METALEX PIPES LIMITED Vs. IATC PRIVATE LIMITED

JUDGEMENT

(1.) Plaintiff has filed this suit for prohibitory and mandator injunction against the defendants, inter alia, on the allegations that it is engaged in the sale and purchase of ferrous and non-ferrou s metals and is also the manufacturer of steel pipes at B-23, Mayapuri Industrial Area, Phase 1, Rewari Line, New Delhi. Defendant No. 1 is engaged in import and export of ferrous and non-ferrous metals. Plaintiff entered into a Bond Transfer Sale Agreement dated 5.12.1995 with defendant No. 1 for purchase of Hot rolled coils (for short the goods) weighing 3078.320 MT stored under bond Nos. CW-18-48 to CW-18-59 all dated 25.9.1995 at Bhandup Bonded Warehouse, Bombay under the control of defendant 2 and these goods are covered under the bill of lading Nos. 1 to 12 all dated 10.8.1995. It is further alleged that in lieu of the sale consideration plaintiff paid Rs. 6,60,000.00 vide cheque No.7447855 dated 5.12.1995 Rs. 6,00,000.00 vide cheque No.468391 dated 26.12.1995, Rs. 9,00,000.00 vide cheque No. 468394 dated 27.12.1995 and Rs. 12,25,000.00 vide cheque No. 468397 ted 1.1.1996, totalling to Rs. 33,85,000.00 to defendant No. 1. In the local market price of the goods has increased marginally and due to that reason defendant No. 1 has now become dishonest and in collusion with defendant No. 4 it is trying to find fault with its ownership to the goods in question. Enquiries have revealed that defendant No. 1 is taking steps to sell the goods to other persons at Delhi and Bombay. It was prayed that by passing decrees of prohibitory and mandatory injunctions defendants, their agents, servants, successors and assignees may be restrained from disposing of and creating third party interest in the goods.

(2.) Alongwith the plaint, an application under Order 39, Rules 1 and 2 read with Section 151, CPC, being IA No. 3397/96 was also filed by the plaintiff and there on vide order dated 18.4.1996 deferdant No. 1 was restrained from transferring or alienating the goods to any third party while defendant No. 2 was also restrained from permitting the goods to be removed without the leave of the Court.

(3.) On 30.5.1996 defendant No. 4 has filed the application under Order 39, Rule 4, with Section 151, Civil Procedure Code (IA No. 5128/96) for vacating that order dated 18.4.1996. It is alleged in the application that pursuant to the negotiations between defendant Nos. 1 and 4 sale agreement dated 7.7.1995 was executed between the parties and as per that agreement hot rolled coils weighing 5655 MT were agreed to be sold at UST) 300.00 per MT FOB and the payment was to be made by defendant No. 4 to defendant No. 1 immediately on presentation of the documents through the bank and any delay in making payment beyond three working days after the presentation of the documents was to attract interest @ 10% p.a. calculated on 360 days year basis for the total period of delayed payment. 5717.160 MT of goods were loaded on board, the vessel (ILFOV) and the shipping company issued 22 bills of lading and goods reached Bombay Port Trust around 11.9.1995. It is further alleged that defendant No. 1 was not in a position to even pay for freight charges and vide fax message dated 10.8.1995 it requested defendant No. 4 to open letter of credit for the freight amount in favour of Asia Express Shipping Agency and accordingly defendant No. 4 took immediate steps to open the letter of credit for the payment of freight charges for and on behalf of defendant No. 1. It is stated that defendant No. 1 was also not in a position to pay the sale consideration and retire the documents and therefore, vide another fax message dated 13.10.1995 it requested defendant No. 4 that the goods be removed from the Bombay Port Trust to the Customs bonded Ware House and to deliver the first set of original 22 bills of lading to its clearing and forwarding agent - M/s. Dhawani Brothers to enable them to remove the goods to the Customs bonded Warehouse. Defendant No. 1 further committed that only upon presentation of second and third sets of original bills of lading goods be allowed to be removed from the Customs bonded Warehouse. It also undertook that the bankers of defendant 4 namely Bank of Nova Scotia, Singapore shall have a lien on the goods till the second and third sets of original bills of lading are retired by it after payment of the sale consideration. Accordingly defendant 4 made endorsement on the first set of 22 original bills of lading for a limited purpose to enable the clearing and forwarding agent of defendant I to shift the good from Bombay Port to Customs bonded Warehouse to avoid demurrage. It is alleged that vide fax message dated 13.10.1995defendant No. 1 assured to make payment of the goods as per the schedule noted in para 21 of the application. Karnataka Bank Ltd. at the behest of Bank of Nova Scotia, Singapore called upon defendant 1 to make payment equivalent to US $ 20.1006 and to retire the- documents. On failure and neglect of defendant No. 1 to retire the documents on payment of the said amount the Karnataka Bank Ltd. vide letter dated 14.2.1996 confirmed that defendant No. 1 has not made any payment and also returned the second and third sets of 22 original bills of lading to defendant No. 4-It is also alleged that Advocate of defendant No. 1 sent a threatening letter dated 26.12.1995 to Bank of Nova Scotia, Singapore not to release the goods to defendant No. 4 and defendant No. 4 was, therefore, compelled to file a suit for declaration etc. being No. 774/96 titled as Jindal Overseas Pvt. Ltd. v. ITACPvt. Ltd. & Ors., before the Bombay High Court. After considering the reply filed by defendant No. 1 dated 13.3.96 and hearing the Counsel for the parties Justice D.R. Dhanuka released the goods in favour of defendant No. 4 vide order dated 14.3.1996 subject to certain conditions noted in that order itself.