BANK OF INDIA Vs. MEHTA BROTHERS

JUDGEMENT

(1.) These are two applications filed by defendant No. 6. These were filed on 4-4-1988. First application is under Order 9 Rules 13 and section 151 of the Code of Civil Procedure and the second under section 5 of the Limitation Act, 1963. The ex parte judgment and decree which are sought to be set aside are dated 10-3-1987. The circumstances which led to the filing of these two applications may be stated in brief in so far as these are relevant.

(2.) The plaintiff is constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1971). On 30-8-1982 it filed a suit for recovery of Rs. 91,58,480.08 against defendants numbering six. Defendant No. I is a partnership firm, of which defendants 2, 3, 4 and 5 are the partners, 6th defendant, who is now the applicant, is the body incorporate under the laws of West Germany and is said to be a foreign company within the meaning of the Companies Act, 1956. On the request of defendants No. I to 5, the plaintiff on 26-6-1979 established an irrevocable Letter of Credit for US $ 6,10,900 (equivalent to about Rs. 50,00,000) for import of PVC Resins in favour of one M/s. Bentrex & Co., Singapore. The Letter of Credit was expressly made subject to the terms of Uniform Customs and Practice for Documentary Credits (1974 Revision). International Chamber of Commerce Publication No. 290. Negotiation of the documents under the Letter of Credit was permitted through any bank at Singapore. It was also provided in the said Letter of Credit that the negotiating bank was to claim reimbursement from the New York Branch of the plaintiff. Such reimbursement, however, was required to be made with the certificate of the negotiating bank that the terms of the credit had been fulfilled. The beneficiaries M/s. Bentrex and Company drew a Sight Draft for an amount of US $ 6,10,740.00 on 1-9-1979 and presented the same with other documents, to defendant No. 6 at Singapore, being their bankers, for negotiation. On 4-9-1979, defendant No. 6, after negotiating the said 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. But the plaintiff claimed that this was done without furnishing the necessary certificate required under the credit. The New York Branch of the plaintiff the plaintiff claims, in good faith paid and reimbursed to the defendant No. 6 on 5-9-1979 the said amount of US $ 6,10,740.00. When the plaintiff received the documents, which was on' or about 13-9-.1979, it found that there were various discrepancies and the same did not conform to the terms of the credit. It, therefore, called upon defendant No. 6 to reverse the reimbursement already claimed by it from the plaintiff's New York Branch. The defendant No. 6, however, rejected the claim of the plaintiff. Defendants No. I to 5 also did not honour and retire the said documents contending that there were discrepancies in the documents and further stated that they had made a claim with the insurance company (M/s. Oriental Fire and General Insurance Company Limited), which was likely to be finalised and that the amount payable thereunder would be received by the plaintiff directly from the insurance company for the adjustment of the due and payable by defendants No. 1 to 5 under the Letter of Credit. These defendants also advised the plaintiff that they had instituted a suit against the insurance company in the Delhi High Court, it being Suit No. 475/89. It appears that the ship which was carrying the goods from Singapore to a Port in India sank. The plaintiff, therefore, claimed that defendants Nos. 1 to 5 on one hand and defendant No. 6 on the other denied their respective liability to repay to the plaintiff the amounts claimed in the suit and that the plaintiff was in doubt as to the person from whom it was entitled to redress (and so the plaintiff had joined defendants No. I to 5 as well as defendants No. 6 as parties to the suit in order to deter- mine the question as to which of the defendants, i.e. defendants No. I to 5 and defendant No. 6, were liable to the plaintiff and to what extent. The suit was under Order I Rule 7 of the Code of Civil Procedure. The plaintiff claimed the suit amount as under :- "1. Amount payable under the Letter of Credit for US $ 6,10,740 Rs. 49,65,365.85 2. Interest at the rate of 21% per annum from 5-9-79 till 30-8-82 Rs. 41,93,114.23 Total Rs. 91,58,480.08

(3.) In the alternative to the interest, plaintiff also claimed a sum of Rs. 41,93,114.23 as damages as mentioned in the plaint. The plaintiff, therefore, wanted a decree against defendant No. 6 and in the alternative against defendants No. I to 5.