Bimal Chandra Basak, J. - (1.) THIS appeal is directed against an order d 23rd March, 1989 whereby th8 learned Trial Judge allowed the applications made under section 20 of the Arbitration Act (hereinafter referred to as the said Act) and gave necessary directions in connection with the arbitration proceedings. The facts of this case as alleged in the petition as follows :
(2.) THERE was an agreement in writing between the plaintiff, who are respondents herein, and the defendants, who are the appellants herein regarding construction of some plants. Clause 23.1 of this agreement contained an arbitration clause which provides as follows : "In the event of any question or disputes arising under or out of these conditions or in connection with this or relating to this contract except as to any matters the decision of which is specifically provided for in these conditions the matter in dispute shall be referred to two Arbitrators, one to be nominated by the company and one to be nominated by the contractor, or in case of the said Arbitrators not agreeing then to an umpire to be appointed by the Arbitrators in writing before proceeding on the reference and the decision of the Arbitrators or in the event of their not agreeing, of the said umpire shall be final and conclusive and the provisions of the Indian Arbitration Act, 1940 and the Rules hereunder and any statutory modification thereof shall be deemed to apply and to be incorporated in this contract." Clauses 7.01, 24.02.1, 24.02.2 (a) and (c) of the contract provided furnishing Bank Guarantee. It is stated that the plaintiff furnished the Bank Guarantee as mentioned in the said clauses of the contract from Vijaya Bank, G. S. Road, Shilong in favour, of the defendant. The Bank Guarantee provided as follows : "Non-judicial Paper Rs. 22.50 P. Bank Guarantee against refund of Security Deposit Name of the Bank : Vijaya Bank Address : G. S. Road, Shillong 793 001 Gurantee No. : 13/85 Date of Expiry : 30.4.1986 Limit of Liability : Rs. 5,67,000 (Rupees Five Lakhs Sixtyseven thousand) only. Ref. Purchase Order No. : PUR/CH/PO/245 Date : 31.5.1982 For (Name of Work) : Construction of Effluent Treatment Plant for Cachar Paper Project. Sub: Refund of Security Deposit Hold Back Amount against Completion To M/s. Hindustan Paper Corporation Ltd. Cachar Paper Project, Panchgram 788202. Dear Sirs, In consideration of M/s. Hindustan Paper Corporation Ltd. having its registered office at Vishal Bhavan, 85, Nehru Place, New Delhi 110 024 (hereinafter call the Corporation (having agreed to REFUND THE SECURITY DEPOSIT TO M/s. The United Assam Construction Company, Kher Mohal, Dinapur (hereinafter referred to as the "Contractor") from the demand under the terms and conditions of the agreement No. PUR/CH/PO/245 dated 31.5.1982 made between the Corporation and said Contractor inter alia for construction of EFFLUENT TREATMENT PLANT for Cachar Paper Project (hereinafter called the "Agreement") of the Security Deposit for the due fulfilment by the said Contractor of the terms and conditions contained in the said agreement, on production of Bank Guarantee for Rs. 5,67,000 (Five Lakhs sixty seven thousand) only, We Vijaya Bank, G. S. Road, Shillong (hereinafter referred to as the "Bank") do hereby undertake to pay to the Corporation an amount not exceeding Rs. 5,67,000 (Rupees Five Lakhs Sixty seven thousand) only against any loss or damage) caused to or suffered by or would be caused to suffer by the Corporation by reason of any breach by the said Contractor of any of the terms and conditions contained in the said Agreement arising out of the Security Deposit. 2. We, Vijaya Bank, G. S. Road, Shillong, do hereby undertake to pay the amount due and payable under this Guarantee without any demur, merely on a demand from the said Corporation stating that the amount claimed is due by way of loss or damage caused to or would be caused to or suffered by the said Corporation by reason of any breach by the Con- tractor of the terms and conditions in the said Agreement or by reason of the Contractor's failure to perform the said Agreement. Any such demand made on the Bank shall be conclusive as regards the amount due and payable by the Bank under this Guarantee. However, our liability under this guarantee shall be restricted to an amount not exceeding Rs. 5,67,000 (Rupees Five Lakhs sixty seven thousand) only. 3. We, Vijaya Bank, G. S. Road, Shillong, further agree that the Guarantee herein contained shall remain in full force and effect during the I period that would be taken for performance of the said Agreement and such extension as may be agreed to and inform to us from time to time either for full or also of reduced value and that it shall continue to be enforceable till all the dues of the Hindustan Paper Corporation under or by virtue of the said Agreement have been fully paid and its claims satisfied or discharged or till the Corporation certified that the terms and conditions of the said Agreement have been fully and properly carried out by the said Contractor and accordingly discharges the Guarantee. Unless a demand or claim under this guarantee is made on us in writing on or before 30.4.1986, we shall be discharged from all liabilities under this Guarantee thereafter.
(3.) WE, Vijaya Bank, G. S. Road, Shillong, further agree with the Corporation that the Corporation shall have the fullest liberty without our consent and without affecting in any manner our obligations hereunder to vary any of the terms and conditions of the said Agreement or to extend the time of performance of the said contract from time to time or to postpone for any time or from time to time any of the powers exerciseable by the Corporation against the said Contractor or to forbear of enforce any of the terms and conditions relating to the said Agreement, and we shall not be relieved from our liability by reason of any such variation or extension being granted to the said Contractor or for any forbearance act or omission on the part of the Corporation or any indulgence by the Corporation whatsoever which under the law relating to sureties would but for this provision have effect of so relieving us.;