Courts power cannot be fettered.

SHANMUKHAM J.

In these appeals, three common questions arise for consideration. They are : (1) Whether the three bank guarantees executed by the second respondent-bank in favour of the first respondent are independent contracts divorced from the contracts entered into between the appellant and the first respondent titled contract No. II ?

(2) Whether they are conditional or unconditional contracts ? and

(3) Whether the first respondent's demand on the second respondent-bank when the former sought to enforce the bank guarantees is in conformity with the terms contained in these guarantees ?

The appeals are directed against the common order of Maheswaran J. made in Applications Nos. 188 to 190 and 402 to 404 of 1983 dated April 30, 1983. In all these applications, the appellant was the applicant while respondents Nos. 1 and 2 were the respondents therein. OSA No. 8 5 of 1983 is against Application No. 403 of 1983 ; OSA No. 86 of 1983 is against Application No. 188 of 1983 ; OSA No. 87 of 1983 is against Application No. 189 of 1983 and OSA No. 88 of 1983 is against Application No. 404 of 1983. It may be noticed that no appeals were preferred against Applications Nos. 190 and 402 of 1983.

The admitted facts that led to the filing of these interlocutory applications are set out below. Neyveli Lignite Corporation Ltd. proposed to start a second lignite mine at Neyveli with the approval of the Government of India in view of the importance and urgency in the execution of the said proposal, a global tender was called for by the first respondent, Neyveli Lignite Corporation Ltd. Finally, the offer made by M/s. Transelektro was accepted by the first respondent. The contract between the first respondent and Transelektro is titled contract No. I. The said contract enabled M/s. Transelektro to choose an Indian firm for erection work, and, accordingly, the applicant was selected as the Indian firm for erection work. Besides, Transelektro has a corporate agreement with EVT, West Germany. A tripartite agreement was concluded amongst Transelektro, EVT, West Germany, and the first respondent covering the scope of equipments under contract No. I and between the applicant and the first respondent under contract No. II. On October 18, 1980, the first respondent issued letters of intent not only to Transelektro under contract No. I, but also to the appellant under contract No. II. This letter of intent authorised the commencement of the work which also provided for a time schedule. It is enough to refer to some of the relevant clauses in contract No. II. The contract price in respect of contract No. II was Rs. 23, 64, 36, 823 which is made up of Indian supplies--Rs. 14, 52, 56, 025, erection and commissioning---Rs. 8, 72, 90, 000 and service charges being Rs. 38, 90, 798. The terms of payment of the price component of the equipment and its erection are as follows :(a) Initial advance of 10 per cent. on supplies ;

(b) 10 per cent. of erection charges to be made within one month from the date of the letter of intent ;

(c) 10 per cent. of the value of supplies within the next one month ;

(d) 55 per cent. against despatch of equipment ;

(e) 15 per cent. on receipt of equipment ;

(f) 10 per cent. on completion of the performance test ;

The contractor, namely, the appellant, was to furnish a bank guarantee to cover the advance amount to be paid under (a), (b) and (c) above with provision for pro rata reduction as contemplated by the contract. The contract provides for termination of the contract under two heads.

Clause 40(1) enables the first respondent to terminate the contract on the basis of certificate issued by the consultants. Clause 40(6) provided that in case of termination of the contract, the first respondent shall give detailed reasons for relevant causes within thirty days prior to such a decision ; and/or notice to be intended to the appellant in order to enable the first respondent/consultant and the appellant to confirm and control all caus