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Issues:
1. Enforceability of the guarantee provided by the National & Grindlays Bank Ltd. 2. Liability of the bank in excess of the guaranteed amount. 3. Recovery of the deficit amount from the security deposit made by Dr. M.N. Kaul. Analysis: 1. The case involved a conditional stay granted by the Supreme Court on an assessment order passed by the Sales Tax Officer against Dr. M.N. Kaul. The bank provided a guarantee for the assessed amount, but the guarantee had specific conditions for enforcement. The court analyzed the terms of the guarantee and concluded that the time limit for enforcement had expired, making the guarantee unenforceable after a certain date. The court emphasized that the guarantor cannot be made liable beyond the terms of the guarantee, citing legal precedents on suretyship and guarantee interpretation. 2. The bank raised objections to the liability in excess of the guaranteed amount and contended that the guarantee was no longer enforceable due to the time limit specified in the guarantee terms. The court upheld the bank's argument, stating that the bank could not be held liable beyond the agreed terms of the guarantee. The court clarified that if the bank could be legally compelled to release funds belonging to Dr. M.N. Kaul through other procedures, it would be obligated to do so, but the guarantee itself could not be enforced beyond the stipulated conditions. 3. The State of Maharashtra sought to recover a deficit amount from the security deposit made by Dr. M.N. Kaul. However, the court ruled that the security deposit was specifically meant for covering costs, and since no costs had been ordered in this case, the deposit could not be used to recover the deficit amount. Consequently, the court dismissed the petitions seeking recovery from the security deposit and held that the costs of the hearing would be borne by the State of Maharashtra.
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