A bank guarantee is an absolute commitment to pay the amount covered by the guarantee upon demand, notwithstanding anything to the contrary. The bank's liability under the bank guarantee is not affected by any disputes between the parties to the underlying contract.

1. THE respondent, Metallurgical engineering Consultants (India) Limited, instituted a suit under Order 37 of the Code of Civil Procedure, being Suit No. 1007 of 1989 (Mettalurgical engineering Consultants (India) Ltd., v. Indian Bank), on a bank guarantee bearing No. 417 dated July 17, 1987 for a sum of Rs.73,74,000/- furnished by the defendant, Indian Bank (i.e. , the appellant before us) at the instance of a party to the underlying contract, M/s. SCIL India Limited (formerly simon-Carves India Limited. Thereafter the plaintiff, being the respondent before us, took out a summons for final judgment for the said sum of Rs.73,74,000/- when the defendant, Indian Bank, the appellant before us, failed and neglected to honour the bank guarantee for such sum upon invocation by the beneficiary, i.e. , the respondent herein. The defendant (i.e. , the appellant before us) also took out a summons for leave to defend the said suit instituted by the respondent against the appellant. The learned trial Judge by an order dated April 6, 1992 dismissed the appellant's application for leave to defend the said suit and allowed the respondent's application for final judgment. The said order dated April 6, 1992 passed by the learned Trial Judge is the subject matter of both these appeals.

2. IN both the appeals, the only issue which calls for our consideration is whether there is any triable issue and whether the appellant should be granted leave to defend the suit. As stated above, the said suit under Order 37 of the Code of Civil Procedure as on the bank guarantee for a sum of Rs.73,74,000/- mentioned hereinbefore. The bank guarantee is at page 34 of the Paper Book filed in Appeal no, 553 of 1992. It appears from the said bank guarantee that in consideration of the respondent's agreeing to pay to the said M/s. SCIL India Limited (hereinafter referred to as the contractor) a sum of Rs.73,74,000/- as and by way of advance payment, the appellant agreed to furnish the said bank guarantee and undertook to keep the respondent indemnified to the extent of the sum of Rs.73,74,000/- from and against all losses and damages that might be caused to or suffered by the respondent in relation to the advance payment to be made by the respondent to the contractor. Under the said bank guarantee, the appellant also agreed to forthwith on demand pay to the respondent any sum or sums not exceeding Rs.73,74,000/- as might be claimed by the respondent to be due from the contractor by way of refund of such advance payment or any portion or otherwise, losses and/or damages, costs, charges or expenses by reason of default or defaults on the part of the contractor as aforesaid.

3. CLAUSE 2 of the said bank guarantee is an important Clause which is set out below:-"notwithstanding anything to the contrary your decision as to whether the Contractor had made any such default or defaults and the amount or amounts to which you are entitled by reason thereof will be binding on us and we shall not be entitled to ask you to establish your claim or claims under this Guarantee but will pay the same on demand without any objection. "

4. IT also appears from the other Clauses of the bank guarantee, viz, clauses 4, 6 and 7, that the respondent would have the fullest liberty without affecting the said bank guarantee from time to time to vary any of the terms and conditions of the underlying contract or extend time of performance of the contract or to postpone for any time or from time to time any of the rights or powers of the respondent against the contractor and either to enforce or forbear to enforce any of the terms and conditions of the contract and the appellant would not be released from its liability under the said bank guarantee by the exercise of the respondent's liberty with reference to matters aforesaid, that the respondent would be entitled to act as if the appellant was the respondent's principal debtor in respect of all the claims of the respondent against the co