Bank Asia Limited
Rangs Bhaban (8th floor)
113-116 Old Airport Road
RE: ENCASHMENT OF BANK GUARANTEE
A/C Y PIPES LIMITED.
We refer to your letter dated 22.09.2002 on the above subject and. We have perused the contents of your letter.
It appears from the Performance Guarantee itself that Nova Scotia (predecessor of Bank Asia Limited) (the “Bank”) gave the guarantee in favour of Summit Daqing Joint Venture for the performance of supply contract by Y Pipes Limited.
Pursuant to the provision of section 126 of the Contract Act, 1872 the person who gives the guarantee is called the “surety”, the person in respect of whose default the guarantee is given is called the “principal debtor”.
In view of the provision of section 126 of the Contract Act, 1872 the Bank is the surety of Y Pipes Limited. In a contract of guarantee, it always implies that the surety has given the guarantee at the request, whether direct or indirect, of the principal debtor. In the instant case the request was indirect and was made by Y Pipes Limited through the Canara Bank. However, whether or not the Guarantee was issued at the request of Y Pipes Limited is immaterial in the present case.
With regard to the subject matter, we refer the subject matter of our letters at our convenience. Accordingly we referred the subject matter of our letter dated 18.09.2002 as “Encashment of Bank Guarantee A/C Y Pipes Limited”.
If you have any query, please do not hesitate to contact the undersigned.
The Lawyers & Jurists
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