ANU ENTERPRISE Vs. STATE BANK OF MAYSORE

JUDGEMENT

(1.) Though not a party to the suit, M/s. Anu Enterprise (appellant) has filed instant appeal seeking to challenge a judgment and decree dated 21.4.1998 of the learned Single Judge passed in S.No. 1044/96 in favour of M / S. Hindustan Photofilms Manufacturing Company Limited (respondent No. 2/ plaintiff) and against the State Bank of Mysore (respondent No. 1 /defendant) for sum of Rs.10 lakhs with costs and interest @ 18% per annum with effect from is October, 1993 until filing of the suit as well as pendente lite and future interest.

(2.) Relevant facts may be noticed first.

(3.) M/s. Hindustan Photo films Manufacturing Company Limited (respondent plaintiff) was dealing in photo sensitized products. It appointed M/s. An Emerprise(appellant) as their stockists in respect of Graphic Art Products and Photo Products. They entered into agreements initially for a period of five year: which were subsequently renewed in the year 1989 for a further period of five year: In terms of the agreements, the appellant was entitled to a credit period and to trade discount on the product value in addition to commission. However, Ban Guarantees/Revolving Letter of Credit/Insurance Guarantees in favour of the respondent-plaintiff were required to be furnished to avail of such credit facilities Consequently, some bank guarantees were furnished whereupon the respondent plaintiff started supplying goods on credit to the appellant. Subsequently, as the amount of credit facility being enjoyed by the appellant was increasing, the value of the guarantees needed to be increased. Earlier bank guarantees were, the replaced by fresh ones of equivalent or enhanced value. In the process, in lieu Bank Guarantee No. 86/89 dated 20.10.1989 for Rs.10 lakhs issued by Vyas Bar Limited, Connaught Place, New Delhi, Bank Guarantee No. 79/91 dated 20.10.19' for Rs.10 lakhs, extended up to 26.11.1993, was issued by the respondent-defendant Bank and it was confirmed that the guarantee would cover the liabilities d vie agair the Bank guarantee No. 86/89 issued by Vyas Bank. The terms of this Bai guarantree read as under: