PEC LIMITED Vs. THAI MAPARN TRADING CO. LIMITED

JUDGEMENT

(1.) This is an application by Thai Maparn Trading Company Ltd. ('Thai Maparn') under Section 144 read with Section 151 Code of Civil Procedure, 1908 ('CPC') for a direction to the Petitioner PEC Limited ('PEC') to pay Thai Maparn an amount of US$827,897.80 for the loss occurred on account of fluctuation in foreign currency while remitting the amount payable to Thai Maparn under a Letter of Credit (L/C) pursuant to an order dated 27 th April 2010 passed by this Court and in terms of the subsequent order dated 9 th March 2011 passed by the Supreme Court in SLP (C) No. 27500 of 2010. Thai Maparn has also prayed for exemplary costs.

(2.) The background to the present application is that several contracts were entered into between the PEC and Thai Maparn during the period 2008-10 for sale of Thai Parboiled long grain rice whereunder Thai Maparn was the Seller and the PEC was the Buyer. It is stated that in relation to one such contract dated 8 th January 2008 for supply of 22,000 metric tonnes ('MTs') of Thai Parboiled long grain rice disputes arose between the parties which were referred to arbitration under the Grain and Feed Trade Association ('GAFTA') Rules for Arbitration, London. An Award dated 4 th March 2010 was passed by the GAFTA Arbitrators in favour of PEC. Thai Maparn was asked to pay PEC US $ 14,520,000 plus interest and costs.

(3.) During the pendency of the above arbitral proceedings a separate contract was entered into on 4 th January 2010 between the parties in respect of supply of 25,000 MT of Thai parboiled long grain rice. The payment under the contract was by an irrevocable and unrestricted L/C On 12 th January 2010 L/C was issued by PEC through the issuing bank, State Bank of India ('SBI'). Under the L/C the advising bank was Krung Thai Bank Public Co. Ltd., and the confirming bank was Intesa Sanpaolo SPA, Singapore. The beneficiary was Thai Maparn and payment was to be remitted at the Krung Thai Bank Public Co. Ltd., at Thailand. It is not in dispute that the L/C was covered by the Uniform Customs and Practice 600 Rules ('UCP 600'). It is further not in dispute that under Article 4 of UCP 600, the undertaking of the issuing bank on the day of the credit was not subject to any claims or defences and under Article 14 (b) UCP 600, the bank had a maximum of five banking days to determine if the presentation was in compliance with the requirements.