INTERADS ADVERTISING (P.) LTD. Vs. PALMEX ENTERPRISES.

JUDGEMENT

(1.) THIS is plaintiff's application under O. 39, rr. 1, 2 and 3 read with s. 151 of the CPC, 1908, in a suit for declaration and injunction for restraining defendant No. 3 from making any payment against documents received under the Letter of Credit No. ND/1909, dated August 20, 1979, favoring M/s. Palmex Enterprises, Singapore, defendant No. 1, and also restraining it from having recourse to the margin money covered by the said letter of credit. The relevant facts are : the plaintiff entered into a contract with defendants Nos. 1 and 2 for the purchase of brass scrap (honey grade) of the value of Rs. 25,00,000, the goods were to be shipped from Singapore to Bombay till September 30, 1979, a certificate with respect to quality and weighment that the goods were of honey grade from an independent surveyor of international repute and standing, well qualified and experienced for inspection an survey of such a commodities was to be issued and full set of clean "on board" bill of lading drawn or endorsed to the order of the Laxmi Commercial Bank Ltd. showing fright prepaid and marked "notified Lakshmi Commercial Bank Ltd." was to be supplied with other documents.

(2.) THE plaintiff applied to the Lakshmi Commercial Bank Ltd., defendant No. 3, for the opening of a letter of credit in favor of defendant No. 1 and defendant No. 3 opened Letter of Credit No. ND/1909, dated August 20, 1979, by a cable to the negotiating bank, defendant No. 9, on August 20, 1979, opening an irrevocable confirmed letter of credit. The following documents were required under the said letter of credit :

(3.) IT appears that the documents relating to this shipment were received by the negotiating bank and copies were also received by defendant No. 3 and the plaintiff. The plaintiff on September 14, 1979, informed defendant No. 3 that there were serious discrepancies in the documents and these were contrary to the express conditions of the letter of credit. It was stated that there was no certificate of quality issued by any independent surveyor and that the certificate of quality issued by any independent surveyor and that the certificate submitted by the beneficiary was silent regarding the quality of the goods. By letter dated October 11, 1979, it was further brought to the notice of defendant No. 3 that the bill of lading was further brought to the notice of defendant No. 3 that the bill of lading was also not in accordance with the directions contained in the letter of credit. The plaintiff, Therefore, informed defendant No. 3 that the documents pertaining to the said goods, i.e., the bill of lading, certificate of weight and quality, etc., were not acceptable and that the same be returned on account of the various discrepancies. On September 17, 1979, the plaintiff also received a cable from defendant No. 1 that the vessel "Oh dai" in which the goods were alleged to have been shipped to the plaintiff had collided with an unknown submerged object as a result where of the ship had been abandoned. The plaintiff thus prays that they are not bound to pay for and that defendant No. 3 be restrained from demanding any payment from the plaintiff and also from making any payment against the documents under the said letter of credit. On November 28, 1979, by an ex parte injunction, defendant No. 3 was restrained from making payment and from having recourse to the margin money covered by the said letter of credit till further orders. Defendant No. 3 in reply to the suit and the application submits that it has made payment under the letter of credit and, Therefore, the suit for injunction has become infructuous, that the documents were in complete confirmation with the terms and conditions of the letter of credit and there was no discrepancy in the documents. For the grant of a temporary injunction a person seeking such an injunction must satisfy (i) that there is a serious question to be tried in the suit and that on the facts before the court there is a probability of his being entitled to the relief asked for by him, (ii) that the court's interference is necessary to protect him from irreparable injury, and (iii) that the balance of convenience is in his favor. Prima facie this means a substantial question raised bona fide which at first sight needs investigation and decision. The plaintiff appears to have satisfied this. The agreement entered into between the parties is subject to the Uniform Customs and Practice for Documentary Credits. Article 3 of the brochure says : An irrevocable credit constitutes a definite undertaking of the issuing bank provided that the terms and conditions of the credit are complied with. Article 7 reads : banks must examine all documents with reasonable care to ascertain that they appear on their face value to be in accordance with the terms and conditions of the credit. Documents which appear on their face to be inconsistent with one another will be considered as not appearing on their face to be in accordance with the terms and conditions of the credit, Article 19 provides that unless specifically authorised in the credit, bills of lading issued by forwarding agents will be rejected. Article 20 further provides that loading on board may be evidenced either by a bill of lading bearing wordings indicating loading on board a named vessel or by means of mutation to that effect on the bill of lading signed or initialled and dated by the carrier or his agent and the date of this notation shall be regarded as the date of loading on board the named vessel. A reference to the bill of lading in the present case disclosed that there is rubber stamp "shipped on board". It is neither signed nor initialled by anybody. The word "Singapore" is printed against the column "fright payable at" and there is also a rubber stamp "freight prepaid". Both are contradictory. It thus appeals that the bill of lading is not in accordance with the letter of credit. The letter of credit also requires the certificate of weight and quality issued by an independent surveyor. The certificate issued by the UNI Marine Service, Singapore, reads as under :