THE HIMACHAL PRADESH STATE SMALL INDUSTRIES AND EXPORT CORPORATION LTD. Vs. EXPORT CREDIT AND GUARANTEE CORPORATION LTD.

JUDGEMENT

(1.) Plaintiff, the Himachal Pradesh Small Industries and Export Corporation is a Public Limited Company registered under the Indian Companies Act with its registered office at Kishore Bhawan, The Mall Shimla. It has claimed a decree for Rs. 7,51,417,94p with future interest and cost against the Defendant.

(2.) It is pleaded in the plaint that in the year 1977, M/s Bhatia Brothers of Industrial Area, Ludhiana approached the Plaintiff Corporation for providing to the said firm finances for exporting bicycle parts to Nigeria since the said firm had Export orders to the tune of Rs. 40 lakhs for exporting bicycle parts to different importers in Nigeria. The Plaintiff sought the approval of the Defendant regarding credit limit to be made available in favour of the Nigerian Importers before providing the requisite finances to M/s Bhatia Brothers. The Plaintiff shipped only that quantity of bicycle parts for which the approval had been sanctioned by the Defendant. The Plaintiff also took coverage under the Comprehensive Risks Policy, aggregating in the sum of Rs. 40 lakhs from the Defendant through Policy No. DEL/POL/42171/77 for the exports of bicycle parts to Nigeria. The Plaintiff paid the necessary premium of the Comprehensive Risks Policy prescribed by the Defendant from time to time.

(3.) The shipments of goods exported were made initially by the Plaintiff on the basis of cash against documents to be negotiated through its Bankers namely State Bank of India, Shimla. However, later on when some of the Importers desired the goods to be delivered to them on cash against acceptance, the Plaintiff sought the approval and acceptance of the Defendant with this regard and as such with its prior consent and concurrence, the payment terms of the goods shipped to Nigeria by the Plaintiff were converted from cash against documents to cash against acceptance basis, with the sole purpose that the payments of the goods exported to Nigeria would come forth from the Nigerian Importers who had placed orders for the imports of goods. However, the Nigerian Importers took delivery of the goods, but did not eventually pay the bills. The remaining goods for which terms of payments were not changed, the delivery thereof was not taken by the Nigerian Importers and consequently the Nigerian Port Authority auctioned the goods according to law applicable in Nigeria. In terms of Policy the Defendant was liable to pay to the Plaintiff to the extent of 90% of the loss suffered by it. The Nigerian Importers failed to make the payment to the Plaintiff, the Plaintiff duly informed the Defendant about this fact. The Managing Director of the Plaintiff Shri Dev Swaroop accompanied by Shri M.L. Aggarwal, the then Commercial Manager met Shri Sathe the then Chairman -cum -Managing Director of the Defendant and the entire matter was discussed in detail wherein the officers of the Plaintiff insisted upon the then Chairman -cum -Managing Director of the Defendant to pay the claims of the Plaintiff which stood fully covered under the Policy. After thorough deliberations and discussions, Shri Sathe informed the Managing Director of the Plaintiff that the claim in question could be paid provided the Plaintiff would have made available to the Defendant the landing certificate of the goods exported by the Plaintiff to Nigeria as also to have got bills noted and protested in accordance with law. It is alleged by the Plaintiff that it was specifically agreed by Shri Sathe during the course of the deliberations and discussions that in the event of these documents being made available to the Defendant, the claims of the Plaintiff as per terms and conditions of the Policy would be paid and the requirement of initiating legal action against the Nigerian Importers in Nigeria would be waived off. The matter was placed before the Board of Directors of the Plaintiff and the Board of Directors approved in its meeting that its Managing Director and General Manager should go to Nigeria and get the necessary documents as desired by the Defendant so that the claims of the Plaintiff were paid by the Defendant. The Plaintiff had not initiated legal proceedings for the recovery of its outstanding dues from the Nigerian Importers in Nigeria on the express assurance given by Shri Sathe the then Managing Director of the Defendant that the claims of the Plaintiff according to the Policy would be paid by the Defendant and requirement of initiating legal action against the Nigerian Importers in Nigeria would be waived off.