The issue before the Hon’ble Court was whether the document in question is a Bank guarantee or contract of indemnity. 

A document, as is well known, must primarily be construed on the basis of the terms and conditions contained therein. It is also trite that while construing a document the court shall not apply any words which the author thereof did not use.

The document in question does not on its face contain any ambiguity. Surrounding circumstances are relevant for construction of a document only if any ambiguity exists therein and not otherwise.

According to the Hon’ble Court the document, constitutes a document of indemnity and not a document of guarantee as it was clear from the fact that by reason thereof the Appellant was to indemnify the co-op. society against all losses, claims, damages, actions and costs which may be suffered by it.  The document does not contain the usual words found in a bank guarantee furnished by a Bank.