ORDER

Leave granted. We have heard counsel for both sides.

2. This appeal by special leave is arises from the Judgment of the Kerala High Court, made on November 14, 1996 in A.S. No. 394 of 1996.

3. The admitted facts are that the appellant laid a suit to enforce the Bank Guarantee against the respondent pursuant to the Agreement dated April 23, 1991 entered into between the appellant, M/s. Fenner (India) Ltd., 3 Madurai Melakkal Road, Madurai and M/s. Vijay Exports, 23/393, Panampally Nagar, Kochi under which the appellant had agreed thus: "In order to finance purchase of raw nuts and processing for exports, the Processor requires financial support and the Exporter has agreed to advance upto Rs. 30,00,000/- (Rupees thirty lakhs only) as Purchase advance to be secured by a Bank Guarantee." The Bank Guarantee executed on April 24, 1991 by the respondent Punjab and Sind Bank, the Guarantor in favour of M/s. Fenner (India), the Purchaser, covenanted that the Purchaser shall repay the amount advanced and in case of default, apart from invoking the arbitration clause, the Bank would be entitled to enforce the Bank Guarantee for recovery thereof. It is not disputed that the Purchaser had ad