( 1 ) THE two appeals arise out of the common order passed by the I Additional Judge, City Civil Court, Hyderabad in two interlocutory applications- IA. Nos. 1854 and 1855 of 1997 - filed by the plaintiff (respondent herein) pending the suit OS No. 1591 of 1997. The A. P. Mineral Development Corporation Ltd. (hereinafter referred to as corporation ) which is a State Government undertaking is the defendant in the suit and the appellant herein. Alongwith the appeals, we have heard the application filed by a company known as gimpex Limited seeking leave to file appeal against the order passed in IA No. 1855 of 1997.

( 2 ) THE suit was filed by the respondent herein seeking a declaration that the letter issued by the defendant Corporation on 19-9-1997 is illegal and for a consequential declaration that the contract entered into between the plaintiff and the defendant on 19-2-1997 is subsisting. The plaintiff also sought for an injunction restraining the defendants from taking any action pursuant to the aforementioned letter including confiscation of Security Deposit and invocation of Bank guarantee. A mandatory injunction was also sought for that the defendant should continue the supply of barytes ore as per the terms and conditions of the contract dated 19-2-1997.

( 3 ) AT this stage, we may advert to the substance of the letter dated 19-9-1997, the validity of which has been challenged in the suit. It is recited in the said letter that under the contract, the plaintiff was :required to buy four (4) lakh metric tonnes of processed A-grade barytes ore on ex-mine basis for export purpose during a period of one year from the dale of the contract. It is further stated, whereas the plaintiff was required to buy 33,000 MTs. per month, by the date of the letter, during a period of about seven months, only 45,000 MTs. was taken delivery of leaving a back-log of about 1,45,000 MTs. It is then stated thus you have not complied with the schedule of buying and lifting as per the contractual obligations . The notice then refers to the fact that there was failure on the part of the plaintiff to perform the contract though the Corporation made the material available. It is stated that no proper explanation was given in reply to the notice dated 14-7-1997 proposing termination of the contract nor any assurance was given to make up the deficiency within the stipulated period. Alleging that there was total failure to perform the obligations under the contract, the Corporation (defendant), by the said letter, terminated the contract dated 19-2-1997 with immediate effect and forfeited the Security Deposit amount of Rs. 1,60,24,600. 00 under clause 16 of the Agreement The plaintiff was also notified that the Corporation was invoking the Bank guarantee issued by the Bank of Baroda. Visakhapatnam for Rs. 1,55,24,600/ -. Aggrieved by this action taken by the defendant-Corporation, the suit aforementioned was filed in the City Civil Court, Hyderabad.

( 4 ) THE two injunctions sought for pending the suit are: (i) to restrain the defendant from taking further action pursuant to the impugned letter dated 19-9-1997 including the confiscation of Security Deposit and invocation of Bank guarantee; (IA1854/97 ). (ii) to restrain the defendant from stopping supply of barytes ore "more particularly the quantity of 25000 tonnes, for which payments were already made by the plaintiff in pursuance of the impugned proceedings. . . . . dated 19-9-1997". (IANo. 1855/97 ).

( 5 ) THE trial Court granted both the prayers for interim relief substantially. IA No. 1855 of 1997 was allowed and the injunction was granted as prayed for. In IA No. 1854 of 1997 which relates to encashment of Bank guarantee, the injunction was granted subject to certain conditions. These conditions are extracted hereunder:" (I) The defendant shall demonstrate losses, if any, till the contract subsists to the plaintiff. The plaintiff shall make the loss good within 3 days from the date of recei

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