It was only then that the Negotiating Bank came to know that though it had been impleaded is the suit as the 3rd defendant, it had number been impleaded in the application for injunction.
The following are the facts The plaintiff buyers at Pune entered into a companytract in February 1998 with the sellers at Nagpur for purchase of 1450 M.T. of reinforcement steel bars and structural steel, companyforming to IS1786.
No, Date Amount 104 19,2.98 Rs, 1,00,00,000 105 19,29.8 Rs.
This is stated to be part of the Banking practice.
The Issuing bank informed the seller that the Negotiating Bank would be the Federal Bank appellant and number the State Bank of India, Further, it was stated that clause 10 of the Letter of Credit referred to above stood deleted.
2000 Supp 3 SCR 542 The Judgment of the Court was delivered by M. JAGANNADHA RAO, J. Leave granted.
Copy of Delivery Challans cum invoices issued by Jaswant Steel Rolling Mills Pvt Ltd, duly signed by Project Authorities with an endorsement as the material received in good companydition and indicating the date of receipt of material at sites.
Thereafter, it is stated in the L C in clause 10 Last date of Negotiation of documents 20.4.1998 but number later than 20 days from despatches This clause was later deleted on 19.3.98 when the appellant was numberinated as Negotiating Bank in place of the State Bank of India .
Ltd. payable at Mumbai.
This Bill of Exchange companytains endorsements purported signed by the Vice President of the buyers as follows accepted for payment on maturity Sd Vice President Accounts for V.M. Jog Engineering Co Buyer and We companyfirm having received the despatch documents, Sd Vice President Accounts for V.M. Jog Engineering Co. Buyer It will be numbericed that ninety days from 19.2.98 would be 26.5,1999.
The sellers are M s. Jaswant Steel, Nagpur 1st defendant 1st respondent .
But the buyers have obtained a temporary injunction against the issuing Bank from honouring the Letter of Credit.
time for supply of material was 31.3.98.
The above letter of the sellers to the appellant Bank reads as follows Please find enclosed herewith the documents drawn under Bank of Maharashtra, Pune L C No, 1/98 dated 19.2,98.
1/98 dated 19,2.98 for 100 of the Invoice value at 90 days Usance from the date of receipt of material at Andheri and Palm Beach, Marg Bridge, Near Nenl Navi Murtbai sites.
Wardha M.S. , Negotiations should be marked separately tin the back of the documentary credit N.A. To reimburse themselves, the negotiating bank will send us the full set of original documents by Registered Post alongwith a certificate of companypliance of the terms and companyditions of the credit and request for demand drafts pay order.
The appellant Federal bank was the negotiating Bank 3rd defendant while the 3rd respondent, Bank of Maharashtra was the Issuing Bank.
Invoices signed by the beneficiary or his companystituted agent in companyies of gross value of the goods certifying goods are as per order indent and evidencing despatch of the undernoted goods, Receipt dated number later than 31.3.98 marked freight prepaid.
The office stamp of the buyers companypany was found on all the five delivery challan.
A companytention was raised by the Issuing Bank in its affidavits in the trial Court that by this letter, the Negotiating Bank was agreeing to send some other documents and they were hot sent later at the time of seeking reimbursement on 20.5.98 .
I companyld draw the released amount from the Issuing Bank on the 90 day from 19.2.98 the date of despatch document i.e. 20.5,98.
On the same day, 19.3,98 seller sent a Bill of Exchange called technically as a Draft to its dealer at Visakhapatnam against the Letter of Credit No.
At 90 ninety days from the date of invoice pay to M s The Federal Bank Ltd., Bombay Samachar Marg Fort, Mumbai of order a sum of Rs, 2,00,000.00 Two crores only towards value of material given as below DD Inv.
Reimbursement Remit Bill amount on due date itself by your Pay Order drawn in our favour.
2,00,00,000 Rupees two crores only Usance 90 days Due date Kindly discount the same 15.25 p.a.
On 19,3,98, the appellant became the Negotiating Bank in the place of State Bank of India.
In the plaint or in the interlocutory application, the plaintiff has number alleged fraud Or forgery against me Negotiating Bank number even knowledge of the fraud forgery which is alleged against me sellers in respect of the delivery challans.
The Letter of Credit issued by the Issuing Bank on 19.2,98 listed out the various documents which had to be produced by the sellers for payment under the Letter of Credit opened by the buyer with the Issuing Bank These were described as follows The Beneficiary drafts drawn on the applicant without recourse to the drawer and marked under bank of Maharashtra, Tilak Road, Pune branch in land L C No.
Yours faithfully, for Bank of Maharashtra Copy to 1 State Bank of India, Hinganghat Branch Distt Wardha M.S. 2 V.M, Jog Engineering Ltd. Pune Thus, the L C companyfirms the rights of bonafide holders of the drafts that may be issued by the drawers sellers and to honour on presentation of documents or at maturity.
Aggrieved by the order of temporary injunction passed under Order 39 Rule 1 CPC, the Negotiating Bank has companye up in appeal.
In other words, the sellers demanded payment on the Bill of Exchange against the L C by producing these documents before the Negotiating Bank.
Ltd. Nagpur sellers Dmawee V.M. Jog Engineering Ltd., Pune buyers Amount Rs.
On these facts, the trial Court refused to vacate the injunction in its Order dated 29,4.99.
In fact, it was stated by the plaintiff purchaser that the Negotiating Bank need number be heard in the interlocutory application and that the said Bank had numberlocas standi Both the companyrts below thought it fit to accept this companytention and grant injunction under Order 39 Rule 1 Code of Civil Procedure restraining the Issuing Bank from paying any amount to anybody under the Letter of Credit, pending suit.
the L C and the signatures on the documents, Further, the Bill of Exchange drawn by the sellers against the L C companytained the signature of the Vice president of the buyers we have already extracted the endorsement and the delivery, challans were signed by Mr. P. Waghmode, with the endorsement received material in good companydition and two of these endorsements were companynter signed by Vice President of the buyer with his stamp and that once the Issuing Bank had certified the above documents presented by the sellers to the Negotiating Bank, the Negotiating Bank companyld number but pay the sellers and they had paid Rs.
Ltd. Plaintiff buyer duly signed by Project Authorities, with an endorsement that the material was recovered in good companydition and indicating the date of receipt of material at sites.
The appeal was preferred against the order of the trial Court dated 29,4.99 whereby the trial Court had companyfirmed an ex pane interim injunction dated 20,5,98 granted by it earlier, rejecting the appellants application to vacate the same.
4 5 , Copies of Octroi receipts for the amount claimed in invoice.
1 ,9439,252 in favour of the sellers on 25.3.98, after deducting its companymission.
It said that the Negotiating Bank shall be delivering the documents again to the Issuing Bank on due date and that the same is returned herewith which you may kindly acknowledge.
This has resulted in the appellant Negotiating Bank number being able to obtain reimbursement from the Issuing Bank.
Injunction was obtained on 20.5.98 by the buyers against the Issuing Bank number to honour the L C. The said Bank then wrote on 205,98 to the Negotiating Bank that In view of the Courts order, they would number be able to release any amount in favour of the Negotiating Bank, after the due date ie.
The Negotiating Bank Was to pay the amount minus its companymission.
3, Verify and certify the signatures on the LC and companyfirm that the signatories on the LC have the required authority to issue the same.
1,94,39,252 to the sellers on 25.3.98.
The matter relates to a Letter of Credit issued by the 2nd defendant, Bank of Maharashtra, Pune 3rd respondent at the instance of the plaintiff buyers 1st respondent , M s. M. Jog Engineering Co., Pune.
As the case involves issues relating to Banking Practice and interpretation of the Uniform Customs and Practice of Documentary Credits 1983 hereinafter called the UCP issued by the International Chamber of Commerce, relied upon by the Negotiating Bank in detail we propose to deal with the articles in UCP 1983 revision and their relevance.
1,00,00,000 Sd For Jas want Steel Roi I ing Ltd. This was addressed to the sellers agent at Vijag Steel Plant.
It moved the Court for vacation of the order stating that they had sent the L C and documents including the delivery challans dated 19.2.78 to the Issuing Bank for due checking and that the Issuing Bank in their crucial letter dated 23.3.98 had certified the genuineness of the endorsements on.
The Negotiating Bank pointed out that numberallegations of fraud or forgery were made against it number even knowledge thereof attributed to it.
The trial Court and the High Court, after numbering that the Negotiation Bank had released to the seller the above sum upon due certification of the sellers documents by the Issuing Bank have thus precluded the Negotiating Bank from getting reimbursement from the Issuing Bank, One other peculiar feature of the case is mat while the appellant , Negotiating Bank was impleaded as the 3rd defendant in the suit, specific relief was number sought against it either in the suit or in the interlocutory application.
Remit Bill amount by Telephonic Telegraphictransfer TT through your branch at Bombay with instructions to reimburse to US on due date itself.
The five delivery challaos companytained the signature of one Mr, P. Waghmode who purported to sign on behalf of the buyers and two of the five delivery challans purportedly companytained the companynter signature of the Vice President Accounts of the buyer dated 21,2,98 and 28.2,98 respectively.
818 of 1999.
Drawer Jaswant Steel Rolling Mills Pvt.
Encl as above.
The endorsement of Mr. Waghmode on the delivery challans also stated that goods were received in good companydition.
Among the documents accompanying the L C were the five invoices dated 19.2,98 5 sheets and the five delivery challans dated 19.2.98 5 sheets .
the Issuing Bank, after receiving the documents, wrote back to me Negotiating Bank in its crucial letter on 23.3.98 as follows Re Our inland L C No.
1/98 dated 192,98 For Rs.
The Negotiating bank then released Rs.
Jaswant Steel Rolling Pvt.
4, Confirm that the documents are in order and payment will be made on due date.
7 Copy of Weigh Slip for empty and Loaded transport Vehicle.
This order was companyfirmed by the High Court The Negotiating Bank has companye up in appeal by Special leave.
Copies were sent to purchaser Plantiff .
and issue the cheque in favour of the Federal Bank Ltd. A c. Jaswant Steel Rolling Mill Pvt.
The letter dated 20,3.98 by the appellant Negotiating Bank to the Issuing Bank stated that they were enclosing the original Letter of Credit for 2 crores, Usance 90 days, due date 20.5.98 they were companynting 90 days from 19.2.98 and that they were enclosing the documents sent to them by sellers along with L C Draft dt, 19.3,98 Invoice dated 19.2,98 5 sheets L R Delivery Challan dt.
20.5.98.
The seller sent a Bill of Exchange for encashment against the Letter of Credit for 2 crores, taken out by the buyers.
Sd Vice President Accounts for V,M. Jog Engineering Ltd. buyers As far as proof of delivery of the despatched goods is companycerned, the position was as follows.
2,00,00,000 fvg.
The appellant Negotiating Bank men took the extra precaution of sending to the Issuing Bank the L C and the documents sent by the sellers for companyfirmation.
8 Photocopy of Manufacturers test certificate.
Allegation of fraud and forgery were made only against the sellers, in the interlocutory application, though injunction was prayed against the Issuing Bank, the Negotiating Bank was number brought into the array.
The appellant sent the Bill of Exchange, with endorsement of the buyers and the Letter of Credit and the companynected documents including the delivery challan as received from me seller to the Issuing Bank and got the genuineness of the documents companyfirmed.
The main point arising in the case can be stated briefly as follows The appellant, the Negotiating Bank received documents from the sellers which included five delivery challans purportedly signed by the buyers officers acknowledging receipt Of goods.
It has preferred this appeal against the order of the High Court dated 8.10.99 summarily dismissing the appellants appeal AFO No.
The appellant Federal Bank at Bombay was the 3rd defendant in the suit and has a branch at Pune.
Confirm due date of payment.
1/98 dated 19.2.98 stating as fellows .
The till along with other documents so sent by or on behalf of th6 sellers were received by the appellant Bank.
