The appellant entered into a companytract on 29th May, 2006 with the respondent by which the respondent had agreed to supply 26,000 metric tones of Extra Hard Pitch Reprocessing Grade in short goods to the appellant as per schedule set out in the companytract.
We have also examined in detail the application for injunction, the original companytract, the Letter of Credit as amended and the other documents on record.
So far as the first shipment was companycerned, goods were received, documents negotiated and payment released.
We accept to make the following payments.
Thereafter, companyrespondence was exchanged between the appellant and the respondent and the Letter of Credit was amended and payment at sight was substituted by the words 230 days from the shipment date.
The learned Single Judge by his order dated 5th June, 2007 had vacated an interim order of status quo granted earlier on an application filed under Section 9 of the Arbitration and Conciliation Act, 1996 hereinafter referred to as the Act for an order of injunction restraining the respondent from receiving any payment under a Letter of Credit.
The respondent raised a plea for vacating the interim order of status quo granted by the learned Single Judge on the application for injunction filed u s 9 of the Act alleging the following facts Goods were dispatched to the appellant by the respondent under two shipments.
Thereafter the matter was directed to appear on 16th May, 2007 and heard by the learned Single Judge on 17th May, 2007 and interim order of status quo was extended till 25th June, 2007.
As numbered herein earlier, the order of status quo was passed by the learned Single Judge of the High Court on the application for injunction filed under Section 9 of the Act at the instance of the appellant on 9th April, 2007, and by the said order, the interim order of status quo was granted till 30th April, 2007 and the same was extended from time to time from 23rd April 2007 till 17th May, 2007.
Therefore, there companyld number be any dispute in respect of the goods relating to the first shipment.
On the basis of the amended Letter of Credit, the payment was, thereafter, payable on or before 10th April, 2007.
In the said companytract, one of the terms of payment was that a Letter of Credit will be opened and accordingly an irrevocable Letter of Credit was opened by the appellant in favour of the respondent.
Main Office Euro 387788.82 Amount to be paid against the above three Bills Euro 1961126.18 Before accepting the documents and agreeing to make payments, by a companymunication dated 28th September, 2006, the respondent had given the appellant two options i either to negotiate the document and resolve the quality issue or ii reject the shipment document.
As numbered herein earlier, the learned Single Judge by order dated 5th June, 2007 vacated the interim order of status quo granted earlier against which an appeal was preferred by the appellant before a Division Bench of the High Court of Calcutta which dismissed the appeal and affirmed the order of the learned Single Judge vacating the interim order of status quo.
By the second shipment, the respondent had dispatched 12,503 metric tones of goods to the appellant which arrived at Calcutta from Iran by a vessel called M.V. Iran Takhti.
It was further the case of the respondent that the defective quality of goods in respect of which order of injunction of the Letter of Credit was sought companyld number also be the reason for grant of injunction as it was related to a payment dated 29th May, 2006 which was also the subject matter of an arbitration proceeding and the claim, if any, companyld be recovered in the said arbitration proceeding.
It was also the case of the respondent in support of its companytention for vacating the interim order of status quo that despite discrepancies raised by the appellant, by its companymunication dated 3rd October, 2006, the appellant had agreed to accept the documents with discrepancy and make payments in respect of the goods for which disputes were raised by the appellant regarding the quality of such goods.
Ltd. with the companycurrence of the respondent.
However, for the balance 10,000 metric tons, documents were number negotiated and numberpayment was released.
Accordingly, the banker of the appellant by a Letter dated 11th September, 2006, intimated the aforesaid fact to the appellant and sought advice whether the appellant was willing to waive the discrepancies indicated in the Letter dated 11th September, 2006.
The amendment of the terms of Letter of Credit was informed to the bankers of the respondent which was accepted by the respondent as well.
According to the respondent, since the Letter of Credit was an independent companytract and the appellant companyld number satisfy any breach of the terms of the Letter of Credit, numberorder of injunction companyld be passed by the companyrt for stopping the respondent from realizing the payment relating to the price of the goods supplied.
In response to this query of the banker, the appellant waived the discrepancies and accepted the documents by a letter dated 3rd October, 2006 and also agreed to make the payments in the following manner With reference to the above and further to your swift message dated 3/10/2006, We are accepting the documents with discrepancy and the payment will be made after 180 days from today.
Initially, under the said Letter of Credit, payment was to be made at sight.
Leave granted.
The document against which payment was to be made, was received directly by the banker of the appellant and on presentation of the document it was found by the banker of the appellant that the description of the goods was number as per the terms of the Letter of Credit.
Out of the aforesaid 12,503 metric tones of goods so dispatched and arrived at Calcutta, documents relating to 2503 metric tones of goods were negotiated by the Central Bank of India, Calcutta and payment released.
Arising out of SLP C No.
The issue regarding the quality of goods remained undecided although an inspection report was submitted by SGS India Pvt.
Emphasis supplied Total amount against above mentioned three 3 Bills Euro 2348915.00 Less Advance payment already Made through Central Bank of India Kol.
This appeal is directed against the judgment and order dated 21st June, 2007 passed by a Division Bench of the Calcutta High Court whereby an appeal preferred against an order dated 5th June, 2007 of a learned Single Judge of the same High Court was dismissed and the order of the learned Single Judge was affirmed.
13775 of 2007 TARUN CHATTERJEE, J. Application for permission to file special leave petition is allowed.
Inspite of various steps taken by the appellant and promises made by the respondent, numbereffective step was taken to resolve the dispute regarding quality of the goods and hence the application under Section 9 of the Act was filed by the appellant to stop release of payment under the Letter of Credit without first resolving the issue regarding the quality of goods of the second companysignment supplied by the respondent to the appellant.
It was further alleged by the respondent that there was numberreason for number negotiating the documents or effecting release of the payment as payments for part companysignment as numbered hereinabove were already released.
Therefore, in the application for injunction, it was pleaded that the act of the respondent for number resolving the dispute on the quality of goods in the second companysignment amounted to fraud as the respondent had dishonestly and with ulterior motive number resolved the dispute as raised by the appellant and in any event, an order of injunction should be granted, otherwise, it would number be possible for the appellant to recover the money released under the Letter of Credit as the respondent is a foreign companypany from Iran and has numberassets in India.
