( 1 ) THE appellant preferred a Civil Suit in the City Civil Court, Ahmedabad, bearing Civil Suit No. 4889 of 2000 against the present respondents, seeking relief against invocation of a bank guarantee furnished on behalf of the plaintiff to defendant No. 1 by defendant No. 2. Along with the plaint, an application Ex. 6 came to be seeking for interim injunction against invocation/encashment of the bank guarantee. The learned Judge presiding over Court No. 10, City Civil Court, rejected the application while vecating the ad-interim protection granted in favour of the plaintiff. Aggrieved by the said order, the plaintiff has approached this Court with this appeal.

( 2 ) FOR the sake of convenience, the appellant is addressed to as "the plaintiff" and the respondents as "the defendants" in this judgment.

( 3 ) IN order that the contentions raised by both the sides may be properly appreciated, certain facts need to be stated. 3. 1 defendant No. 1 is a company which regulates sale and export of sugar. Tenders were invited for export of Indian White Crystal Sugar upon certain conditions. The plaintiff submitted an offer to defendant No. 1 with certain conditions of standard form of contract. It transpires that there were negotiations between the parties on terms of the tender. Initially, the plaintiff furnished earnest money covering 2% of the tender price by demand draft and, thereafter, after following the procedure as required under the terms of the tender, furnished a bank guarantee worth Rs. 1,66,63,500. 00. Defendant No. 1 was the beneficiary under the bank guarantee and defendant No. 1-United Commercial Bank issued the bank guarantee. It appears that, thereafter, the plaintiff found some terms of agreement to have been changed by defendant No. 1 and, ultimately, the plaintiff has sought relief against invocation/encashment of the said bank guarantee. The said bank guarantee is supposed to be valid upto the 25th February, 2001.

( 4 ) THE contention that is raised by the plaintiff/appellant is that the bank guarantee is for performance of the contract and for performance of the contract, the pre-requirement is that there must exist a concluded contract. In the instant case, according to the plaintiff/appellant, the contract had not come into existence and, therefore, the question of invocation/encashment of bank guarantee does not arise.

( 5 ) LEARNED Senior Counsel, Mr. S. N. Shelat, appearing for the appellant, submitted that the Court below has not appreciated that the bank guarantee is a performance guarantee for performance of a contract. If the facts of the case are properly appreciated, there is no contract between the parties. As per initial negotiations, the contract was supposed to be entered into a prescribed form and, admittedly, there does not exist a contract in the prescribed form. Mr. Shelat, therefore, submitted that there is absence of a concluded contract and, if there is no contract, there is no question of invocation/encashment of a bank guarantee issued to ensure performance of the contract. 5. 1 mr. Shelat submitted that the Court below failed to appreciate that, though the guarantee appears prima facie to be unconditional one, it would operate only on conclusion of the contract guaranteed under the bank guarantee. Mr. Shelat has drawn attention of this Court to clauses 10 and 14 of the communication inviting offer (Mark 3/1 ). In clause 10, there is a condition that successful tenderers may furnish a performance guarantee covering 2% of the value within five working days from the date of conclusion of deal in lieu of EMD. The performance guarantee shall be valid for 180 days from the date of issue and shall be returned on fulfilment of obligation by the buyer under the contract. In clause 14, it is provided that acceptance of offer shall be subject to the Rules and Regulations which the Government of India may impose from time to time regarding export of sugar from India and also subject to