1994 (7) TMI 87 - SC - Customs

Whether the appellant should at all be permitted to enforce indemnity given by the intending exporters? Held that - The question as to the applicability of the indemnity clause in the contract between the Indian suppliers and the appellant to claims by the foreign buyers against the appellant was not specifically raised before the high Court and the High Court has not dealt with the said question. We, therefore, do not propose to go into the same and we leave it to the parties to raise it in appropriate proceedings in the event of such a contingency arising on account of the appellant being found liable for damages to the foreign buyers and the appellant claiming reimbursement from the Indian suppliers for the loss sustained by it on account of such claim for damages on the basis of the indemnity clause contained in the contract between the Indian suppliers and the appellant.

Summary

Issues:
1. Validity of amendments in the Export (Control) Order, 1977 imposing a ban on export of silver.
2. Interpretation of contracts between suppliers, appellant, and foreign buyers post-ban.
3. Applicability of indemnity clause in contracts to claims by foreign buyers against the appellant.

Detailed Analysis:
1. The Supreme Court addressed the appeals against the High Court's judgment on the amendments in the Export (Control) Order, 1977 banning silver export. The ban was imposed by the Government of India in 1979, affecting contracts and trade relationships.
2. The Court noted the complex contractual relationships involved in the export scheme, where the appellant acted as an intermediary between local suppliers, foreign buyers, and itself. The High Court observed that the ban rendered the contracts impossible to perform, leading to frustration under Section 56 of the Contract Act.
3. The appellant challenged the High Court's observations, seeking protection against potential claims by foreign buyers post-ban. The appellant cited an indemnity clause in the Business Associateship Contract, holding the suppliers liable for any related claims or losses. The Court examined the indemnity clause's scope and potential application to claims by foreign buyers against the appellant.
4. Referring to a previous case involving a similar ban on silver export, the Court highlighted the importance of equity in contractual matters. It noted that while the indemnity clause may remain valid, its enforcement could be subject to the specific circumstances and equities of each case.
5. The Court clarified that the issue of enforcing the indemnity clause against claims by foreign buyers was not directly raised before the High Court. It left the question open for future consideration, emphasizing that parties could raise it in appropriate proceedings if necessary.
6. Ultimately, the Court disposed of the appeals without costs, leaving the applicability of the indemnity clause to potential claims by foreign buyers open for future determination based on specific circumstances and equities of the case.