( 1 ) THIS appeal arises out of an order of A. K. Basu, J. , dated the 3rd June, 1969, in Suit No. 2643 of 1967. In order to appreciate the dispute in this appeal it is necessary to refer briefly to certain facts. On the 10th August, 1967, there was a contract between the Economic Trading Co. , defendant No. 1 in this suit who was the buyer and Messrs. Lohia Jute Press Private Limited who was the plaintiff-seller for purchase of 27,12,900 pieces of polythene bags at Rs. 270/- per 100 bags, f. o. b. , Calcutta the total value being Rs. 73,24,830. 00. In the said contract there was a guarantee clause which stated as follows:"the sellers to provide letter of guarantee for 20% of the face value of the goods sold in favour of the consignees within three weeks from date through an Authorised Egyptian Bank. The Letter of guarantee should be valid for claims to be filed by the Buyers or consignees within three months of the expiry date of L/c. This letter of guarantee should be unconditionally payable on demand. "the plaintiff requested the State Bank of India on the 25th August, 1967, for a packing credit loan and performance guarantee for Rs. 14,65,000/ -. It fur