AUDIO DEVICES Vs. BANK OF INDIA

JUDGEMENT

(1.) This suit for recovery of Rs.27.00 lakh was filed by the plaintiff against the defendants under Order 37 CPC, However, it was treated as an ordinary suit and was tried as such.

(2.) The plaintiff firm operating at New Delhi, had supplied 354 UPS systems to M/s Goyal Computers of Lucknow in pursuant to an order dated 6 th July 2002. An agreement in this regard was executed between both the parties on 17 th August 2002 at New Delhi. As per one of the terms of this agreement, an irrevocable Letter of Credit (L.C.) was to be given by M/s Goyal Computers in favour of the plaintiff. Consequently, the said M/s Goyal Computers arranged a L.C. from the defendant bank on 02.12.2002 for a sum of Rs. 27.00 lakh and forwarded the same to the plaintiff vide letter of even date. As per Clause 6 of the L.C., payment was to be made by the defendant bank on receipt of invoice and copy of delivery challan duly signed by M/s Goyal Computers. The plaintiff supplied the goods in terms of the said contract to M/s Goyal Computers against invoices and challans, duly signed and acknowledged by the latter. The plaintiff, vide its letter dated 14.01.2003, asked its bankers M/s. ICICI bank Ltd., New Delhi to collect the L.C. amount of Rs. 27.00 lakh from the defendant bank. Along with the said letter, the plaintiff submitted original L.C., six challans and six invoices duly signed by M/s Goyal Computers, two Bank Guarantees (B.G.) of Rs.50,000/- each in favour of M/s Goyal Computers along with receipt acknowledging advance of Rs.6,77,160/-. The ICICI Bank forwarded, vide its letter of 21.01.2003, the L.C. and all these documents to the defendant for payment. The defendant bank vide its letter dated 28.01.2003 asked the ICICI Bank to remove certain deficiencies so that payment could be released. The ICICI Bank, vide its letter dated 01.02.2003, clarified the alleged discrepancies and requested for the release of the payment. The defendant bank having failed to respond in any manner, the ICICI Bank vide its letter of 27.03.2003, requested it to inform the fate of the said Letter of Credit submitted on 21 st January 2003. Since no response was received from the defendant bank, the plaintiff got issued legal notice dated 27.05.2003 calling upon the defendant bank to make payment of Rs. 27.00 lakh against the L.C. The defendant bank, vide its response dated 19.06.2003, again reiterated the documents being held at their end due to the said discrepancies. It was also stated that they are engaged in correspondence with the collecting banker (ICICI Bank) and the final decision will be taken in this regard soon. The ICICI Bank, vide its letter dated 27 th June 2003, again informed the defendant bank about having already clarified their queries by their letter dated 01.02.2003. The defendant bank was again requested to make the payment immediately. Subsequently, the defendant bank, vide its letter dated 10.07.2003, returned the documents to ICICI Bank stating that the drawee did not accept the bills for payment. The amount of the L.C. remaining unpaid, the plaintiff filed the instant suit seeking recovery of the said amount along with interest @ 14% per annum from the due date of payment till realization.

(3.) So far as the transactions between the plaintiff and M/s Goyal Computers, including supply of goods in pursuance of order, execution of agreement between the two, and issue of L.C. by the bank at the instance of M/s Goyal Computers, are concerned, the same are not in dispute. The correspondence that ensued between the plaintiff and the defendant bank, as noted above, is also not in dispute. The defendant bank contested the suit on various other grounds. It was its first plea that Delhi Courts had no territorial jurisdiction. It was also a preliminary objection that the suit was not maintainable for want of non-joinder of M/s Goyal Computers, as a necessary party. Further, it was also its Preliminary Objection that there is no privity of contract between the plaintiff and the defendant bank. On merits, the suit was contested, by the defendant, on the ground that the documents submitted by the plaintiff's banker-ICICI were not as per the terms of the L.C. It was stated that the invoices and the challans were not signed by any partner or authorized representative of M/s Goyal Computers; that the documents did not contain acknowledgement receipt of Rs.6,77,160/-; that M/s Goyal Computers had requested them to hold the documents as there was some dispute regarding quality of the goods supplied; that the original L.C. was not sent by the plaintiff and lastly that, the L.C. was, in fact, never invoked by the plaintiff. On these averments of the parties, the case was set for trial on the followings issues: