( 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 of the appellant for the interim injunction (arising out of a suit filed by appellant) restraining the respondent from realising any amount in pursuance of the bank guarantee dated 6-3-1979 furnished to it by the appellant/[plantiff from the Bank of India.

( 3 ) THE plaintiff/appellant 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/defendant. For their requirements the appellant entered into an agreement with the respondent for the supply by the respondent of 360 MT of SMA-20 quality of natural rubber. Alongwith the registration application a bank guarantee from the Bank of India for Rs. 3. 6 lakhs was furnished which was calculated @ Rs. 1000 per MT for the quantity indented. By clause. 10 (viii) of the Conditions of allotment the appellant had agreed to make pay