MEHTA BROTHERS Vs. BANK OF INDIA

JUDGEMENT

(1.) The two appeals arise out of a common order passed by learned Single Judge on 28.2.1999 allowing the application of defendant No. 6 for setting aside the ex-parte decree and condoning the delay in filing the application for setting aside the ex-parte decree.

(2.) In the suit filed by Bank of India out of which this appeal has arisen the status of parties is that Bank of India, the appellant in FAO (OS) 100/91 is the plaintiff; M/ s. Mehta Brothers and Others, the appellants in FAO (OS) No. 78/91 are defendants 1 to 5 and Deutsche Bank Asia, formerly known as European Asian Bank, respondent No. 2 in FAO (OS) 78/91 and respondent No. 6 in FAO (OS) No. 100/91 is defendant No. 6.

(3.) Facts in detail have been mentioned by the learned Single Judge in the impugned order and need not be stated again by us. However, briefly some of the important facts are being stated. A suit for the recovery of Rs. 91,58,480.09 was filed by the plaintiff against the defendants on 30.8.1982 inter alia alleging that on the request of defendants 1 to 5 on 26.6.1979 the plaintiff established on irrevocable letter of credit for US $ 6,10,900 (equivalent to about Rs. 50,00,000.00) in favour of M/ s. Bentrex & Co., Singapore; the letter of credit was expressly made subject to the terms and conditions of Uniform Customs and Practice for Documentary Credits (1974 Revision). International Chamber of Commerce Publication No. 290; on 1.9.1979 the beneficiary drew a site draft for an amount of US $ 6,10,740.00 and presented the same alongwith other documents to defendant No. 6 for negotiation; on 4.9.1979 defendant No. 6 after negotiating the documents despatched the original and duplicate set of the documents from Singapore directly to the Chandni Chowk Branch of the plaintiff and called upon the New York Branch of the plaintiff for reimbursement under the said credit; the plaintiff alleged that this was done without furnishing the necessary certificate of compliance of credit terms, which were required under the credit. On 5.9.1979 New York Branch of the plaintiff on receipt of the aforesaid claim, in good faith paid on account/without prejudice the said amount of US $ 6,10,740.00; on 13.9.1979 the plaintiff received the documents from defendant No. 6 and found that there were many discrepancies in the documents and they were not as per the Uniform Customs and Practice of Documentary Credits (1974 Revision); on 14.9.1979 by a talex the plaintiff-pointed out to defendant No. 6 some of the discrepancies in the documents and stated that documents were being held at its risk and responsibility; defendant No. 6 was requested to reverse the reimbursement already claimed by it from New York Branch of the plaintiff; on the same day defendant No. 6 by its talex to the plaintiff rejected plaintiff's claim alleging that the discrepancies were of minor nature and all the terms and conditions of letter of credit were complied with; on 14.9.1999 defendants 1 to 5 also did not honour and retire the documents under the letter of credit on the ground that there were discrepancies in the documents and they were not at all in accordance with the terms of letter of credit. The plaintiff further alleged that defendant No. 6 failed and neglected to reply and reimburse to the plaintiff the amount received by it from the New York Branch of the plaintiff; defendant No. 6 had failed to furnish to the New York Branch of the plaintiff, the certificate of compliance in terms of the said letter of credit, for that reason also defendant No. 6 acted in breach of its obligation under the letter of credit to do so and was, therefore, not entitled to claim and retain the payment received thereunder; despite repeated requests and reminders defendant Nos. 1 to 5 also did not honour and retire the said documents and went on contending that there were discrepancies in the documents; defendants 1 to 5 also stated that their claim with Insurance Company was likely to be finalised soon and the amount payable thereunder shall be received by the plaintiff directly from the Insurance Company for the adjustment of the amount due and payable by them under the said letter of credit. As defendant Nos. 1 to 5 as also defendant No. 6 had denied their respective liability to repay to the plaintiff the amounts claimed by plaintiff and the plaintiff was in doubt as to the person from whom it was entitled to redress, the plaintiff joined defendant Nos. 1 to 5 as well as defendant No. 6 as parties to the suit in order to determine the queston as to which of the defendant i.e., defendant Nos. 1 to 5 or defendant No. 6 was liable to the plaintiff and as to what extent, if separate suits were brought against defendant Nos. 1 to 5 and defendant No. 6 common question of law and fact would arise, therefore, the plaintiff had a right to relief against the defendant Nos. 1 to 5 or defendant No. 6 in the alternative.