FAIR DEAL AGENCIES Vs. INNER MONGOLIA MUWANG ANIMAL

JUDGEMENT

(1.) BY the order dated 23. 07. 2007, the following issues were framed:-

(2.) SINCE issue No. 2 pertains to the jurisdiction of this court to try and determine the present suit, it would be appropriate to take up consideration of that issue first. The objection as to jurisdiction had been taken by the defendant No. 3. The entire case as set out in the plaint concerns two Letters of Credit. The plaintiff had filed this suit seeking an injunction against the defendant No. 3 (the issuing bank of the two letters of credit) restraining it from making payments. The letters of credit were issued at the request of the plaintiff because the plaintiff had ordered certain goods from the defendant No. 1 through the defendant No. 2. It is the case of the plaintiff that the documents submitted by the plaintiff to its bankers (Bank of China)[the negotiating bank] were contrary to the terms of the letters of credit. It is alleged by the plaintiff that this constituted not only breach of terms of the letters of credit, but the breaches were grave enough to be construed as fraud. It was also contended on behalf of the plaintiff that since there is no established legal system in China, if the injunction is not granted, then the plaintiff would be left without any recourse insofar as payments under the letters of credit are concerned. It was also contended on behalf of the plaintiff that the plaintiff had ordered non-alloy steel, whereas what had been shipped to the plaintiff by the defendant No. 1 was alloy steel. This, however, has been controverted by the learned counsel appearing on behalf of the defendant No. 1 that the plaint does not carry any such statement. It has also been contended that the goods were supposed to have been on CIF basis, but the plaintiff was required to pay freight at ICD, Tughlakabad and this, according to the plaintiff, would clearly indicate that the condition of the letters of credit that the goods were to be shipped on CIF basis had been violated. It is on the basis of these alleged breaches and discrepancies that the present suit had been filed seeking an injunction against the defendant no. 3 (issuing bank) from releasing payments in respect of the documents submitted to it through the negotiating bank (Bank of China ). This is the background of the case.

(3.) IT was contended by the learned counsel for the defendant No. 3 that this court does not have jurisdiction to entertain the present suit. He drew my attention to the memo of parties which clearly indicated that both the plaintiffs have their businesses at Jallandhar, Punjab. The defendant No. 1 is located in China and the defendant No. 3 (Punjab National Bank,international Banking Branch)is also located at Civil Lines, Jallandhar, punjab. The learned counsel drew my attention to paragraph 1 of the plaint which states that the plaintiff No. 1 is a trading division of the plaintiff No. 2 which has its registered office at Nehru Garden Road, Jallandhar, Punjab. It is an admitted position between the parties that the plaintiffs approached the defendant No. 3 at Jallandhar for the purposes of opening the letters of credit in question. Both the letters of credit were opened by the defendant no. 3 at its Jallandhar Branch. Paragraph 28 of the plaint was also brought to my notice. The contents thereof relate to the averments with regard to cause of action. It is alleged therein that the cause of action arose in favour of the plaintiff and against the defendant in the first week of July, 2005 when the agent of the defendant No. 1 contacted the plaintiff with regard to sourcing of the goods in question from China. It is further alleged that the cause of action also arose when the plaintiff opened the letters of credit in favour of the defendant No. 1 on 22. 08. 2005 and that it again arose in favour of the plaintiff and against the defendant No. 1 when the plaintiff was required to pay demurrage charges for release of the goods in question in delhi as well as in Mumbai on or about 25. 11. 2005 on the alleged fraud of the defendant No. 1. The plaintiff also alleged that the cause of action was a continuing and subsisting one since the defendant No. 1 had failed to honour its commitment under the commercial bargain as stipulated in the letters of credit opened in favour of the defendant No. 1. The only allegation with regard to cause of action in respect of defendant No. 3 was as under:-