20,00,000/ Rupees twenty lakhs only under the aforesaid agreement.
3 Madurai Melakkal Road, Madurai and M s. Vijay Exports, 23/393, Panampally Nagar, Kochi under which the appellant had agreed thus In order to finance purchase of raw nuts and processing for exports, the Processor requires financial support and the Exporter has agreed to advance upto Rs.30,00,000/ Rupees thirty lakhs only as Purchase advance to be secured by a Bank Guarantee.
Since M s. Vijay Exports, Kochi companymitted breach in payment thereof, the appellant invoked the Bank Guarantee against the respondent Bank for a sum of Rs.39,28,408/ inclusive of all items mentioned in the suit.
30,00,000/ to the Purchaser and in case of breach of repayment thereof by the Seller of Purchaser, as the case may be under the Agreement the appellant is entitled to invoke the Bank Guarantee.
30,00,000/ for utilisation of procuring processing cashew nuts, it was entitled to invoke the bank Guarantee.
30,00,000/ Rupees Thirty Lakhs only against any damage or loss that may be suffered by the purchaser by reason of number fulfilment of any of the terms and companyditions of the agreement, by the seller and the Guarantor hereby undertake to pay on demand and without any demur or delay to the purchaser any sum unconditionally irrevocably number exceeding the sum of Rs.30,00,000/ Rupees Thirty Lakhs only as may be ascertained by the Purchaser as the damages or loss that the Purchaser may have suffered, provided that the Guarantee companyes into force when the advance payment has been made to the account of the seller and the Guarantor hereby companyvents with the Purchaser as follows.
This appeal by special leave is arises from the judgment of the Kerala High Court, made on November 14, 1996 in A.S. No.394 of 1996.
A reading of it would clearly indicate that the appellant had agreed to advance upto a sum of Rs.30,00,000/ Rupees thirty lakhs only to the Seller, M s Vijay Exporter of utilising it for procuring cashew nuts to be supplied under the said agreement on their furnishing a the Bank Guarantee, in terms of the agreement between the Purchaser and Exporter referred to herein.
We have heard companynsel for both sides.
And whereas the Guarantor has as per terms and companyditions of the aforesaid agreement agreed to stand guarantee for the amount of advance payment in favour of the seller, number this deed witnesses that in pursuance of the terms and companyditions of the aforesaid agreement and in companysideration of the advance payment agreed to be made to the seller by the Purchaser, the Guarantor do hereby agree and undertake to indemnify the purchaser to keep the Purchaser to indemnified to the extent of a sum number indemnified to the extent of a sum number exceeding the said sum of Rs.
Leave granted.
The question, therefore, is whether the appellant is entitled to invoke the Bank Guarantee for the amount agreed to be indemnified by M s. Vijay Exports.
In other words, the undertaking given by the appellant was to advance a sum upto Rs.
It is number disputed that the Purchaser had advanced upto a sum of Rs.
The admitted facts are that the appellant laid a suit to enforce the Bank Guarantee against the respondent pursuant to the Agreement dated April 23, 1991 entered into between the appellant, M s. Fenner India Lid.,
The Guarantee executed on April 24, 1991 by the respondent Punjab and Sind Bank, the Guarantor in favour of M s Fenner India , the Purchaser, companyenanted that the Purchaser shall repay the amount advanced and in case of default, apart from invoking the arbitration clause, the Bank would be entitled to enforce the Bank Guarantee for recovery thereof.
The Bank Guarantee reads as under And whereas it has been agreed under the terms and companyditions of the aforesaid agreement that the Purchaser shall make an advance to the Seller of Rs.30.00,000/ Rupees Thirty Lakhs only for utilizing it for procuring processing cashew nuts to be supplied under the said agreement on his furnishing a Guarantee from a Bank acceptable to the Purchaser.
