STATE BANK OF INDIA Vs. BANK OF IRELAND

JUDGEMENT

(1.) THIS Misc. Appeal under Section 104 read with Order XLIII Rule 1A of the Code of Civil Procedure ["Code" hereafter] has been filed against the order dated 13th March, 2009 passed by the Court of Thirteenth Additional District Judge,Indore in Civil Suit No.1-A/2009 rejecting the application under Order XXXIX Rule 1 & 2 of the Code filed by the appellant.

(2.) The appellant has filed Civil Suit No. 1 -A/2009 for declaration and permanent injunction pleading that the appellant - State Bank of India at the request of Respondent No.2 -Soni Ispat Ltd. had opened a letter of credit(LC) in favour of Respondent No.3- M/s European Metal Recycling Ltd.,United Kingdom bearing No.09632081M0000201 on05.09.2008 with the date of expiry being 05.11.2008. The Respondent No. 1 - Bank of Ireland is negotiating and confirming Bank. The tenor of the letter of credit was specified as 180 days from the date of Bill of lading. The Respondent No. 1 - Bank negotiated the documents (three bills) under the subject letter of credit on 24.10.2008, 28.10.2008 and 31.10.2008 respectively. The total amount of the bills negotiated under the LC was Rs.2,30,47,711.50 (USD460957.23 @ Rs.50 per USD). The Respondent No.l under the said LC forwarded three sets of documents to the appellant and the appellant had found various discrepancies in the documents as they were not found in strict conformity with the conditions of LC. A protracted correspondence took place between the appellant and the Respondent No. 1 in which allegedly the Respondent No. 1 had admitted its mistake and the appellant returned the original documents to the Respondent No. 1 on 29.12.2008. The appellant apprehended that the Respondent No: 1 will file a suit in England, therefore, it filed the present suit before the Court of Additional District Judge,Indore seeking permanent injunction to restrain the Respondents No. 1 and 3 from initiating and/or prosecuting proceeding before the Court in England or in any other Foreign Court with regard to the issue in question and also further relief of declaration that the documents negotiated under the LC in question were discrepant and did not satisfy the test of complying presentation.

(3.) The suit was opposed by the Respondent No. 1 by filing the written-statement and raising the plea that the Respondent No.l - Bank is involved in the case as "confirming bank" of an irrevocable LC which was issued by the appellant. The purpose of LC was to pay for goods shipped by the Respondent No.3(Seller) to Respondent No.2 (Buyer). The goods in question were shredded scrap iron & steel. Three shipments were made by the Respondent No.3 against which payment was sought from the Respondent No. 1 Bank as confirming bank. The Respondent No.1 received the documents required by LC from the Seller in relation to three shipments and found them to conform with the requirements of LC and made payment to the Seller in respect of three shipments. The Respondent No.l then sent the original documents to the appellant's Branch at Indore on 24th October, 2008; 28th October, 2008;and 31st October, 2008 respectively to seek reimbursement of the amounts paid to the Seller but the appellant rejected the documents claiming that they were discrepant and refused to reimburse the Respondent No. 1. The Respondent No. 1 pleaded that Courts in UK have adequate jurisdiction in respect of the subject matter since the appellant is carrying on business in UK and subject matter of the dispute falls under the jurisdiction of the UK Courts. Respondent No. 1 also pleaded that nothing in the written-statement should be taken as a submission to jurisdiction by Respondent No. 1 and it reserves the right to challenge the jurisdiction of the Indian Courts.