FALCON TRADERS PRIVATE LIMITED Vs. ANDREW MARC INC

JUDGEMENT

(1.) M/s Falcon Traders Pvt. Ltd. filed a summary suit for recovery against the defendants under the provisions of Order 37 of the Code of Civil Procedure (in short 'CPC') The plaintiff has based his claim primarily on the ground that one Mr.Ashim Raizada approached the plaintiff with a proposal to export the leather garments to U.S.A. The said Ashim Raizada was the Director of defendant No.3. Defendant No.3 was the sole agent of defendant No.1 in India. Defendant No.1 being a trader in the leather goods in U.S.A. was interested to export the leather goods. Plaintiff agreed to supply the goods against irrevocable letter of credit favouring the plaintiff for an amount equivalent to the amount of the goods. Finally, order for 500 jackets was placed by defendant No.1 and an irrevocable letter of credit dated 25th January, 1990 for US$ 44,000.00 representing the value of the goods was issued by defendant No.7 i.e. Chase Manhattan Bank through their corresponding bank, State Bank of India, Parliament Street Branch, New Delhi, was sent to the plaintiff. Pursuance to the said order, the plaintiff despatched air consignment of 280 jackets valued at US$ 24,900.00 on 15th May, 1990. Another consignment of 250 jackets valued at US$ 19,580.00 was also despatched. These consignments were duly inspected by defendants 3 and 4 on behalf of defendant No.1. The goods supplied by the plaintiff confirmed to the specification and were found to the satisfaction and standard laid down by defendant No.1. Over a period of 5 to 6 months, plaintiff received as many as nine orders from defendant No.1. Each order was supported by corresponding enhancement in the amount of letter of credit issued by defendant No.7 i.e. Chase Manhattan Bank. The 8th order was placed vide order No.208 dated 20th August,1990 for supply of 975 jackets amounting to US$ 97,500.00 and the 9th order was placed on 21st August, 1990 amounting to US$ 23,750.00.

(2.) The goods covered by order No.208 being 8th in series were despatched in four consignments. Documents of the same were despatched to defendant No.7 i.e. Chase Manhattan Bank through the plaintiff's bankers M/s Andhra Bank, R.K.Puram, New Delhi. But the value of the same has not been paid by defendant No.7 nor by defendants 1,3 and 4. Rather defendant No.7 has taken the plea that as per instructions from defendant No.1, they delivered the documents to their Document Collection Department. This was protested by the plaintiff and ultimately documents were returned by the defendant to the plaintiff on the request of defendant No.1. This action of the bank has been challenged by the plaintiff. Since the defendants have failed to make the payment, hence this suit which is based on the agreement entered into between the parties.

(3.) Summons in the prescribed form i.e. Form 4 Schedule B of Order 37 C.P.C. were issued to the defendants. Summons were served on defendants 3, 4, 7 to 9. They entered appearance. Summons for judgment were issued to these served defendants. In response, present application under Order 37 Rule 3 (5) C.P.C. has been filed by defendant No.7 seeking leave to defend this suit unconditionally. Leave has been sought primarily on the ground that the suit being based on irrevocable letter of credit bearing No.D3351 77 dated 25th January, 1990 and since the plaintiff failed to comply with the conditions stipulated therein, hence a triable issue arises. The said letter of credit was extended from time to time and lastly upto 15th October,1990. The documents were sent on 25th October, 1990 i.e. much after the date of shipment. Thus, defendant No.7 on account of this discrepency was not liable to make the payment. The date of shipment was the vital term of letter of credit. The relevant clause of the letter of credit reads as follows: