registrar of the High Court.

3. The question in this case is: whether the appellant is liable to honour the letters of credit entered into between the appellant and M/s. Emmenor Export Traders? The admitted position is that under the letters of credit a conditional contract was entered into between the appellant and the first defendant. The most important clauses relating thereto are as under:

"Clauses 1(i) and 1(iii) (b). Clause 1(i) provides in respect of the documents for negotiations. Firstly, it is the seller s signed commercial invoice in quadruplicate based on the weight, sampling, analysis and moisture determined at the time of shipment, valuing the ore at the ratio of 17 U.S. dollars converted into @ Rs. 4.75 to one U.S. dollar per dry metric Tonne of 1,000/- Kg. net dry weight, F.O.B. Vishakhapattanam, on the basis of 40 per cent Manganese with the pro rata scale for each unit of Manganese content above or below 40 per cent down to the minimum of 39 per cent. The clause 1(ii)(b) speaks about the certificate in triplicate from M/s. R.G. Briggs and Co. Private Ltd. of sampling assailing and moisture, determined at the port of shipment showing the material to conform to the following contracted qualities.

(B) heard lumpy, Indian Low grade Manganese Ore having the following chemical analysis at 105 degrees C. minimum 39 per cent. (F.E.) Iron Maximum 8.25 per cent SIO-2 Maximum 23.00 per cent Phosphorus Minimum 0.23 per cent (All approximately)."

4. The trial Court as well as the High Court have recorded a finding that the quality of the goods supplied by the first defendant to the buyers did not match the quality contracted for under the letters of credit. The trial Court considered this aspect of the matter and the obligation to honour the contract in paragraph 13 and concluded as under:

"Now I proceed to see whether, the plaintiff had complied with both these clauses. It is not now disputed that in both the supplies made by the plaintiff to the Defendant No. 1, the phosphorus was more than the agreed maximum of 0.23 and that in one of the supplies the Manganese was below the minimum of 39 per cent. This can be found from the documents presented by the plaintiff to Defendant No. 2 at the time negotiations on 20th June 1966. They are exhibits 80 to 85. Exhibits 81 to 84 are the certificates issued by the analyser R.V. Briggs and Co. Exhibit 81 shows the Manganese to be 38.06 per cent and the phosphorus to be 0.240 per cent and exhibit 84 shows that the phosphorus was 0.246 per cent. Now this approximation clause qualifying these percentages stated either in the letter of credit exhibit 78 or in the agreement at exhibit 69 cannot be so read as to allow the percentages to go below or above the agreed minimums and maximums. The minimum and the maximum percentages shall have to be treated as the percentages of rejection limits. The approximate percentage can be slightly above the minimum agreed and slightly below the maximum agreed. This clause regarding approximation cannot be read so as to allow a percentage below the rejection limit. If this is allowed there wil