GLOBUS AGRONICS LIMITED Vs. BANQUE NATIONAL DE PARIS

JUDGEMENT

(1.) The plaintiff filed the suit under Order 37 of the Code of Civil Procedure for recovery of Rs.3,50,84,500.00 on the allegations that it had contracted to sell "Fermentation Ethanol" made from Molasses to an overseas party named M/s Kolmar Petrochemicals AG, Switzerland. Under the agreement entered into between them on 29.9.1997 and the buyer was to provide a Documentary Irrevocable Letter of Credit payable at sight at the counters of an Indian bank against presentation of documents for payment of price of goods under the said contract. On the request of the buyer and in terms of the agreement between the parties defendant no.2 as banker of the buyer issued a confirmed Letter of Credit in favour of the plaintiff envisaging payment through defendant no.1 bank at its counter in Delhi. The value of the Letter of Credit was US$ 7,40,000.00 with unit sale price as US$ 370.00 per MT. The terms of irrevocable Letter of Credit were stated to have been amended by issue of confirmation letters by both the defendants. The value of the Letter of Credit was increased to US$7,55,000.00 (plus and/or minus 5%) and unit price increased from US$ 370 per MT to US$ 377.50 per MT. Defendant no.l is alleged to have confirmed its duties and obligations to the plaintiff in payment of amount under the Letter of Credit upon presentation of documents and recovered from the plaintiff the charges in relation to the confirmation of the Letter of Credit established in favour of the plaintiff by debiting plaintiffs current account with defendant no.l. The agreed quantity of Fermentation Ethanol duly inspected in accordance with the contract by the notified agency were exported to the buyer and the documents drawn in terms of the Letter of Credit were tendered for payment at the counters of defendant no.l. The documents were found by defendant no.l to be in accordance with the Letter of Credit and the plaintiff was assured that its account will be credited with the amount covered by the Letter of Credit. No payment was, however, credited to the account of defendant no.l bank either within a reasonable tims or during the validity of the irrevocable Letter of Credit or at all. On being asked as to why the payment was not being made, some evasive pleas were taken by defendant no.l for non-payment of the amount to the plaintiff. A notice dated 26.12.1996 was served upon the defendants, reply to which was received by the plaintiff. It was stated that the defendants by virtue of being the opening bank and the confirming bank assumed distinct and independent obligations to pay to the plaintiff the amount in the suit which is the value of the irrevocable Letter of Credit. As the amount was not paid inspite of the notice having been served upon the defendants, the plaintiff filed this suit under Order 37 of the Code of Civil Procedure staling the same to be covered by classes of suits defined in the said Order.

(2.) On the summons being served upon the defendants, defendant no.2 besides filing an application for leave to defend also filed an application under Order 7 Rules 10 and II read with Section 151 Civil Procedure Code for rejecting the plaint and/or returning the same for presentation to the proper court on the ground that this Court has no territorial jurisdiction to try and determine the present suit. It is this application of defendant no.2 which is being disposed of by this order.

(3.) On these averments it is stated by defendant no.2 that this Court has no territorial jurisdiction to decide this suit.