B.C.Mitra, J. - (1.) THE respondent instituted Suit No. 2556 of 1967. (THE Commissioners for the Port of Calcutta v. THE Chartered Bank) for recovery of Rs. 7,35,000/- and for other reliefs. THE basis of the respondent's claim is that on or about May 5, 1965. it was agreed between the respondent and a British Company known as Blyth Dry Docks Shipping Building Co. Ltd. (hereinafter referred to as the Company) that the Company would build and deliver to the respondent 2 Hopper Barges at a price of 3,50,000/-each aggregating 7,00,000/-. In consideration of the contract the appellant by two several Deeds of Guarantee dated 7-6-1966 guaranteed the due performance and observance by the company of all the covenants and conditions of the said contract for supply of Barges and promised to pay on demand 17,500/- in respect of each of the said two Barges in the event of a breach or non-performance of the contract or in the event of any neglect or omission by the company. Pursuant to the said contract for the supply of the 2 Barges the respondent from time to time paid divers sums to the company aggregating 1,75,000/-.
(2.) ON or about September 13, 1966. the company went into voluntary liquidation without completing, constructing or delivering the said 2 Barges or any of them. The respondent contends that the appellant failed to pay 35,000/-under the said 2 guarantees or any portion thereof. On or about November 29, 1967, the appellant was served with the writ of Summons in the said Suit No. 2556 of 1967. The appellant entered appearance in the Suit and on January 5, 1968. took out a notice of motion for stay of the Suit and all proceedings thereunder. This application was disposed of by the trial Court by a judgment and order of May 12, 1969, by which the application for stay of the suit was dismissed. This appeal is directed against the judgment and order dated May 12, 1969.
(3.) BEFORE proceeding to deal with the contentions of the parties I should refer to the correspondence that passed between the parties in the matter of their rival contentions under the contract. On December 20, 1966, the respondent wrote to the appellant to say that the company had failed to carry out the contract, and that the Guarantee furnished by the appellant had become enforceable. The appellant was therefore called upon to pay Rs. 3,50,000/- under the two Deeds of Guarantee within 15 days. On January 28, 1967. the appellant wrote to the respondent that no formal contract was signed by the respondent and the company, and as no such contract had in fact been signed, the terms of the Guarantees were not operative, and therefore there could be no effective claim under the Guarantees. On March 2, 1967, the appellant wrote to the respondent that a contract existed between the respondent and the company when the tender was accepted. on the understanding that when a formal contract was signed, it would govern what was being done meanwhile, and that the final contract which was to be signed by the parties was concluded at the latest on July 27, 1966. In paragraph 3 of this letter the appellant alleged that as the Guarantee was given in respect of a contract which arose out of the tender and acceptance and not the concluded contract between the parties the contract of guarantee had been superseded and no longer applied. There were several other contentions raised in this letter to which it is not necessary to refer. On April 26, 1967. the appellant forwarded to the respondent a memorandum raising various contentions namely:-- (a) A tender was accepted by the company which was to be embodied in a formal contract a pro forma of which was included in the tender documents. (b) The contract came into existence when the tender was accepted and such acceptance was on the understanding that if a formal contract was signed it would govern what was being done meanwhile. (c) The tender and acceptance constituted a tentative contract. (d) The concluded contract was the result of correspondence which was finally concluded by the company's letter of July 27, 1966. The contract then had retrospective effect and brought into effect Clause 38 of the Pro-forma Contract so that all previous contracts between the parties were thereby cancelled. (e) The Guarantee does not purport to and does not guarantee the concluded contract. (f) The arbitration clause was altered in material respect by the concluded contract unknown to the appellant. ;