JUDGMENT

S.B. Sinha, J. - Leave granted.

2. The 1st Respondent herein was appointed as a Consignment Agent by an agreement dated 23.12.1993 in regard to the sale of products of the Appellant Company-plaintiff, namely, Salt and Tea in South and Central Bihar. In terms of the said agreement it was required to furnish a Bank Guarantee for a sum of Rs.5 lakhs. The transactions between the parties started in January, 1994. Some of the clauses in the said Bank Guarantee are as under:

".......We........................(hereinafter referred to as the Bank) do hereby agree to pay the Principal Co. an amount not exceeding Rs.6,00,000/- (Rupees Six Lacs only) against any loss or damage caused to or suffered or would be caused to or suffered by the Principal Co. by reason or any breach of contract by the consignment agent as their due performance of their duties as consignment agent for the Principal Co., the major term being settlement of the Principal Co.s bills by the consignment agent within 30 days from the date of receipt of material.

(2) We......................(Bank) do .............. hereby undertake to pay the amounts due and payable under this guarantee without any demur merely on a