( 1 ) THE petitioner in this application, inter alia, has prayed for issuance of a writ of or in the nature of mandamus directing the respondents to forthwith revoke and/or rescind and/or cancel the letters dated 7/09/1992 and 18/09/1992 which are contained in Annexures R, R/1, S, S/1 to the writ application as also desisting from invoking bank guarantee No. AH7/ BG/3/87, dated 7/11/1987 for a sum of Rs. 10 lacs 57 thousand 1 hundred 60 and bank guarantee No. 5/88, dated 5/10/1988 for a sum of Rs. 31 lacs 71 thousand 4 hundred 80 both issued by the Bank of Maharashtra.

( 2 ) THE fact of the matter lies in a very narrow compass.

( 3 ) THE petitioner No. 1 owns a shipyard at Shibpur for carrying on business as Marine and Mechanical Engineers and structural fabricators. The respondent No. 5 intended to get a fishing trawler built by the petitioners. According to the petitioners the Central Government had evolved a scheme to promote shipping industries and grant loan to such persons intending to get a ship built wherefor even subsidy is paid. It is stated that a contract for building the aforesaid fishing trawler, the cost where of was one crore five lacs was entertained into between the petitioners and respondent No. 5 on or about 23-3-1987. The Government's subsidy was to be to the tune of 1/3rd of the said amount, namely, Rs. 31,40,128. 00 and the buyers own contribution was only to the extent of Rs. 3,61,577. 00. The respondent No. 2 Shipping Credit Investment Co. Ltd. granted a loan to the respondent No. 5 for a sum of Rs. 68,69,000. 00. On or about 26/03/1987, a tripartite agreement in writing was executed by and between the petitioner No. 1, respondent No. 2 and respondent No. 5. On the same day an agreement was entered into by the petitioner No. 1 and the respondent No. 2 for grant of subsidy to the extent of Rs. 33,40,128. 00.

( 4 ) PURSUANT to the said tripartite agreement dated 26/03/1987, payment of loan for construction of the fishing trawler was to be made to the petitioners as per Clause 14 thereof. The petitioner received payments to the extent of Rs. 10,57,160. 00 and 31,71,480/- in terms of their Bills in respect whereof petitioner No. 1 furnished two bank guarantees being dated 7/11/1987 and 5/10/1988. According to the petitioners the respondent No. 5 backed out from the said agreement halfway through as the petitioner refused to accede to his wrongful demand that a Marine Cater Pillar Engine be installed in place and stead of indigenous Cummins Engine. It may be noted that the second payment to the petitioner No. 1 was made by the respondent No. 2 although in the meanwhile disputes and differences had arisen between the petitioner No. 1 and the respondent No. 5. The respondent No. 2 allegedly released the second payment observing that the payment at the third stage might be made only after a new buyer was found by the petitioner No. 1 or alternatively an amicable settlement be made with the existing buyer i. e. respondent No. 5. No amicable settlement, however, took place between the petitioner No. 1 and respondent No. 5.

( 5 ) THE petitioners have contended that the Central Government sought to intervene in the matter and indicated the possibilities of settling claim of the petitioner by it. However, in terms of letter dated 14-3-1991 the respondent No. 2 observed that in view of the conduct of the respondent No. 5 the contract be treated to have become frustrated. The respondent No. 2 by a letter dated 14-3-91 asked the petitioner No. 1 for reimbursement of the amount of loan but gave an alternative proposal to them with a view to finding out a new buyer and stipulated that in case no new buyer could be placed by the petitioner, the bank guarantees would be invoked by it. The petitioner No. 1 allegedly found out a new buyer i. e. respondent No. 6. The Government of India, however, asked the respondent No. 6 to comply with certain directions in terms of its letter dated 14-5-1992. Responden