PGB

PERFORMANCE BANK GUARANTEE


To,
Bank Guarantee No. :
Bank Guarantee Date :
Bank Guarantee Amount :Rs.
Bank Guarantee Expiry Date:

THIS DEED OF GUARANTEE made this _______ day of _________, 2007 by …………………………………………………………………….…… (mention name of the Bank) having head office at………………………….. and a branch office at………………………………… (hereinafter called the “Guarantor” or the “Bank”, which expression shall, unless repugnant to the context or meaning thereof includes its successors and assigns) in favour of ……………………………(name of the Company) having its registered office at __________________ and corporate office at Trade World, B-9, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013 (hereinafter called the “Buyer”, which expression shall, unless repugnant to the context or meaning thereof includes its successors and assigns).

WHEREAS M/s ………………………………, a company registered under the Companies Act, 1956 and having its Registered office at ___________________ ____________________________________________ (hereinafter referred to as the “Supplier”, which expression shall, unless repugnant to the context or meaning thereof includes its successors and assigns) was issued a Purchase Order No. / Letter of Intent ………………, dated ……………….. by the Buyer on the terms and conditions setforth in the said purchase order/letter of intent as modified from time to time (hereinafter referred to as the “Contract”), for supply of the goods as mentioned in the Contract for a total consideration of Rs………………..

AND WHEREAS in terms of the said Contract, the Supplier has agreed to furnish to the Buyer, the security by way of Bank Guarantee (hereinafter called the “Performance Guarantee”) by a nationalized bank for a sum of Rs…………….. (Rupees…………………………………………..only) being the amount equivalent to ……% of the value of the Contract, as security for due performance and compliance by the Supplier of its obligations in accordance with the Contract.

AND WHEREAS at the request of the Supplier, the Bank has furnished this Bank Guarantee in the manner hereinafter appearing.

NOW THE DEED WITNESSETH AS FOLLOWS:

1. For the valuable consideration received, the receipt and sufficiency of which is hereby acknowledged, the Guarantor hereby undertake and irrevocably and unconditionally guarantees to pay without any demur to the Buyer, on first demand, an amount not exceeding Rs…………………..(Rupees …………………only), without any protest or proof or satisfaction or without reference to the Contract or without the Buyer needing to prove or to show grounds or reasons for its demand for the sum specified therein, against any losses or damages caused to or suffered or would be caused to or suffered by the Buyer, by reason of non-fulfillment of the obligations of the Contract on the part of Supplier and further agrees to indemnify and keep the Buyer indemnified against all costs, charges and expenses whatsoever, which the Buyer may incur by reason of the Supplier failing to perform the obligations under the Contract.

2. The Guarantor hereby gives guarantee and declares that its liability under this Guarantee shall extend to the payment of the whole of and every part of the guarantee amount viz. Rs. ………………/- (Rupees …………………………only) paid by the Buyer to the Supplier as provided for in the said Contract.

3. Any demand so made on the Guarantor by the Buyer shall be conclusive as regards the amount due and payable by the Guarantor under the Guarantee. The Guarantor neither shall be entitled to any recourse to the Supplier nor shall be entitled to any defense or plea for any reason whatsoever to give effect to this Guarantee. To give effect to this Guarantee, the Buyer may act as though the Guarantor were principal debtors.

4. The Guarantor further agrees that the Buyer shall be the sole judge of whether the Supplier has committed any breach of any of the terms and conditions of the Contract and the extent of losses, damages, costs, charges and expenses suffered or incurred or would be suffered or incurred by the Buyer on account thereof.

5. Should it be necessary to extend the Guarantee beyond the date of expiry of this Guarantee on account of extension of the time being granted by the Buyer to the Supplier for the due fulfillment of the obligations under the Contract by the Supplier, the Bank undertakes to extend the period of this Guarantee until such time as may be reasonably required.

6. The Bank shall not revoke this guarantee during the currency except with the previous consent of Buyer and also agree that any change in the constitution of the Supplier or the Bank’s constitution shall not discharge the Bank’s liability hereunder.

7. This Guarantee shall not in any way be affected by the Buyer taking or varying or giving up any securities from the Supplier or any other person, firm or company on the Supplier’s behalf or by the winding up of the Supplier.

8. The Bank shall not be released from its obligations under these presents by any exercise by the Buyer of its liberty with reference to the matter aforesaid or any indulgence shown by the Buyer or by any other matter or thing whatsoever under the law would, but for this provision have the effect of releasing the Bank.

9. The Bank further agrees that no changes or addition to or other modification of the terms of the Contract or of the equipments to be supplied thereunder or any of the Contract documents, which may be made between the Buyer and the Supplier shall in any way release the Bank from any liability under this Guarantee and the Bank hereby waives notice of any such change addition or modification.

10. Buyer’s right to recover the said amount of Rupees ………………/- (Rupees ………………………………………….Only) from the Bank as aforesaid will not be affected or suspended by reason of the fact that any dispute or disputes have been raised by the Supplier and / or that any disputes or disputed matters are pending before any officer, tribunal or court or arbitration and any such demand made by Buyer shall be final and binding on the Bank.

11. Subject to the maximum limit of the Guarantor’s liability as aforesaid, this Guarantee will cover all the Buyer’s claim or claims against the Supplier from time to time arising out of or in relation to the Contract and in respect of which the Buyer’s demand or notice in writing be received by the Guarantor.

12. The Bank confirms that it has the power to issue this Guarantee in favor of Buyer and the issuance of this Guarantee has been duly authorised by the Bank and the undersigned has full power and authority to act for and on behalf of the Bank in respect of this Guarantee.

13. All cost and expenses incurred by Buyer in connection with this Bank Guarantee or the Bank’s obligation to pay hereunder, shall be borne by the Bank and shall be paid to Buyer promptly and not later than two business days of the date of demand made by Buyer.

14. This Guarantee shall remain in full force and effect during the period of currency of the Contract until Buyer discharges this Guarantee and shall remain in force upto____________ unless a demand is made on the Guarantor on or before the date of expiry of this Guarantee.

15. This Guarantee shall be governed by the laws of India and the Court in Mumbai shall have exclusive jurisdiction.

Notwithstanding anything contained herein :

(i) Our liability under this guarantee shall not exceed Rs. …………. (Rupees ……………………only). This bank guarantee shall be valid upto _________________.
(ii) The Guarantor shall be liable to pay the guaranteed amount or the reduced guarantee amount or any part thereof under this guarantee only and only if Buyer serves upon us a written claim or demand on or before __________________.

In witness whereof the Guarantor has executed these presents on the date and place above written.

Signed and delivered by the within named ……………….(name of the Bank) represented by its authorized representative (name and designation of manager executing the guarantee) in the presence of (witness).


Dated this _________ day of ____________