( 1 ) JAGATJIT Distilling and Allied Industries Ltd. (hereinafter called the distillers ) is a joint stock company incorporated under the Indian Companies Act 1913. They have their registered office at Hamira in Kapurthala, Punjab. In 1945 the distillers placed an order for a complete Drum Screw Plant from two manufactures of England, namely. Moon Brothers Limited and Siemens-Sachuckert (Great Britain) Ltd. The Machine Tool Controller, Government of India required the distillers to furnish a guarantee. The distillers approached Bharat Bank Limited, Darya Ganj, Delhi (the bank ). On June 18, 1945, the bank agreed to furnish guarantee to the Machine Tool Controller for Rs. 2,08,800 plus ten per cent for the purpose of the plant which the distillers had odered.

( 2 ) THE distillers entered into an agreement with the bank. As a margin towards the guarantee of Rs. 2,08,800 the distillers gave a fixed deposit receipt of Rs. 57,429 which was in the fixed deposit account with the bank. By mutual agreement the Bank guarantee was extended to June 23, 1947. The guarantee amount was treated by the bank as a cash-credit account of the distillers in its books.

( 3 ) THE