HINDUSTAN ZINC LIMITED Vs. PUNJAB NATONAL BANK

JUDGEMENT

(1.) The PLAINTIFF M/s. Hindustan Zinc Ltd., a Government of India Enterprise, has filed the present suit for recovery under Order XXXVII CPC on the basis of irrevocable letter of credit (in short ILC) issued by Punjab National Bank, Court Road, Muzaffarnager. Branch, defendant No.2 in their favour. Defendant No.4 M/s Mohindra Steel Tubes Limited placed an order on the plaintiffs for purchase of furnace zinc weighing about 20.146 metric tons at the unit price of Rs.44,500.00 per metric ton. The plaintiff agreed to supply furnace zinc and defendant No.4 opened an ILC with dfendant No.1 bank in favour of the plaintiff and the proceeds thereof were payable at Delhi. Defendant No.2 Muzaffarnagar Branch of Punjab National Bank opened an ILC bearing No.3/93 on 20/08/1993 for a sum of Rs.10 lakhs According to terms and conditions of the ILC, the sight draft for the recovery of the value of the material supplied to defendant No.4 was to be accompanied by the documents like signed invoice in duplicate, copy of gross FOB/FOP/CIF/C & F/CIP ex-works value of the furnace zinc. The plaintiffs issued the delivery order on 2 4/08/1993 in favour of defendant No.4 on their depot at 4, Industrial Area, Sahibabad For the delivery of the goods, the authorised representative of defendant No.4 duly signed the delivery challan and took the delivery. The plaintiffs have averred that the goods were taken by the representative in a truck under a gate pass dated 25/08/1993. It was mentioned on the challan that the defendanl was entitled to interest free credit for a period of 60 days as per the policy of he plaintiffs. Defendant No.4 was liable to pay interest at the rate of 30% per annum beyond the period of 60 days. On 20th October, 1993, plaintiffs, sent sight draft of Rs.8,96,497/- drawn on defendant No.2 against ILC No.3/93 for collection through their bankers, namely, State Bank of Bikaner & Jaipur, Nehru Place, New Delhi branch. The plaintiffs claim tha alongwith the sight draft requisite documents were also enclosed. The plaintiffs' bankers were to purchase the bill and credit the amount to plaintiffs' account. On 30th November,l993, plaintiffs bankers forwarded the said bill alongwith the documents to Punjab National Bank, Nehru Place Branch, New Delhi (advising bank) demanding payment of Rs. 8,96,477.00 plus Rs. 7,427/- being their charges against the letter of credit. The defendant No.2 refused to make the payment. The plaintiffs bankers informed on 5/01/1994 that they were unable to obtain the payment against the aforesaid bill as the defendant No. 2 refused to make the payment. The plaintiffs wrote the defendant No.2 for expediting the payment as well as informed defendant No.4 about the refusal of payment by the advising bank. The plaintiffs levelled allegations aginst defendant No 3, the Senior Manager of the Muzaffarnagar Branch of the advising bank for unilaterally amending the terms of the ILC. After some correspondence with the defendants, plaintiffs served a legal notice dated 16/01/1995 on the defendants, to which defendants 1 to 3 gave reply dated 10/02/1995. The plaintiffs filed the present suit on the basis of ILC against the defendants for Rs.13,19,879.00 claiming interest at the rate of 30% per annum form 24/08/1993 to 30th Apri1,1995 on Rs.9,03,924/-. The defendant No. 3 is impleaded as Manager of defendant No 2 who unilaterally amended the terms of the ILC on 13/10/1993 and refused to accept the bill on that basis Defendant No.4 is impleaded as a proper and not a necessary party. A decree is, however, claimed against all the defendants jointly and individually with interest at the rate of 30% per annum pendente lite and future. Photocopies of the documents relied upon have been filed by the plaintiff.

(2.) Defendants on receipt of summons for appearance under Order 37 CPC filed appearance. After that the summons for judgment were taken out and served on the defendants. In response thereto, defendants 1 to 3 and defendant No.4 filed two separate appllications for leave to defend the suit unconditionally being IA.No.8432/95 and IA,No.8939/95 respectively. By this order, I propose to dispose of these two applications.

(3.) Defendants 1 to 3 have claimed unconditional leave to defend the suit inter alia on the following grounds :- 1. The suit is not maintainable against defendant No.3, who is the Senior Manager and Principal Officer or the branch of the defendant bank and had acted in his official capacity, there being no privity of contract between defendant No.3 and the plaintiff. 2. The documents submitted by the plaintiff with the sight draft were not in conformity with the terms of the letter of credit and that the same was not accompanied by the transport documents like RR/MTR, which was required as per the amended letter of credit. Also the sight draft with the documents was not submitted within the stipulated period of 21 days as per the practice of UCPDC (Uniform Customs & Practices for Documentary Credits) within 21 days from the date of despatch i.e. 24/08/1993. Even otherwise, the sight draft with documents was presented after the date of expiry of the letter of credit and the goods were not delivered at Muzaffarnagar, which was a condition prescribed. 3. Leave to defend is also claimed on the ground that there was no privity of contract to pay interest between the parties and defendants 1 to 3 were not bound by the terms of the sale contract between the plaintiff and defendant No.4.