BANQUE NATIONAL DE PARIS Vs. GLOBUS AGRONICS LIMITED

JUDGEMENT

(1.) This appeal is directed against the order of the learned Single Judge passed on 6th May, 1999 dismissing the application moved by the appellant (defendant No. 2 in the suit) seeking rejection of the plaint and return of the same-for presentation to the appropriate Court on the ground that this court has no territorial jurisdiction to try and determine the suit.

(2.) The facts given rise to this appeal are that the plaintiff (respondent No. 1 herein) filed a suit under Order 37 of the Code of Civil Procedure (hereinafter called the 'Code') for recovery of Rs. 3,5(),84,500.00 representing the letter of credit of US $ 7,66,622.60 alongwith interest thereon, on the allegation that vide agreement dated 29.9.97 it had contracted to sell "Fermentation Ethariol" to M/s. Kolmar Petrochemicals A.G, Switzerland (hereinafter referred to as the buyer). The buyer was to provide Documentary Irrevocable Letter of Credit payable at sight at the counters of an Indian bank against presentation of documents for payment of the price of goods under the said contract. On request of the buyer and in terms of the said agreement appellant (defendant No. 2) as a banker of the buyer issued a confirmed Letter of Credit in favor of the respondent No. 1 (plaintiff) envisaging payment through respondent No. 2 (defendant No. 1) bank at its counter in Delhi of the aforesaid value. The terms of the irrevocable Letter of Credit were staled to have been amendment and its value was increased by issue of confirmation letters by both the defendants. Respondent No. 2 (defendant No. 1) 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 charges from the plaintiff in respect of the same.

(3.) The agreed quantity of Fermentation Ethnnol were inspected in accordance with the contract by the notified agency, and was exported to the buyer and the documents were drawn in terms of the Letter of Credit and were tendered for payment at the counters of respondent No.2. The documents were found to be in accordance with the Letter of Credit. However, no payment was credited to the account of respondent No. I during a reasonable time; on 26.12.1996 a notice was served upon the defendants, and in reply it was stated that the defendants by virtue of being the opening bank and the confirming bank assumed independent obligations to pay to the plaintiff the amount covered by the said Irrevocable Letter of Credit. As the amount was not paid, therefore the said suit to recover the amount was instituted. On summons being issued the appellant (defendant No. 2) besides filing an application for leave to defend also filed an application under Order 7 Rules 10 and 11 read with Section 151 of the Code praying for rejection of the plaint on the ground of lack of territorial jurisdiction, inter alia, pleading therein that the transaction between the parties was governed by the Uniform Customs and Practice for Documentary Credits, 1993 (for short UCP 500). The learned Single Judge on the basis of the above pleadings and the materials placed on record by the parties was pleased to dismiss the application of the appellant.