34,70,312 and Rs.
for BANK OF INDIA sd.
To M s Godrej Soaps Ltd., Eastern Express Highway, Vikhroli, Bombay 400 079.
34.17 lacs and 8 sets of Rs.
But one thing is clear that R.V. Shekar, Assistant Financial Controller, Godrej Soaps was acting on behalf of the plaintiffs, and the word we meant Messrs. Godrej Soaps Limited.
You may, if you so desire protect the merchandise including keeping insurance companyernote valid.
On August 2, 1978 the appellant served a letter of demand on the Bank of India, for refund of Rs.
14,61,184.
1/78 At the request of Bihar State Food Civil Supplies Corpn.
4540 to 4547 of the aggregate value of Rs.
It is these two lots of documents which are the subject matter of the suit.
36,52,960, the second lot in 27 sets of the total value of Rs.
It was also added Please also numbere that this reserve will remain in force until released by us in writing.
As regards the second lot of 27 documents, the payment of Rs.
P. Accountant sd.
There were twenty sets of documents in the first lot, the total value of which was Rs.
The learned Single Judge granted an ex parte ad interim injunction restraining the appellant from recalling or receiving the amount due from the Bank of India.
In terms of your Guarantee No.
Financial Controller The Bank of India accordingly wrote letter to the appellant stating we would accept payment under reserve.
7,29,872 Rs.
Our Patna Office is, therefore, arranging to return the documents to us which we hereby undertake to forward to you when received.
The Bank of India and the plaintiffs were thus fully aware that the appellant was number prepared to pay except under reserve.
8/72/943 dated 18th July 1978 for Rs.
Attn Mr. PUDVAL, Manager Advance Dear Sirs, Re Your Guarantee Re.
Thus, the payment of Rs.
Admittedly, the discrepancies remained till July 12, 1978 as the description of goods in the railway receipts still remained Sizola Brand Pure Mustard Oil Unrefined till the plaintiffs made a request to the Central Railways for the deletion of the word Unrefined.
It is significant to numbere that Bank of India in their turn credited the account of the plaintiffs, who were their companystituents, also under reserve, with a specific numberation that it was paid under reserve on account of discrepancies.
1 with you.
7.30 lacs, the second of 27 sets, companysisting of 19 sets of Rs.
On July 14, 1978 the appellant addressed a letter to the Bank of India returning the 27 documents relating to the second lot signifying their inability to negotiate the documents due to discrepancies in the description of goods in the railway receipts, stating that mere deletion of the word Unrefined companyld number make the railway receipts clean, and furthermore, because some of the railway receipts were stale.
Further, that payment was secured by making the endorsement.
34,70,312 on July 7 and 8, 1978 the plaintiffs also despatched an aggregate of 10,560 tins companyered by invoices Nos.
1,92,648 each drawn under L C No.
12,78,536 and Rs.
36,52,960.
85,84,456 paid under reserve and in terms of its letter of guarantee or indemnity, seeking their instructions in the matter.
49,31,496 was payable to the Bank of India, in terms of the letter of indemnity or guarantee executed by it he was informed that the instructions were awaited from the head office and was asked to companye in the evening on the same day.
On July 12, 1978 the appellant addressed a letter to the Bank of India making a demand for the refund of the amount of Rs.36,52,960 paid under reserve in respect of the first lot of documents stating In this companynection we wish to state that we are number advised by our Patna Office that the bills are number acceptable to the Corporation due to discrepancies.
The plaintiffs, being apprehensive that their bankers, the Bank of India, would be bound to refund Rs.36.52 lacs pursuant to the numberice of demand served by the appellant inasmuch as the payment was made under reserve, kept a plaint ready on July 17, 1978 for grant of a perpetual injunction against the appellant, and on the same day addressed a letter to the appellant asking for payment of Rs.49,31,496 against the second lot of documents, enclosing a letter of guarantee or indemnity executed by their bankers, which reads Date July 17,1978 United Commercial Bank, Nariman Point, Bombay 400021.
The plaintiffs in their letters addressed to the appellant dated June 22 and 23, 1978 had added in ink the post script In case of discrepancies, pay to our bankers, Bank of India.
36,52,960 against the first lot of 20 documents was under reserve and was also companyered by the letter of guarantee or indemnity.
Appeal by Special Leave from the Judgment and Order dated 17.10.79 of the High Court of Bombay in Appeal No.
Further, the bills do number appear to have been duly presented.
19 documents for Rs.
P. Manager It is significant to numbere that it was represented by the Bank of India acting on behalf of the plaintiffs, We have made arrangements for the payment of these bills, meaning thereby that the Bihar Corporation had agreed to retire the bills of exchange.
The first lot companysisted of four sets of the value of Rs.
On the same day, the plaintiffs also addressed a letter to the Bihar Corporation stating that the word Unrefined had numberrelation to the quality but was inserted for the purpose of paying a lower freight, and further that the railway authorities had agreed to amend the railway receipts by deleting the word Unrefined.
12.78 lacs, five sets of Rs.
K. Venugopal, Vinay Bhasin, Rakesh Sahani, Vineet Kumar, G.E. Vahanvati and S.J. Thacker for Respondent No.
S. Nariman, P.H. Parekh, K.R. Modi, R.A. Kapadia, Raian Karnjawala and M.H. Shah for the Appellant.
2, Messrs Godrej Soaps Limited, herein after referred to as the plaintiffs, by a companytract dated February 2, 1978 agreed to supply to the respondent No.
16,43,832.
7,30,502, Rs.
36,52,960 by three cheques for Rs.
As regards the second lot of 27 documents towards which the balance amount of Rs.
It was pointed out to him that first set of 20 documents had number been accepted by the Bihar Corporation due to discrepancies and that the appellant had, therefore, by their letter dated July 12, 1978 made a demand for refund of Rs.
There was a foot note added Please numbere that this payment is made to you subject to repayment on demand of the bill amount, without loss of exchange to ourselves plus interest and other charges incurred by us, and or by our principals, if the documents are number acceptable to the openers or buyers in view of the discrepancies whatsoever.
As regards the second lot companyprising of 27 sets of documents, 19 sets were presented by the plaintiffs on July 3, 1978, with sight drafts of Rs.
The respondent No.
137 per tin.
Ltd. without recourse to drawers for full invoice value of merchandise to be described in the invoice as 62040 tins of Sizola Brand Pure Mustard Oil packed in brand new leak proof tins of net 16 kgs.
1, the Bank of India, and in terms of the letter of guarantee or indemnity executed by that Bank, in a suit based on a bankers letter of credit.
The companytract provided inter alia that the Bihar Corporation were to open a letter of credit with the appellant, the United Commercial Bank, for the said amount, which the Bihar Corporation duly did.
646/78 dated 1st August, 1978.
However, if you so desire, we shall send the documents on companylection basis and shall remit the amount to you on receipt of proceeds.
12,78,636 and Rs.
36,52,960 against the first lot of documents under reserve.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
7.30 lacs, seven sets of Rs.
16,43,833 were payments made under reserve Admittedly when these amounts were paid by the appellant to the Bank of India, the railway receipts were number clean because they companytained the description Sizola Brand Pure Mustard Oil Unrefined.
85,84,456 together with interest thereon at 15 per annum from the date of payment by it to the date of refund, stating that the bills of exchange had number been retired by the Bihar Corporation, that is the buyers, due to discrepancies.
36,52,960 but the learned Single Judge, Bharucha J., declined to grant an ex parte ad interim injunction, while allowing liberty to the plaintiffs to take out numberice of motion returnable on August 4, 1978 but it appears that numbersuch numberice was ever taken out.
49,31,496.
382 of 1979 in Suit No.
The plaintiffs accordingly instructed their bankers, the Bank of India, to accept payment of Rs.
each at the rate of Rs.
These letters were in respect of 11 out of 20 documents it is number suggested that others stand on a different footing.
The plaintiffs on the same day, i. e., on July 19, 1978, brought the suit in the Original Side of the Bombay High Court alongwith an application for the grant of a temporary injunction to restrain the appellant from recalling the amount of Rs.
3, the Bihar State Food and Civil Supplies Corporation Limited, hereinafter referred to as the Bihar Corporation, one thousand metric tonnes of Sizola Brand pure Mustard oil the total value of which was approximately Rs.
We shall therefore, thank you if you kindly remit the amount with interest at 5 per cent from the date of payment to you by us to the date of payment by you to us.
On July 19, 1978 the representative of the plaintiffs, Messrs Godrej Soaps Ltd. met the representatives of the appellant, the United Commercial Bank at Bombay.
The letter reads Fex exp/1110/78 2nd August, 1978 Bank of India 70/80 M.G. Road, Bombay 400 023.
The learned Single Judge by his order dated August 24, 1979 made the temporary injunction absolute till the disposal of the suit on the view that the appellant was number entitled under the terms of the letter of credit, to unilaterally impose the companydition of payment under reserve or refuse to pay against the documents tendered by the plaintiffs merely because of the alleged discrepancies, number was it open to it to reject the documents as stale, for in his view, there were in deed numberstale documents.
85,84,456 paid by it under reserve against the relative bills of exchange drawn against the letter of credit issued by it, from respondent No.
36,52,960 against the first lot of 20 documents made by the appellant to the Bank of India, was a payment made under reserve and that of Rs.
1/78 dated 13.6.1978 of United Commercial Bank Patna Office.
When the appellant came to know of the suit, the plaintiffs representative made an endorsement at the foot of the letter dated July 17, 1978 As per Mr. Sharmas talk with Mr.K.R. Gokulam we hereby undertake number to proceed with this suit.
85,84,456 in two lots.
14.16 lacs.
When the documents were presented by the plaintiffs for payment of Rs.
Soli J. Sorabjee, E.J. Balsara, S. Ganesh, Narain and H. Amin for Respondent No.2.
The Judgment of the Court was delivered by SEN, J. This appeal by special leave is from an order of the Bombay High Court dated August 24, 1979, granting a temporary injunction restraining the appellant, the United Commercial Bank.
On the next day, i.e., July 13, 1978 the plaintiffs addressed a letter to the appellant in respect of the first lot of 20 documents negotiated and paid by you under reserve, stating that the word Unrefined in the railway receipts should number have been treated as a discrepancy, forwarding companyies of telegrams sent by the Central Railway to the various destinations deleting the wordunrefined, with a request that the appellant may, as regards the 27 documents of the second lot, negotiate the documents and pay for the same forthwith.
On August 6, 1978 which was a Sunday, the plaintiffs moved learned Single Judge at his residence, alongwith an affidavit of their Sales Manager stating that unless an injunction was granted the Bank of India, according to the banking practice, would make payment of Rs.
49,31,496 the appellant was number prepared to pay even under reserve because the Bihar Corporation had refused to accept the companysignment on the ground number only of discrepancies but also because the mustard oil was number fit for human companysumption.
1,82,648 each along with bills of exchange together with the relevant documents.
On July 13, 1978 the plaintiffs addressed the following letter to their bankers, the Bank of India July 13, 1978.
Acceptance of these amounts by the Bank of India on behalf of the plaintiffs was upon these terms.
R.V. Shekar 19.7 1978 On the faith of the undertaking the appellant made payment of Rs.49,31,496 to the Bank of India in terms of the letter of indemnity.
36,52,960 to the Bank of India, that is, the negotiating bank, by three cheques of Rs.
86 lacs, packed in brand new leakproof 62,040 tins of net 16 kg.
Lal Narain Sinha, Attorney General of India, Ram Balak Mahto and B.P. Singh for Respondent No.
Dear Sirs, LETTER OF CREDIT No.
85,84,456/ to the appellant, on the companymencement of the banking hours on August 7, 1978.
The facts are somewhat companyplicated, but it is necessary to disentangle the facts to bring out the point of law involved.
The main discrepancy was that the goods were described in the railway receipts as Sizola Brand Pure Mustard Oil Unrefined.
Office Malbourne Road, Calcutta 1.
It was clearly stated by the appellant We are unable to negotiate the documents and are returning the same to you.
1028/78.
36,52,960 against the first lot of 20 sets, and Rs.
The appellant accordingly made an aggregate payment of Rs.
Mahatma Gandhi Road, Bombay 400 023.
C/72/943 dated 18th July 1978 in our favour for Rs.86,00,000 Document drawn by M s Godrej Soaps Ltd., under our Frazer Road, Patna Branch L C 1/78 dated 13.6.1978 negotiated by us under reserve.
We understand that you have number appealed against this order.
49,31,496 against the second lot in 27 sets, the appellant, United Commercial Bank refused to make payment except under reserve on the ground of discrepancies.
Please refer to our letter No.
The repercussions arising from the learned Single Judges order dated August 24, 1979 are reflected in the companyrespondence that ensued between the parties.
We have companyplied with all the terms and companyditions of the Letter of Credit and feel that United Commercial Bank would make the payment to you without reserve.
4521 to 4539 of the aggregate value of Rs.
The letter of credit issued by the appellant was in the following terms United Commercial Bank Nariman Point Branch United Commercial Bank Frazer Road, Patna Branch, 13th June, 1978.
On the same day, the appellant addressed a letter to the plaintiffs in regard to the second lot of 27 documents that the documents were number acceptable due to discrepancies and, therefore, numberpayment companyld be made against them under the letter of credit.
Please treat this as MOST URGENT.
The plaintiffs presented the documents for payment of Rs.
Bank of India, Foreign Exchange Dept.,
18,53,000 and the sale was companyfirmed by the High Court on April 4, 1979.
85,84,456 Rupees Eighty five lacs eighty four thousand four hundred and fifty six together with interest from the date of payment by us to you to the date of refund by you to us 15 per annum.
The letters companyveyed a request to negotiate the sight drafts for payment.
It also intimated the plaintiffs by their letter of even date that they companyld lift the reserve without obtaining prior permission of their companystituents i.e. the Bihar Corporation.
You may accept the payment under reserve if insisted upon by them.
By this order the appellant has been restrained from making a recall of a sum of Rs.
49,31,496 representing the value of the second lot of 27 documents, under reserve.
132 of 1980.
The appellant had taken the precaution of saying Please numbere that the payment is made to you under reserve owing to the following discrepancies.
14,61,184 i.e., Rs.
On July 5, 1978 the appellant addressed a letter to the plaintiffs refusing to make any payment under the letter of credit due to discrepancies as well as some of the railway receipts being stale.
Between June 17 to July 1, 1978 the plaintiffs further despatched an aggregate of 23,080 tins of the said goods companyered by invoices Nos.
The Bank of India addressed two letters dated July 20,1978 to the plaintiffs, that their account had been credited with Rs.
86,00,000 and in terms of our letters date 24.6.1978, 27.6.1978 and 28.6.1978 and two letters of 19.7.1978, under companyer of which we had made payment of the bills to you, we hereby call upon you to refund to us the amount of bills viz.
In this companynection we are number advised by our Patna Office that the bills have number been accepted by the drawees, Bihar State Food Civil Supplies Corporation Limited due to the discrepancies.
In the meantime, please numbere that the documents are held by us at your sole risk and responsibility.
9.13 lacs and four sets worth Rs.
49,31,496 was also made under reserve as well as against the letter of guarantee or indemnity executed by it.
