Judgment

S. Saghir Ahmad, J.-Leave granted in both the Special Leave Peti­tions.

2. Hindustan Construction Company Limited (for short, ‘HCCL’) was awarded a contract for the construction of Icha Dam across the river Kharkai in village Kuju by the State of Bihar (for short, ‘the defend­ants’). The contract was awarded in the sum of Rs. 39,71,31,019/- on 25.4.1989. The period of contract was 42 months and the work was to be completed by 24th of October, 1992. In terms of the agreement, HCCL was required to furnish, and it did furnish, a Bank Guarantee for 10 per cent of the contract price as “Performance Guarantee” in the sum of Rupees Three Crores Ninety Seven Lakhs Thirteen Thousand One Hun­dred and Two only. Another Bank Guarantee which was required to be furnished by HCCL, and which it did furnish, was the Guarantee against “Mobilisation Advance” which was to be provided by the defendants from time to time to the HCCL during the course of the contract. HCCL has already furnished fifty “Mobilisation Advance” Bank Guarantees aggre­gating in all to Rs. 532 lacs. In addition to these Bank Guarantees, HCCL had also furnished another “Mobilisation Advance” Bank Guarantee dated 2.7.1991 f