The main legal point established in the judgment is the autonomy of a bank guarantee and the limited protection provided to guarantors under Section 22 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985.

REVA KHETRAPAL, J.

( 1 ) THE short question which arises for decision in the instant case is whether the bar created by Sections 22 of the Sick Industrial Companies (Special provisions) Act (1 of 1986 as amended by Act No. 12 of 1994) will apply to a suit invoking a bank guarantee, executed by the bank to secure payment for supply of goods to an industrial company which stands referred to the Board for Industrial and Financial Reconstruction (for short BIFR ).

( 2 ) THE facts are in a very narrow compass:- (i) A summary suit under Order XXXVII Rule 2 of the Civil Procedure Code, 1908 was filed by the plaintiff " M/s Rashtriya Chemicals and Fertilizers limited against the defendant " State Bank of Patiala praying for a decree in the sum of Rs. 40,83,759. 82 (Rupees forty lakhs eighty three thousand seven hundred fifty nine and paise eighty two only) together with further interest on the principal sum of Rs. 33,36,792. 10 (Rupees thirty three lakhs thirty six thousand seven hundred ninety two and paise ten only) @ 18% per annum from the date of the filing of the suit till payment and/or realization. (ii) The plaintiff has averred that the suit is for a liquidated sum arising on a bank guarantee (Annexure-B to the plaint), which has been filed as the defendant has wilfully failed and neglected to make payment to the plaintiff, when the plaintiff invoked the said bank guarantee. The said bank guarantee was furnished by the defendant to the plaintiff on behalf of one montari Industries Limited to ensure the due payment of the purchase price of "anhydrous DMA", which the plaintiff was supplying to the said Montari industries since the year 1994. The supply of the said product was on a 30 days' credit from the date of supply, and to ensure the due payment of the purchase price of the said product (Anhydrous DMA) by Montari Industries, the defendant executed in favour of the plaintiff a bank guarantee bearing no. SBP/npnd/ BG/64/94-95 dated 9th /12th September, 1994, for an amount not exceeding Rs. 50,00,000/- (Rupees fifty lakhs only) on the terms and conditions more particularly set out therein. The said guarantee was to remain in force upto 7th September, 1995 and a claim under the same was to be made and served on the defendant on or before 6th March, 1996. (iii) The said bank guarantee was irrevocable and specifically provided that the defendant agreed and undertook to pay the amount due and payable under the said guarantee without any demur, merely on a demand from the plaintiff that the amount claimed had become due by reason of the said Montari Industries' failure to pay to the plaintiff the amount of their invoices within 30 days. The said guarantee further provided that any such demand made by the plaintiff would be conclusive in regard to the amount due and payable by the defendant to the plaintiff under the said bank guarantee. The validity of the said bank guarantee dated 12th September, 1994 was extended from year to year, the last extension being upto 7th September, 2000 and a demand under the same was to be made on or before 6th March, 2001. (iv) As the said Montari Industries failed to pay the invoices raised by the plaintiff within 30 days as stipulated, the plaintiff invoked the bank guarantee issued by the defendant vide letter dated 29th May, 2000, addressed from their registered office at Mumbai, and called upon defendant to make payment of sum of Rs. 47,38,693. 69 (Rupees forty seven lakhs thirty eight thousand six hundred ninety three and paise sixty nine only), including interest within two days from the receipt of the said letter. As there was no response from the defendant, the plaintiff by their letter dated 7th June, 2000 once again called upon the defendant to pay the aforesaid sum of Rs. 47,38,693. 69 (Rupees forty seven lakhs thirty eight thousand six hundred ninety three and paise sixty nine only) under the said bank guarantee to the plaintiff. In reply thereto, the defendant by their letter dated 8t