MAKHARIA BROTHERS Vs. STATE OF NAGALAND

JUDGEMENT

(1.) These are appeals against the judgment and order of the High Court of Assam, Nagaland, Meghalaya, Manipur and Tripura.

(2.) Makharia Brothers ('the contractor') entered into a works contract with the State of Nagaland (the 1st respondent). The contract stipulated that the contractor should furnish to the State security in the sum of Rs. 2,87,800/- for due performance of the contract. Clause 5.3 of the contract read thus:

(3.) Pursuant to the aforesaid, the contractor furnished a bank guarantee dated 12th December, 1977 issued by the Vyasa Bank Ltd. ('the bank'). It was valid in the first instance up to 5th January, 1979 and was extended up to 5th July, 1979. The relevant part of the bank guarantee read thus: