( 1 ) IN the present suit instituted by the plaintiff a decree for permanent injunction is prayed for by the plaintiff against the defendant No. 1 restraining it from encashing or seeking to encash or recovering the whole or any part of the amount with respect to the bank guarantees given by the defendant No. 2 to the defendant No. 1 on behalf of the plaintiff. On or about 5. 4. 1990 Indian Railway Construction Corporation (in short REFERRED TO to as IRCON) awarded the contract of construction of Railway Station and Commercial Complex at Belapur to defendant No. l. The defendant No. 1 on its part desired to split up the total contract work into smaller parts and give the same on subcontracts. The plaintiff submitted its tender for a part of the works proposed to be sub- contracted by defendant No. 1 and in pursuance thereof on or around 14. 11. 1990 the defendant No. l issued a letter of intent and around 22. 11. 1990 the defendant No. 1 issued a work order to the plaintiff company. In terms of the agreement between the defendant No. l and the plaintiff the plaintiff was entitled to raise mobilisation advance to the extent of 5% of the contract value and the said mobilisation advance was payable to the plaintiff against furnishing of bank guarantees from Nationalised/scheduled bank on the proforma provided by the defendant No. 1. In addition to furnishing bank guarantees towards mobilisation advance the plaintiff company also furnished bank guarantees towards security deposit for 2% of the contrail value. The aforesaid bank guarantees were issued by the erstwhile New Bank of India, now Punjab National Bank, defendant No. 2.

( 2 ) SUBSEQUENTLY, IRCON terminated the contract of defendant No. l and it is stated that the defendant No. l claiming the contract between the plaintiff and defendant No. 1 to be a back to back contract terminated the contract with the plaintiff. This termination, it is alleged by the plaintiff, was illegal. IRCON decided to terminate the contract with defendant No. 1 w. e. f. 12. 2. 1992 and the defendant No. 1 terminated its contract with the plaintiff w. c. f. 31. 3. 1992.

( 3 ) IT is slated that from lime to lime the defendant No. 1 had been seeking to invoke the bank guarantees, staling inter alia, that the bank guarantees should be extended for a further period failing which the bank guarantees would stand invoked. In view of the aforesaid actions on the part of defendant No. 1 the plaintiff has been extending the validity of the bank guarantees. Finally the defendant No. 1 issued a letter dated 15. 3. 1995 purportedly invoking the bank guarantees furnished by the plaintiff. It is contended on behalf of the plaintiff that if the defendant No. 1 is permitted to invoke and encash the said bank guarantees the defendant No. 1 would be successful in perpetuating a glaring fraud and in that event the plaintiff would suffer irreparable loss and injury. Accordingly, the present suit has been instituted by the plaintiff seeking for the aforesaid relief.

( 4 ) ALONGWITH the aforesaid suit the plaintiff also Filed an application under Order 39 Rules 1 and 2 which was registered as I. A. 2571/ 1995. Byorder dated 21. 3. 1995 this court passed an ex parte ad interim temporary injunction restraining the defendant No. 1 from encashing the bank guarantees on condition that the plaintiff would keep the bank guarantee alive. The defendant No. 1, on service of summons and notices appeared in the suit and filed its reply to the aforesaid application, contending inter alia, that no ground has been made out by the plaintiff in the application for restraining the defendant No. 1 from invoking and encashing the bank guarantees.

( 5 ) I have heard the learned counsel appearing for the partics. Mr. Chandiok appearing for the plaintiff submitted that since the contract of the defendant No. 1 with the plaintiff is a back to back contract between the defendant No. 1 and 3 therefore, the bank guarantees furnishe