Judgment

Dr. A.S. Anand, CJI-Leave granted.

This appeal by special leave calls in question the judgment and order of the Delhi High Court dated October 17, 1996 and arises in the following circumstances.

2. The respondent, Indian Oil Corporation Ltd., entered into an agree­ment with M/s. Tubacero of Mexico for purchase of pipes for its Kandla-Bhatinda Pipeline project on September 16, 1993. According to the terms of the agreement, M/s. Tubacero were to deliver the pipes to the respondent at Tampico Port in Mexico. In order to bring the pipes to India, the respondent, a Government Corporation, was required to go through M/s. Transchart, a department of the Ministry of Surface Transport, which brokers charter party arrangements with various vessel owners, for the purposes of shipping of pipes from Tampico Port. M/s. Transchart invited offers from various ship owners and the appellant was one of the ship owners who made an offer. In order to execute a contract between the parties, respondent No. 1 was to establish a standby letter of credit as per the format to be mutually agreed upon by the parties while the appellant was to furnish a per­formance bond also in a format to be mutually a