9911796707
TMI Blog2013 (5) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaintiff and the defendant no.2. The plaintiff shall also be entitled to pendente lite and future interest at the rate of 12% per annum. Decree be drawn accordingly. - C.S. (O.S.) No. 2185/2001 - - - Dated:- 29-4-2013 - M. L. Mehta,J. Mr. Anshu Mahajan, Adv Ms. Manjula Gandhi, Adv ORDER I.A. 12238/2006 (under Order XXXVII Rule 3(5) 7, CPC) 1. This order disposes the application of the defendant seeking leave to defend the suit. The instant suit was filed by the plaintiff under Order XXXVII of the Code of Civil Procedure (for short the Code‟ for recovery of Rs. 20, 92, 802. 40P/- (Twenty Lakhs Ninety Two Thousand Eight Hundred and Two Rupees and Forty Paise) along with pendent lite and future interest thereon at the rate of 18% per annum. 2. The plaintiff is a public limited company registered under the Companies Act 1946 and is engaged in the business of the manufacture and sale of various kinds of conveyor belts, Nylon Tyre Cord Fabric, Nylon Industrial Fabric etc. Defendant nos. 1 and 2 are Public Sector Banks constituted under the Banking Companies Acquisition and Transfer of Undertaking Act, 1980. Defendant no.3 is a private limited company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the prescribed period of seven days and thus the defendant no.2 was in violation of the UCP 500. 7. The plaintiff contends that because the defendant no.2 had failed to return the said documents within the prescribed period, it was bound to make the payment to the Plaintiff under the said L/C. Consequentially, the plaintiff through their advocate served a legal notice dated February 2, 2000 u/S 43(1) (a) of the Companies Act, 1956, calling on the defendants to pay a sum of of Rs. 20, 92, 802. 40P/- (Twenty Lakhs Ninety Two Thousand Eight Hundred and Two Rupees and Forty Paise) along with interest thereon at the rate of 18% per annum. The plaintiff submits that on receiving a frivolous reply to the said legal notice, they approached this Court by filing the present suit. 8. In its application for leave to defend, the defendant no.2 contends that at the request of defendant no.3, it had opened the said L/C in favour of the plaintiff. Under the terms of the said L/C, the defendant no.2 undertook to pay the price of the supplied goods to the plaintiff provided all the documents were presented in accordance with the terms of the said L/C. The defendant no.2 further contends that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usal or acceptance of the documents but had merely intimated the defendant no.1 of certain discrepancies and also stated that it would be sending the submitted documents to the defendant no.3 for acceptance. 13. The counsel further contended that the defendant no.2 was in violation of the UCP 500 Articles. Relying on the decisions of the Apex Court in the cases of Federal Bank Ltd vs. V.M Jog Engineering Ltd. Ors., AIR 2000 SC 3166 and UBS AG vs. State Bank of Patiala, AIR 2000 SC 2250 the Ld. Counsel argued that the rules under the UCP 500, provide for a number of Articles that apply to all documentary credit and are binding upon the parties thereto unless otherwise agreed and that this set of rules cast a duty on the Issuing Bank (defendant no.2 herein) to comply with the provisions of the same. 14. The Ld. Counsel for the plaintiff further submits that all the relevant documents and letters are on record and that all the issues were purely legal in nature and based on the letters of the defendant no.2 dated July 2, 1999 and August 19, 1999, there was no clear refusal or acceptance of the documents. 15. In its rejoinder, the defendant argued that no acceptance on its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of time i.e. seven working days. 18. On reading the letter dated July 2, 1999, it is seen that the defendant no.2 had stated that it would send the same to the defendant no.3 for acceptance. At this juncture, it would be appropriate to reproduce the relevant portions of the said letter. 3. We have presented the documents to the applicant for their acceptance. In the meantime, we hold the documents at your own risk and responsibility. Please also note that we disown any responsibility for the goods or its condition and we are unable to store, insure the goods. However, we will deliver the documents to the applicant if finally accepted prior to your instruction otherwise. It is clear to me that this communication was neither a refusal nor an acceptance on the part of the defendant no.2 regarding the documents. Thus, I find no merit in the contention of the defendant no.2 that no acceptance would mean an implied refusal. 19. There is a clear violation of provisions under the UCP 500, especially with regard to Article 13 (b) which clearly stipulates that the issuing bank should intimate the party (plaintiff herein) whether it has decided to take up or refuse the docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UCP) terms do not constitute a statutory code. As the title makes clear, they constitute a formulation of customs and practices, which the parties to a letter of credit can incorporate into their contracts by reference,. If it is found that the parties have explicitly agreed to such a term, then the search need go no further, since any contrary provision in UCP must yield to the parties' expressed intention. It will also be of advantage to refer to the decision in Bankers Trust Co. v. State Bank of India, (1991) 2 Lloyd's Rep 443 in which it was held that the Bankers Trust was barred from refusing or objecting documents in question because it had taken an unreasonable and inordinate time to examine and reject them (emphasis supplied) 22. In the present case, the defendant no.2 had clearly submitted to the rules as provided under UCP 500. Further as examined above, the defendant no.2 was in clear violation of Articles 13 and 14 of the UCP 500 with regard to intimating the plaintiff about discrepancies within the prescribed time of seven banking days. 23. In light of the above factual matrix and the legal provisions applicable to them, it is found that the defendant no.2 has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
