( 1 ) BY this order plaintiff s application under Order 39, Rules 1 and 2, CPC for interim injunction against invocation and encashment of bid security Bank guarantee (No. 2/98 dated 12. 3. 1998 issued by defendant No. 2 - Punjab National Bank) on behalf of plaintiff in favour of defendant No. 1 for Rs. 25. 00 lakhs is being disposed of.

( 2 ) BRIEFLY the facts are that defendant No. 1 on 20. 1. 1998 floated a Tender (Tender No. MM/of/121997/000116) for supply of 6f Optical Fibre Cables alongwith accessories for a quantity of 13000 kms. , later increased to 13624 kms. Plaintiff had submitted tender for the same alongwith bid security in the form of a Bank guarantee in the sum of Rs. 25. 00 lakhs as per condition of the bid tender documents. Plaintiff s bid being the lowest was accepted on 15. 4. 1998. However as provided in Clause 11 of Special Conditions of Contract. (Section IV) the quantity to be supplied was allocated among ten lowest bidders by adopting the formula of Vendor Rating. Total quantity to be supplied was fixed at 10898 kms. cables out of which 1008 kms. were allocated to the plaintiff. Defendant No. 1 placed Advance Purchase Order No. CP/apo/068/98-99 dated 11. 9. 1998 for the supply of 1008 kms. of cables. The plaintiff vide its letter dated 23. 9. 1998 accepted the conditions of the Advance Purchase Order and also submitted requisite performance Bank guarantee dated 29. 9. 1998 in the sum of Rs. 16,81,000/- issued by defendant No. 2 valid upto 12. 9. 2000 as demanded in the Advance Purchase Order. On 20. 10. 1998, a formal Purchase Order was also placed on the plaintiff for the supply of said 1008 kms. of cables.

( 3 ) DEFENDANT No. 1 then placed further Advance Purchase Order dated 23. 10. 1998 (APO/nct/apo/090/98-99)on the plaintiff for an additional quantity of 9005 kms. of cables with a demand of a performance Bank guarantee of Rs. 72,06,000 / -. This quantity on representation made by the plaintiff was first reduced to 3500 kms. and then to 2500 kms. of cables vide Letter No. 80-8/98-MHC/vol. II/ 930 dated 23. 11. 1998. The plaintiff accepted it and furnished further requisite performance Bank guarantee dated 10. 12. 1998 in the sum of Rs. 28,68,000/- Defendant No. 1 in the said letter dated 23. 11. 1998 also asked explanation of the plaintiff as to why they could not accept the supply of balance 1000 kms. Explanation was given by plaintiff in their letter dated December 7,1998.

( 4 ) IN the meantime, defendant No. 1 on 21. 12. 1998 floated another tender for the supply of another quantity of the plaintiff being lowest was accepted. Defendant No. 1 placed Advance Purchase Order dated T4. 1. 1999 for 1000 kms. on the plaintiff, but on the rates which were accepted in respect of the earlier tender which were lower by about Rs. 3,556/-perkm. to which plaintiff raised objections. Apparently, the supply having not been made, defendant No. 1 by an express telegram dated 12. 2. 1999 invoked the bid security Bank Guarantee (No. 2/98 dated 12. 3. 1998) and asked defendant No. 2 to remit the amount of Rs. 25. 00 lakhs by 19. 2. 1999.

( 5 ) PLAINTIFF has filed the suit for declaration and injunction that the conditions of the bid security Bank guarantee were fulfilled and so it stood discharged and was not liable to be invoked. Alongwith the suit, the plaintiff also filed the aforesaid application for interim injunction on which this Court vide ex parte interim order dated February 22,1999 stayed the encashment of the Bank guarantee. That interim order is still continuing.

( 6 ) DEFENDANT No. 1 filed written statement and also reply to the application contesting the same. It has been alleged that the plaintiff has committed breach of the terms and conditions of the contract and as such the bid security is liable to be forfeited and that their action is valid and lawful.

( 7 ) I have heard learned Counsels for the parties. Mr. Rajiv Nayar, learned Senior Counsel for the plaintiff has referred to various t