INDERMEET KAUR, J.

1. On 20.01.1997 the State Trading Corporation (hereinafter referred to as the petitioner) invited tenders for purchase of argentine wheat. The offer made by Tradigrain (hereinafter referred to as the respondent no.3) was accepted by the petitioner.

2. Parties entered into a contract on 04.02.1997. In terms of this contract respondent no.3 was to give a Performance Guarantee to the petitioner to ensure the due performance of its obligation under the contract. It was agreed that in case of disputes matter would be referred to the Grain and Feed Trade Association (GAFTA). Respondent no.3 approached its Swiss Banker-UBS AG (hereinafter referred to as the respondent no.2) who in turn approached the State Bank of India (hereinafter referred to as the respondent no.1) and requested it to issue a performance guarantee on behalf of respondent no.3 in favour of the petitioner. Respondent no.1 asked for a counter guarantee in its favour from respondent no.2. Accordingly respondent no.2 issued a counter guarantee on 13.02.1997 which was subsequently amended on 14.02.1997, in terms whereof parties were to be governed by the Indian law. Pursuant thereto respondent no.1