Delhi High Court
Radnik vs Janata Bank And Ors. on 11 October, 1993
Equivalent citations: ILR1995DELHI538
JUDGMENT Mahinder Narain, J.
(1) (ORAL).-SUIT No. 1021 of 1990 has been filed under Order xxxvii of the Code of Civil Procedure seeking recovery of money upon an unpaid letter of credit.
(2) In the instant case, plaintiff exported goods to its buyers in Dhaka who are defendants No. I and 2. The buyers in Dhaka had got a letter of credit issued by their bankers for ensuring payment to the plaintiff.
(3) A question which arises is whether Order xxxvii of the Code of Civil Procedure covers this case or not.
(4) Order xxxvii ( i) (2) of the Code of Civil Procedure reads as under :- "(1)This order shall apply to the following Courts, namely:- (a) High Courts, City Civil Courts and Courts of Small Causes; and (b) Other Courts : Provided that in respect of the Courts referred to in clause (b), the High Court may, by notification in the Official Gazette, restrict the operation of this Order only to such categories of suits as it deems proper, and may also, from time to time, as the circumstances of the case may require, by subsequent notification in the Official Gazette, further restrict, enlarge or vary, the categories of suits to be brought under the operation of this Order as it deems proper, 2. Subject to the provisions of sub-rule (1), the Order applies to the following glasses of suits, namely-- (a) suits upon bills of exchange, hundies and promissory notes; (b) suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest arising,- (1) on a written contract; or (2) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature (it a debt other than a penalty; or (3) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only."
(5) Letter of credit is unconditional obligation undertaken by banker who has issued the letter of credit to pay the beneficiary. There is no contract between the beneficiary and the bankers who issue the letter of credit.
(6) There being no contract between the beneficiary plaintiff and the bankers defendant. Order xxxvii of the Code of Civil Procedure can have no application.
(7) Letter of credit is also different from a guarantee and is, therefore, not covered under Order xxxvii ( 2) (iii).
(8) Suits that can be filed under Order xxxvii of the Code of Civil Procedure are those which are based upon Bills of Exchange. Hundi, a liquidated demand, or a written contract, or a guarantee. A suit by the beneficiary of a letter of credit cannot be filed under Order xxxvii, as there is no contract between the beneficiary of the letter of credit and the issuing banker.
(9) This suit ha'; to be treated as an ordinary suit for recovery of money, and not as a suit which can be tried by the summary procedures of Order xxxvii of the Code of Civil Procedure.
(10) Suit No. 1021 of 1990 will be tried as an ordinary suit for recovery of money.
(11) To come up on 13-12-1993. LA. No. 1598/93 This is an application under Order I Rule 2 of the Code of Civil Procedure to delete the name of defendant No. 3 from the array of parties. The applicant is the banker of the plaintiff, against whom, according to para 3 of the plaint, no relief is claimed Deletion is sought by defendant No. 3 from the array of parties. In my view, inasmuch as the plaintiff will be able to summon the defendant No. 3 bank or its officers, and its records for the purpose of establishing the case against the defendants No. 1 and 2, there is no need to retain defendant No. 3 as a party defendant. This application is allowed. The name of defendant No. 3 is deleted from the array of parties.