( 1 ) WHAT sanctity and effectiveness is to be attached to the Bank guarantees which are also called performance guarantees is the question that calls for decision in this appeal?

( 2 ) THIS is an appeal against the order of the learned single judge by which he refused the application for the appellant for interim injunction (arising out of a suit filed by appellant) restraining the respondent from realising any amout in pursuance of the bank guarantee dated 6. 3. 1979 furnished to it by the appellant from the Bank of India.

( 3 ) THE plaintiff is a manufacturer of tyres. One of the raw materials which is used in the manufacture of tyres is natural rubber. The import of natural rubber is canalised through respondent. For their requirements the appellant entered into an agreement with the respondent for the supply by the respondent of 360 MT of SMR-20 quality of natural rubber Alongwith the registration application a bank guarantee from the Bank of India for Rs. 3. 6 lakhas was furnished which was calculated Rs. 1,000/ per MT for the quantity indented. By clause 10 (viii) of the Conditions of allotment the appellant had agreed to make payment for goods allotted and for taking t