( 1 ) THIS appeal arises from the order passed on an application under older 39 Rules 4 and 5 Civil Procedure Code. moved by the appellant wherein it had sought permission to invoke bank guarantee which had been furnished by the respondent.

( 2 ) IT appears that the appellant was trying to negotiate with the Iranian State Railways for the supply of certain goods. In order to be able to negotiate the proposed contract the appellant, it seems, approached the respondents in order to ascertain for itself as to whether it would be in a position to make the supplies.

( 3 ) SOME understanding between the parties was apparently arrived at. This is reflected in a bank guarantee dated 14th July, 1976 in favour of the appellant by the Punjab National Bank, Shahdara, Delhi, which had been furnished at the instance of the respondent. The relevant portions of the bank guarantee, with which we are concerned in the present case, read as under:

"with reference to contract made between Iranian State Railways and M/s. Harprashad and Company Limited, Mahajan House, E 1 and 2 NDSE Part II New Delhi for supply of Railway Track Components and in compliance with request made by M/s. Sudarsh