HINDUSTAN PHOTOFILMS MANUFACTURING CO LTD Vs. ANU ENTERPRISES

JUDGEMENT

(1.) <DJG>S.RAVINDRA BHAT, J.</DJG> The plaintiff seeks a decree for the sum of Rs.2,39,47,194.27 against the defendants. The first defendant is a registered partnership firm of which the other two defendants are partners (defendants hereafter are collectively referred as `M/s Anu Enterprises').

(2.) The suit averments are that the plaintiff carries on business of manufacture and sale of photo Sensitised Products including still photo products and graphics arts photo products. On 30.07.1984 and 01.08.1984, the plaintiff constituted Anu Enterprises as its stockiest in respect of two types of products and entered into agreement which were initially for five years and later renewed in 1989 for a further period of five years. In terms of the agreements, the dealings between the plaintiff and Anu Enterprises on a principal-to-principal basis. Anu Enterprises as stockiest entitled to a credit period as well as a trade discount on the product value and additionally to an agreed commission. As stockiest Anu Enterprises has to furnish bank guarantees/revolving letter of credit/insurance guarantee to secure the over all credit facility it is stated that consequently Anu Enterprises initially issued some bank guarantees upon which the plaintiff started supplying the goods. The plaintiff mentions that during the course of dealings Anu Enterprises approached it for enhanced credit facilities against bills of exchange as they anticipated greater volume of business and that purchases would be made against hundies to be accepted for payment of supplying of the goods.

(3.) The plaintiff mentions that the City Bank was operating a bill discounting scheme under which hundies could be discounted forthwith by presentation before date of maturity and acceptors to such hundies would make payment to the bank on the date of maturity for the value along with interest charges etc. The plaintiff accepted the Anu Enterprises proposal and selling goods to it against hundies duly accepted by the latter for payment. The hundies would be presented to the Citi Bank which discounted them or paid or credited to the plaintiff's account. However, Anu Enterprises did not honour the hundies accepted by them and consequently failed to pay the amounts on the due dates as a result Citi Bank debited the plaintiff's account to the extent of such dishonoured hundies. The plaintiff mentions having informed Anu Enterprises about the dishonouring of hundies as well as consequent embarrassment and loss. It is submitted that initially the defendant was apologetic and promised to clear the entire amounts outstanding but failed to do so despite repeated reminders. It is further submitted that the plaintiff was under the circumstances constrained to invoke bank guarantees to the tune of Rs.65 lakhs. Apparently only Indian Overseas, Kanpur honoured a bank guarantee to the tune of Rs.5 lakhs and the other banks refused to honour resulting in cases being filed against them (such banks).