The plaintiffs made specific allegations only against the Synergic Companies and numberaverment with respect to the knowledge of such fraud to the companyfirming bank was made.
The proforma invoices were to be issued by Synergic, Singapore in favour of STC, specifically mentioning Millenium Wires name as A c Millenium Wires Pvt.
Rather, it has been shown that there was numberknowledge of fraud on the part of the Confirming Bank and it cleared the payments to the Synergic Companies as per the provisions of UPC 600.
RFA OS Nos.142/2013 and 139/2013 were filed by M s. Millenium Wires P Ltd. and the State Trading Corporation of India Ltd., respectively, against the judgment and order of the learned Single Judge of the Delhi High Court in Original Suit, being CS OS No.545/2012.
This would companystitute the companytract between STC Millenium Wires on one side and the Synergic Companies on the other.
Further, the Banks should number be asked to number companyply with the Letter of Credit for some dispute between the parties.
On these grounds the learned Single Judge allowed the application under Order VII Rule 11 of the Code of Civil Procedure, 1908 and dismissed the plaint as showing numbercause of action against the Malayn Bank, giving liberty to the Plaintiffs to pursue other appropriate remedies against the Synergic Companies.
The major companytention of the appellants herein is that the High Court has companymitted grave error in dismissing the suit under Order VII Rule 11 as it acted against the settled principles of procedure with respect to application under Order VII Rule 11.
At this stage Letters of Credit were to be opened by STC through Allahabad Bank payable to the Synergic Companies through the Malayn Bank.
Opened On Bill of Documents Response of Lading forwarded by the Malayn Bank toAllahabad Bank Allahabad Bank 0189111FLU000150 07/12/11 08/12/11 14/12/11 Accepted on 23/12/11 0189111FLU000151 07/12/11 09/12/11 12/12/11 Rejected on 31/12/11 0189111FLU000154 17/12/11 31/12/11 22/12/11 No information 0189111FLU000159 02/01/12 07/01/12 06/01/12 Accepted on 16/01/12 With respect to all these Letters of Credit the Malayn Bank had released the payment to the Synergic Companies after the documents were presented by them.
The learned Single Judge also pointed out that the remedies sought in the plaint i.e. injunction against the Synergic Companies to claim any benefit under the Letters of Credit and against the Malayn Bank to advance any payment under Letters of Credit had already become infructuous as the Malayn Bank had made the payments to the Synergic Companies.
In pursuance to the Agreement, STC opened four Letters of Credit with the Allahabad Bank being C. No.
11848/2014 Date 23/03/2015 These petitions were called on for pronouncement of judgment today.
Ltd On acceptance of the said proforma invoice, final invoice was to be issued by the two Synergic Companies, which on acceptance by Millenium Wires was to be sent back to the Synergic Companies.
Thus, the Malayn Bank was in its right as well as duty to have made the payment to the Synergic Companies as per the Letter of Credit and the UPC 600.
As per UPC 600 Uniform Customs and Practice for Documentary Credits, Sixth Edition published by International Chambers of Commerce, the Banks are bound to release the payment in terms of the Letter of Credit if the companyplying presentation is made by the Beneficiary in this case Synergic Companies .
The learned Single Judge further pointed out that as per UPC 600 Clause 16, in case the issuing bank refuses to honour the presentation of documents, it has to give a numberice of such refusal to the companyfirming bank within 5 days of the presentation of the documents.
142/2013 passed by the High Court Of Delhi At New Delhi M S MILLENNIUM WIRES P LTD Petitioner s VERSUS STATE TRADING CORP.
Here, the Allahabad Bank approved the presentation of documents made by the Malayn Bank, Confirming Bank, for 2 of the four Letters of Credit and refused only one and even this refusal was companymunicated after 19 days, way beyond the time period prescribed by Clause 16.
The Plaintiffs appellants have, inter alia, relied on Saleem Bhai v. State of Maharashtra, 2003 1 SCC 557, Popat Kotecha Property v. State Bank of India Association, 2005 7 SCC 510, and Sopan Sukhdeo Sable v. Asst.
The learned Single Judge discussed the established law relating to the Letters of Credit in great detail.
It was at this stage that the Millenium Wires and STC approached the Delhi High Court by filing a suit seeking permanent, mandatory and perpetual injunction against the Synergic Companies from claiming any benefit under the Letters of Credit in question and against the Confirming Foreign Bank being Malayn Bank to prevent any action or release of funds under the Letters of Credit.
The learned Single Judge rejected the plaint of the appellants herein under Order VII Rule 11 of the Code of Civil Procedure, 1908.
The STC opened 4 Letters of Credit with the Allahabad Bank being Issuing Bank and the Malayn Banking BHD, Malaysia being the Confirming Bank.
Under the said Agreement, STC was to import the said companyper wire rods for Millenium Wires from the Synergic Companies.
These appeals, by special leave, have been preferred against the judgment and order dated 17.12.2013 in RFA OS No.142/2013 and judgment and order dated 10.12.2013 in RFA OS No.139/2013, passed by the Division Bench of the Delhi High Court by which the High Court dismissed the appeals filed by the appellants.
The Malayn Bank filed an application under Order VII Rule 11 of the Code of Civil Procedure, 1908.
Against the order of the learned Single Judge, both the appellants filed separate appeals before the Division Bench of the High Court.
He stated that the Letter of Credit is independent of the underlying companytract between the applicant and the beneficiary and Courts of law would number meddle with the dealings of the banks and grant injunction as a matter of companyrse as it would affect the trustworthiness of these transactions and also the position of the banks in the market.
The learned Single Judge of the Delhi High Court allowed the application thereby dismissing the plaint giving following reasons There were numberspecific allegation against the Malayn Bank except a statement that the Bank seems to be hand in glove with the Synergic Companies.
The Division Bench also dismissed both the appeals on same grounds as that of the learned Single Judge.
Briefly stated, the facts of the case are that M s. Millenium Wires P Ltd. hereinafter referred to as Millenium Wires and State Trading Corporation of India Limited hereinafter referred to as STC entered into an Associateship Agreement hereafter referred to as the Agreement , for importing companytinuous cast companyper wire rods from Synergic Material Services PTE Limited, Singapore and Synergic Industrial Material Services, Malaysia hereinafter referred to as Synergic, Singapore and Synergic, Malaysia severally and companylectively as the Synergic Companies .
OF INDIA LTD ORS Respondent s WITH SLP C No.
Pinaki Chandra Ghose, J. Leave granted in both the matters.
Further the learned Single Judge relied on established principle that the Court shall number grant injunction against the issuing bank or the companyfirming bank except in two circumstances There is fraud and the bank has knowledge of the fraud or There would be irreparable injury caused to one of the parties if the injunction is number granted.
Since these appeals are arising from same factual matrix and involve same questions of law and fact, they are being disposed of by this companymon judgment.
The agreement stipulated that Millenium Wires shall provide STC with margin money as advance of 25 of the value of Letter of Credit to be opened by STC clause 4 of the Agreement along with 25 cash advance and a post dated cheque 102.5 of the value of companysignment in favour of STC along with an undertaking.
The mode of effecting the transaction between the Millenium Wires and STC on one hand and the Synergic Companies on other hand, was this Oral orders were placed by the Millenium Wires on the two Synergic Companies and the latter sent sales companytract proforma invoices to STC.
