PRADEEP NANDRAJOG, J.

1. We shall be referring to the parties as the plaintiff; defendant No.1; defendant No.2; and defendant No.3 respectively.

2. Bharat Heavy Electrical Ltd. (the first respondent in the appeal) is the plaintiff. Public Power Corporation SA (respondent No.3 in the appeal) is defendant No.1. Hellenic Electricity Distribution (the appellant in the appeal) is defendant No.2. State Bank of India (respondent No.2 in the appeal) is defendant No.3.

3. The plaintiff instituted a suit pleading that defendant No.1 is a company established in Greece and was in the business of power production and power supply. It invited a global tender for supply of five transformers. Plaintiff’s bid was accepted and on February 05, 2009 a contract was executed containing, amongst others, terms on which liquidated damages for late supply could be levied. As per the contract, a performance guarantee had to be given to defendant No.1 and therefore, at the asking of the plaintiff the defendant No.3 issued, in favour of defendant No.1, a performance guarantee No.0999609FG in sum of € 7,54,707.50 which was valid till August 25, 2012 and that as per the contract, as and when a transfo