S. B. Sinha, J. - (1.) Leave granted.
(2.) The 1st respondent herein was appointed as a Consignment Agent by an agreement dated 23-12-1993 in regard to the sale of products of the appellant-company-plaintiff, namely, Salt and Tea in South and Central Bihar. In terms of the said agreement it was required to furnish a Bank guarantee for a sum of Rs. 5 lakhs. The transactions between the parties started in January, 1994. Some of the clauses in the said Bank guarantee are as under : ". . . . . . . .We. . . . . . . . . . . . . . . . . . . (hereinafter referred to as the Bank) do hereby agree to pay the Principal Co. an amount not exceeding Rs. 6,00,000/- (Rupees Six Lacs only) against any loss or damage caused to or suffered or would be caused to or suffered by the Principal Co. by reason or any breach of contract by the consignment agent as their due performance of their duties as consignment agent for the Principal Co., the major term being settlement of the Principal Co.s bills by the consignment agent within 30 days from the date of receipt of material. (2) We. . . . . . . . . . . . . . . (Bank) do . . . . . . . . . . hereby undertake to pay the amounts due and payable under this guarantee without any demur merely on a demand from the Managing Director or any other director of the Principal Co. stating that the amount claimed is due by way of loss or damage caused to be suffered by the Principal Co. by reason of any breach of contract for non-payment of the Principal Companys bills within 30 days from the date of receipts of materials by the consignment agent of any of the terms and conditions agreed upon/to be agreed in performance of their duties of consignment agent on behalf of the Principal Co. Any such demand made on the . . . . . . . . . (Bank) shall be conclusive as regard the amount due and payable by the Bank under this guarantee. (3) We. . . . . . . . . . . . . (Bank) further agree that the guarantee shall remain in full force and effect for a period of 12 (Twelve) months from the date of issue of this guarantee or till the period that would be taken by the consignment agent for the due performance of their duties as consignment agent on behalf of the Principal Company on the terms and conditions mutually agreed upon/to be agreed upon shall continue to be enforceable till all the dues of the Principal Company have been fully paid and its claims satisfied or discharged or till the Managing Director or any other director of the Principal Company certified that the due performance of their duties as consignment agent have been fully and properly carried by the consignment agent and accordingly discharge the guarantee, whichever date is earlier. (4) We . . . . . . . . . . . . . (Bank, further agree with the Principal Company that the Principal Company have been fullest liberty without our consent and without AFFECTING IN ANY MANNER. Our OBLIGATIONS HEREUNDER to vary any of the terms and conditions agreed/to be agreed with the consignment agent in the due performance of their duties as consignment agent or to extend time of performance by the consignment agent from time to time any of the power exercisable by the Principal Company against the consignment agent and to forbear or enforce any of the terms and conditions agreed upon and we shall not be relieved from our liabilities by the reason for any such variation or extension being granted to the consignment or any forbearance act or omission on the part of the Principal Company or any indulgence by the Principal Company to the consignment agent by any such manner or thing whatsoever which under the law relating to sureties would but for this provision have effect of so relieving us."
(3.) Pursuant to or in furtherance of the agreement entered into by and between the parties herein, the 1st respondent furnished a Bank guarantee of Rs. 5 lakhs issued by respondent No. 2, Bank of India, Muradpur, Chouhatta Branch, Patna on 12-1-1994.;