Bangalore District Court
Mr.N.A.Jayaram vs M/S.Kumting Teng Yue Hao on 18 October, 2016
IN THE COURT OF THE XIX ADDL. CITY CIVIL &
SESSIONS JUDGE AT BANGALORE CITY: (CCH.18)
Dated this 18th day of October, 2016.
Present
SMT.K.B.GEETHA, M.A., LL.B.,
XIX ADDL. CITY CIVIL & SESSIONS JUDGE,
BANGALORE CITY.
O.S.NO.2140/2010
PLAINTIFF : Mr.N.A.Jayaram,
s/o Sri.N.Anjaneya Setty,
aged about 54 years,
Proprietor: M/s.Bilwa Labs,
No.53, 1st Floor, Sannidhi Road,
Basavanagudi,
Bangalore-560 004.
(By Sri.V.B.Shivakumar,Advocate)
-VS-
DEFENDANT : 1. M/s.Kumting Teng Yue Hao,
Trade and Economy Company Ltd.,
No.118, Dong Feng East Road,
Kunming Tunnan,
China.
Represented by its
Managing Director
Ms.Nancy,
Major.
2. Ms.Nancy,
Major,
Managing Director,
M/s.Kumting Teng Yue Hao,
Trade and Economy Company Ltd.,
2 O.S.No.2140/2010
No.118, Dong Feng East Road,
Kunming Tunnan,
China.
3. The Manager,
HUA XIA Bank China,
Kunming Branch,
Kunming, China.
4. The Relationship Manager,
Commercial Relationship,
Global Commercial Bank,
Citibank,
M.G.Road,
Bangalore-560 001.
( D.1 to D.3 - Exparte)
(D.4 - By Sri.By Sri.HMS, Advocate)
Date of Institution of the suit : 27/3/2010
Nature of the Suit : Recovery of money
Date of commencement of recording
of evidence : 19/6/2014
Date on which the Judgment was
pronounced : 18/10/2016
Year/s Month/s Day/s
Total Duration : 06 06 21
JUDGMENT
The plaintiff has filed this suit for recovery of USD.201.600.00 which is equivalent to Rs.94,75,200/- 3 O.S.No.2140/2010 being the sale of industrial salt supplied to the 1st defendant; to direct the 3rd defendant bank to pay the entire amount to plaintiff being the bank which is required to release the consignment against the payment to the defendant Nos.1 & 2; to direct the Citibank - 3rd defendant to deposit the entire amount in terms of USD.201.600.00 which is equivalent to Rs.94,75,200/- into the current account of plaintiff standing in the name of M/s.Bilwa Labs under Number 071297006001 being the cost of consignments and also issue directions for attachment of movables and immovables of defendant and arrest of defendant for committing breach of contract; for court costs and for such other reliefs.
2. The case of plaintiff in nutshell is that the plaintiff is the proprietor of M/s.Bilwalabs and its registered office is situated at Basavanagudi, Bangalore. Plaintiff is holding its e-mail ID [email protected] for the purpose of entering transaction of sale of industrial salt red powder and other industrial chemicals and components. 4 O.S.No.2140/2010 Defendant's e-mail is utilized for the purpose of placing orders by plaintiff in favour of 1st defendant, a network acknowledgment came to be delivered with the conditions of placing of orders and supply of industrial products named as 'industrial salt'. The specification for supply of industrial salt, its quantity and the manner in which it needs necessarily required to be supplied on the basis of the commercial invoice to be supplied to the beneficiary together with the original and copies of shipment advice to be shipped on Board Marine Bill of Lading covering Port to Port shipments made out to order of Vietnam International Commercial Joint Stock Bank, VINHPHYC branch marked 'Freight prepaid' showing full name and address for effective supply. Under the terms of contract, the 3rd defendant was required to release the stocks on the Bill of Lading after receipt of the payment. The Letters of Credit which were handed over to the 3rd defendant, the 3rd defendant was required to hold responsible that the entire stock in terms of Bill of Lading transported by the plaintiff to the 1st defendant on the order to Vietnam International 5 O.S.No.2140/2010 Commercial Joint Bank to be handed over to the consignee
- 1st defendant for release of such articles of goods. Thereby, the 3rd defendant is a contractual party for which it holds obligation for realization or collection of the amount upon handing over the consignment to the consignees - defendant No.1 & 2. Plaintiff effected supply of industrial salt in quality - KCL 95 PCT MINIMUM K20:60 PCT MINIMUM MOISUTE: 1 PCT MAXIMUM INCOTERM 2000 valued at USD201,600.00 calculated in terms of Indian Rupee at Rs.94,75,200/-. The transportation of industrial salt was on the basis of Bill of Lading. The place of receipt for the consignee's reference is at Bangalore. Place of loading is ICD Bangalore. The port of loading at Chennai and port of discharge is at Haiphong. It was to be notified to LAM THAO Fertilizers and Chemicals Company, LAM THAO PHU THO Province, Vietnam for being transported and handing over the consignment to 1st defendant at Kuming Yunnan, China. Plaintiff at the instance of 1st defendant appointed German Express Shipping Agency (India) Pvt. Ltd., as its agents for 6 O.S.No.2140/2010 transportation of the consignments and to hand it over to the 1st defendant. Plaintiff issued certificate of shipment Advice to plaintiff for sending one set of Bill of Lading containing the particulars of dispatch details and one set submitted to Citibank - 3rd defendant. Citibank was notified for opening of the account. Citibank called upon the plaintiff to open an account in the name of firm- Bilwalabs for transaction by way of cheques to be done as the Swift payments were received in the name of Citibank. One Mahima Garg, Relationship Manger, Commercial Relationships, Global Commercial Bank, Citibank, Bangalore, was responsible to take into consideration payment as against release of consignment as provided under the invoices and wrote a letter to the plaintiff informing the account number as 0343788002. Defendants were making immense difficulties with regard to payment in respect of the outstanding amount that were totally liable to be paid to the plaintiff. Defendants failed to make payment. 1st and 2nd defendants were called upon to make payment by issuing notice dtd:16/9/2009 through 7 O.S.No.2140/2010 internet and RPAD. Said notice was received by them through internet communication. The Tracking number with regard to details of shipment, date of shipment, its destination and delivery date and the proof of delivery came to be confirmed on e-mail notification and acknowledgment accordingly made. But, defendants failed to discharge their liability. Defendants are jointly and severally liable to pay the suit claim. Plaintiff has made efforts through External Affairs Ministry through International Commercial Arbitration so as to discharge liability in order to keep the arbitration outside India which was also miserably failed. Defendant No.1 is a registered company in China. It is the sole responsibility of 3rd defendant - Citibank, who had taken the responsibility pertaining to realization of the entire amount on release of consignment and thereby plaintiff handed over the original Bill of Lading and Credit Bill. The original Bill of Lading and Credit Bill were to be handed over upon destination of shipment and upon shipment delivery of consignment to defendant No.1 & 2 and while releasing the shipment to 8 O.S.No.2140/2010 defendant No.1 & 2; it was the obligation on the part of third defendant bank to release the amount and thereafter debit into the account of plaintiff with A/C No.07129006001. But, 3rd defendant and its representatives while contacted the Global Commercial Bank, have played fraud on the plaintiff. The 3rd defendant bank deliberately released the consignment to the defendant Nos.1 & 2 and released the original bill of lading and credit bill without releasing the cost of consignment to plaintiff. The consignee bank has failed in contractual obligation for realization of the amount under Bill of Lading. Hence, the suit for appropriate reliefs.
3. Even after service of suit summons, defendant No.1 to 3 have not appeared and hence placed exparte.
4. After service of suit summons, defendant No.4- Citibank appeared through its counsel and filed its written statement wherein, it denied the allegations made in the plaint in toto except admitting that defendant No.4 has forwarded the documents produced by plaintiff to it to 9 O.S.No.2140/2010 defendant No.3 and it is not the issuing bank. Defendant No.4 further contended that during March 2009, a contract came to be entered into by and between the plaintiff and the defendant No.1 wherein, plaintiff agreed to sell the industrial salt and defendant No.1 agreed to purchase the same on terms and conditions more particularly set out in the said contract. Vietnam International Commercial Joint Stock Bank, Vinh Phuc Branch - the issuing bank issued a Transferable Credit dtd: 10/3/2009 bearing No.0903311100319 for a total value of USD.1,125,000/- wherein, defendant No.1 was named as the 1st beneficiary and defendant No.3 was authorized as the Transferring Bank in respect of the LC. In pursuance to the request made by defendant No.1 in that regard, defendant No.3 transferred the LC on 13/3/2009 thereby naming plaintiff as 2nd beneficiary. The Transferred LC is bearing No.060TR0900091A. This LC was transferred towards payment to be made in respect of industrial salt to be shipped by plaintiff under the above said contract between plaintiff and defendant No.1. The LC was advised to the 10 O.S.No.2140/2010 plaintiff by the Hongkong and Shanghai Banking Corporation Ltd., M.G.Road, Bangalore i.e., HSBC Bank under the cover of its computer-generated advice dtd:14/3/2009. According to terms and conditions of said LC, the last date of shipment was 29/3/209; expiry date of the validity of the transferred LC was 5/4/2009; all documents specified in the transferred LC were to be presented to defendant No.3 within 7 days of shipment, but in any event, not later than the validity of the transferred LC; the liability of the transferring bank to make payment under the transferred LC arises only upon receipt of payment from the issuing bank. Defendant No.4 is neither the issuing bank nor transferring bank nor a confirming bank. It is only the forwarding bank and forwarded the documents submitted to it by the plaintiff on "approval basis" only without assuming any obligation under the Transferred LC or otherwise. Plaintiff is the customer of defendant No.1 and holds current account with defendant No.4, but no credit facilities have been sanctioned to the plaintiff by defendant No.4. In 11 O.S.No.2140/2010 accordance with the standard business practice of this defendant, if a letter of credit is presented to defendant No.4 by a customer, this defendant follows either to route the documents to the importer's bank through defendant No.4 where defendant No.4 acts merely as a forwarding bank; or certifies the documents to be without any discrepancies as per the letter of credit in which event, it may negotiate the documents and credit the proceeds to the customer's account. In the present case, defendant No.4 merely acted as a forwarding bank. It received a letter dtd:11/5/2009 from plaintiff wherein, it has stated that the consignment of goods had been exported as per the terms of transferred LC and LC along with documents to be presented for negotiation/collection as set out in the transferred LC. Defendant No.4 under letter dtd:12/5/2009 forwarded the above said documents to defendant No.3 being the transferring bank for presentation and clearly instructed defendant No.3 that documents to be delivered to the issuing bank against payment; the proceeds to be credited to 4th defendant's account, the presentation of 12 O.S.No.2140/2010 documents to defendant No.3 is subject to the version of UCP as is applicable to LC i.e., UCP 600. On the same day, defendant No.4 also issued an 'Advice of Export Bill processed' to the plaintiff wherein, it mentioned that it is not responsible for any delay or losses in the course of transmission of the documents; the payment to the plaintiff will be subject to receipt of funds from issuing/collecting bank, except "Confirmed Credit Complaint" cases. As already stated above, this defendant has not sanctioned any credit facilities to plaintiff and this is not a "Confirmed Credit Complaint" case. On perusal of the documents provided to 4th defendant by plaintiff, defendant No.4 found that the transferred LC was expired on 5/4/2009 i.e., before presentation of the documents to it. Moreover, it is also found that shipment of industrial salt under the aforesaid contract had not been carried out in accordance with the terms of the transferred LC. As per document, the last date for shipment was 29/3/2009. But, documents were presented only on 11/5/2009. The role of defendant No.4 is limited to processing and forwarding 13 O.S.No.2140/2010 documents and accordingly, in performance of its obligations, forwarded the documents to defendant No.3 without any delay. However, in view of above discrepancies, defendant No.4 sent e-mail dtd:13/5/2009 addressed to plaintiff confirmed that the original transferred LC was received by defendant No.4 and aforesaid documents had been processed and forwarded on collection and on approval basis and also informed plaintiff that the transferred LC had expired and that the shipment had not been done in accordance with the transferred LC. Thus, defendant No.4 undertook to forward documents to defendant No.3 on 'approval basis' only. It has no independent obligation to make any payment under the transferred LC. Accordingly and also in light of the fact that this defendant is neither the transferring bank nor a confirming bank in respect of the transferred LC, this defendant has not undertaken any obligation or responsibility other than that of acting merely as the plaintiff's forwarding bank. Thereafter, in the interest of plaintiff, it addressed a Swift Message 14 O.S.No.2140/2010 dtd:26/5/2009 to defendant No.3 informing that aforesaid documents under the transferred LC had been forwarded on 12/5/2009 and as per UCP 600, defendant No.3 was required either to accept or reject the aforesaid documents. But, it has not received any reply from defendant No.3. Again, it sent another message to defendant No.3 on 4/6/2009 reminding defendant No.3 about the said facts. Defendant No.3 failed to respond even to this message and therefore, 2 more reminders on 15/6/2009 and 19/6/2009 were sent to defendant No.3, but defendant No.3 has not responded to any of the above messages. Subsequently, plaintiff vide its e-mail dtd:26/6/2009 informed defendant No.4 that defendant No.1 was having financial troubles and asked defendant No.4 to call back the aforesaid documents from defendant No.3. As per the directions from plaintiff, defendant No.4 again sent Swift message to defendant No.3 on 2/7/2009, but it has not received any response from defendant No.3 again. Again on 13/7/2009 similar message was sent to defendant No.3. On 17/7/2009 defendant No.3 sent Swift 15 O.S.No.2140/2010 message to defendant No.4 in response to the aforesaid message dtd:13/7/2009 stating that issuing bank had released the aforesaid documents to the applicant of the LC according to the terms and conditions of the "LC amendment". On 1/8/2009, again defendant No.4 requested defendant No.3 to confirm the status of the aforesaid documents as well as the status of the payment as it had neither received any payments nor any documents. But it has not received any response from defendant No.3. Defendant No.4 received the legal notice dtd:16/9/2009 from plaintiff's advocate making allegations. Despite such allegations by the plaintiff, defendant No.4 continued to act in good faith and sent 2 more Swift messages dtd:3/12/2009 to defendant No.3 as well as to issuing bank requesting to confirm the status of the payment; since the documents were sent 'on sight' basis. Issuing bank vide its Swift message dtd:5/12/2009 informed defendant No.4 that the issuing bank had not received any documents from defendant No.3. Then, defendant No.4, again sent Swift message dtd:9/12/2009 16 O.S.No.2140/2010 to defendant No.3 to provide the courier details of the dispatch of the aforesaid documents. On 11/12/2009, defendant No.3 informed defendant No.4 that no payment had been received by it from the issuing bank and all the aforesaid documents had been returned to the 1st beneficiary i.e., defendant No.1 directly by the applicant of the LC. This message shows how defendant No.3 has been inconsistent in its stand throughout the term of this transaction resulting in confusion regarding the status of the aforesaid documents as well as the status of the payment. In furtherance of the message dtd:5/12/2009 sent by the issuing bank to defendant No.4, issuing bank through another Swift message dtd:17/12/2009 informed defendant No.4 that the courier details pertaining to the aforesaid documents which the issuing bank had requested had not yet been received by the issuing bank and that this defendant was still to respond with the details requested by them. Issuing bank again wrote to defendant No.4 through telex dtd:29/12/2009 advising that the presentation of the aforesaid documents was 17 O.S.No.2140/2010 required to be made to the transferring bank i.e., to defendant No.3; and issuing bank would remit the proceeds only to transferring bank i.e., defendant No.3 and defendant No.4 should contact the transferring bank i.e., to defendant No.3. In response to the above said message, defendant No.4 again by its Swift message dtd:5/1/2010 to the issuing bank requested to confirm whether the issuing bank had made any payment to defendant No.3 under the transferred LC in respect of the aforesaid shipment. On 8/1/2010, the issuing bank gave reply that issuing bank had received the aforesaid documents from defendant No.3 "without reimbursement claim as per terms and conditions of LC amendment No.2"
and further stated that as per the terms and conditions of LC amendment No.2; defendant No.1 had retained right not to advise LC amendment to the 2nd beneficiary i.e., to the plaintiff and issuing bank was unable to verify which payment is related to the bill forwarded by defendant No.4. Defendant No.4 is not aware about the amendment to LC and the only document presented to defendant No.4 18 O.S.No.2140/2010 is the transferred LC. Again defendant No.4 sent Swift message dtd:15/1/2010 to defendant No.3 informing the message given by issuing bank and requested defendant No.3 to make a reimbursement claim on the issuing bank at the earliest and forward the proceeds to the account of defendant No.4 as soon as they are realized from the issuing bank. Plaintiff wrote letter dtd:26/6/2010 to RBI that it has filed 2 suits including the present suit for recovery of amount including aforesaid payment amounting to USD.201,600/- and specified the names of 2 banks i.e., M/s.Shanghai Pudong Development Bank, Dalian Branch, China and State Bank of India, Bangalore were responsible for non-realization of the outstanding amount, but not mentioned the name of defendant No.4.
It further contended that the plaint pleadings are very much vague regarding the allegations made against defendant No.3 and defendant No.4. It denied all other averments made in the plaint. It further contended that plaintiff might be miserably failed in the arbitration proceedings initiated in respect of payment of money and 19 O.S.No.2140/2010 transferred LC. The award that might have been passed in such arbitration would be relevant to the present suit.
Hence, prayed for dismissal of suit with costs.
5. From the above facts, the following issues were framed:-
ISSUES
1. Whether the plaintiff proves that he had supplied industrial salt in quality - KCL 95 PCT MINIMUM K20:60 PCT MINIMUM MOISUTE: 1 PCT MAXIMUM INCOTERM 2000 valued at USD 2,01,600 which is equivalent to Rs.94,75,200/- and defendant No.1 had not paid the said amount?
2. Whether the plaintiff further proves that defendant No.1 had appointed German Express Shipping Agency (India) Pvt.Ltd., to transport the consignment from Chennai to Haiphong of China and in respect of the receipts of the materials, defendant No.1 had not paid the amount?
3. Whether the plaintiff further proves that defendant No.3 and Manager, Citibank, MG Road, Bangalore had taken responsibility of releasing the entire amount of receipt of consignment and therefore they are also jointly and severely liable to pay the suit claim amount to plaintiff with interest due thereon?20 O.S.No.2140/2010
4. Whether the plaintiff is entitle for suit claim amount with interest due thereon from the date of suit till the date of realization?
5. Whether defendant No.4 proves that defendant No.3 transferred LC on 13/3/2009 in favour of the plaintiff and defendant No.4 is neither the issuing bank nor transferring bank nor the confirming bank and he forwarded the document only and hence he is not liable to pay the suit claim amount to the plaintiff?
6. Whether the plaintiff is entitle for the suit claim amount with interest due thereon?
7. What Order or Decree?
6. On behalf of plaintiff, plaintiff is examined as P.W.1, got marked Ex.P.1 to Ex.P.20 and closed his side. On behalf of defendant No.4, present Vice-President of defendant No.4 is examined as D.W.1, got marked Ex.D.1 to D.22 and closed its side.
7. Heard arguments of both sides.
8. Findings of this court on the above issues are:-
Issue No.1:- In Affirmative;
Issue No.2:- In Affirmative;21 O.S.No.2140/2010
Issue No.3:- Partly in Affirmative;
Issue No.4:- Partly in Affirmative;
Issue No.5:- In Affirmative;
Issue No.6:- Partly in Affirmative;
Issue No.7:- As per the final order for the following:-
REASONS ISSUE Nos.1 & 2
9. These issues are considered together, as they are inter-linked with each other.
10. It is the specific contention of plaintiff that plaintiff had contract with defendant No.1 to supply industrial salt to defendant No.1. Defendant No.1 has placed order to plaintiff through e-mail to the e-mail I.D. of plaintiff at [email protected].
11. It is to be noted here that plaintiff claims that he supplied industrial salt worth USD.201,600.00/- which is equivalent to Rs.94,75,200/- to defendant No.1 and it has not made said payment. Defendant No.2 is the Managing Director of defendant No.1. Defendant No.3 is the HUA 22 O.S.No.2140/2010 XIA Bank. Defendant No.4 is Citibank. Plaintiff contended that as per the specifications of defendant No.1, it appointed German Express Shipping Agency(India) Pvt.Ltd., to transport the consignment from Chennai to Haiphong of China port.
12. To substantiate the above said contention, plaintiff has produced the computer generated statement as per Ex.P.6. It reveals that from Hoskote, Bangalore, plaintiff has transported the industrial salt to Chennai and then, it was shipmented in Chennai and the port of discharge was Haiphong. According to this document, the net weight of the goods transported was 44,800 K.Gs. The exporter is plaintiff and consignee is 1st defendant. The value of these goods is US$.201,600.00/- exchange rate was Rs.49.400/- per US$. The invoice number is 243 and its date was 13/3/2009. It gives the description of goods sold i.e., industrial salt.
13. Plaintiff has also produced the shipment bill dtd:22/4/2009 as per Ex.P.8. It also disclosed the other 23 O.S.No.2140/2010 particulars mentioned in Ex.P.6 which is also dtd:22/4/2009. Plaintiff has also produced Ex.P.9-letter written by plaintiff to defendant No.4 Citibank with a request to submit the documents for collection which is dtd:11/5/2009. Along with Ex.P.9, plaintiff has also produced Ex.P.10 addressed to defendant No.3-HUA XIA bank. It is mentioned in this document that bill of lading No.HLCUBLR090461460 dt:9/5/2009 and letter of credit No.HUA XIA Bank, China, Kunming Branch, Kunming, L.C.No.060TR0900091A dtd:13/03/2009 issued by defendant No.3 bank dtd:13/3/2009.
14. Ex.P.11 is the computerized copy of invoice bearing No.243 dtd:11/5/2009 written by plaintiff to defendant No.1. Ex.P.12 is the computerized copy of packing list addressed to defendant No.1 by plaintiff and invoice No.243 dtd:13/3/2009 is also written in this document. According to this document, the country of origin of goods is India and it should reach the country of final destination
- Vietnam as per Agricultural Bank of China; Letter of Credit No.0903311100319 dtd:10/3/2009. 24 O.S.No.2140/2010
15. Ex.P.13 is the computerized copy of certificate of Quantity and Weight and it was certified by plaintiff that they have stuffed 16 containers industrial salt red colour, each container loaded with 28 bags containing 448 MTs of industrial salt to be reached to 1st defendant at China.
16. Plaintiff has also produced the computerized copy of Certificate of Quality as per Ex.P.14 pertaining to above said property; the computerized copy of Certificate of Origin as per Ex.P.15 and the computerized copy of Certificate as per Ex.P.16 issued by himself for having sent the copy of invoice along with packing list through shipping bill No.HLCUBLR090461460 dtd:9/5/2009. He has also produced the computerized copy of Shipping Advice pertaining to the above bill of lading dtd:9/5/2009 as per Ex.P.17. Ex.P.18 is the Declaration-Cum- Undertaking given by plaintiff to defendant No.4 that the plaintiff firm is not in the "XOS" (export outstanding) list of any other bankers. And also confirms that all the transactions specifically mentioned in the schedule does not involve and is not designed for the purpose of any 25 O.S.No.2140/2010 contravention or evasion of the Foreign Exchange Management Act, 1999. Ex.P.19 is the certificate as required under S.65-B of the Act and Ex.P.20 is the affidavit on this point.
17. Defendant No.1 to 3 already placed exparte and have not contested the suit and not disputed these documents to say that the industrial salt was not supplied by plaintiff to defendant No.1. These documents are self-explanatory that plaintiff has supplied the above said industrial salt to defendant No.1 and defendant No.2 is the Managing Director of defendant No.1. But, they do not reveal that 1st defendant appointed German Express Shipping Agency(India) Pvt.Ltd., to transport the consignment from Chennai to Hiphong of China. Anyway it is not in dispute that plaintiff has supplied the industrial salt worth US$.201,600.00/- which is equivalent to Rs.94,75,200/- to defendant No.1.
18. Defendant No.1 to 3 have not appeared and not contested the suit and not contended that they have 26 O.S.No.2140/2010 already paid the price of said goods. Hence, this court holds that plaintiff has proved issue No.1 & 2. Accordingly, issue Nos.1 & 2 are answered in affirmative.
ISSUE Nos.3 & 5
19. It is the contention of Plaintiff that under the terms of contract, 3rd defendant was required to release the stocks on the Bills of Lading after receipt of payment. The Letter of credit is handed over to the 3rd defendant. The 3rd defendant was responsible for the entire stock in terms of Bills of Lading transported by the plaintiff to the 1st defendant on the order to Vietnam International Commercial Joint Bank to be handed over to the consignee
- 1st defendant for release of such articles of goods. After thorough conclusion, plaintiff supplied industrial salt in quality - KCL 95 PCT MINIMUM K20:60 PCT MINIMUM MOISUTE: 1 PCT MAXIMUM INCOTERM 2000 valued at USD.201,600.00/- calculated in terms of Indian Rupee at Rs.94,75,200/-. The transportation of industrial salt was on the basis of Bills of Lading. The place of receipt for the 27 O.S.No.2140/2010 consignee's reference is at Bangalore. Place of loading is ICD Bangalore. The port of loading at Chennai and port of discharge is at Haiphong. Through LAM THAO Fertilizers and Chemicals Company, LAM THAO PHU THO Province, Vietnam, the goods were transported under several consignments to 1st defendant at Kuming Yunnan, China. Plaintiff at the instance of 1st defendant appointed German Express Shipping Agency (India) Pvt. Ltd., as its agent for transportation of the consignments and to hand it over to the 1st defendant. It is the obligation of 3rd defendant to release the entire stock of consignment to be handed over to the 1st defendant and 3rd defendant shall open an account for receipt of the entire amount either in terms of USD in a sum of 201,600.00 or shall convert the same into Indian Rupees and to hand over to the plaintiff pertaining to the total cost of the supplies made.
20. In the plaint, plaintiff himself confused and referred the 3rd defendant as HUA XIA Bank, China and also referred Citibank as 3rd defendant in several paras. 28 O.S.No.2140/2010 Hence, by making these allegations, plaintiff himself is not clear that which bank plaintiff refers in these paras. Sometimes, he referred Citibank as 4th defendant in the plaint and sometimes, he referred Citibank as 3rd defendant in the plaint.
21. In the plaint cause title, plaintiff has shown the Manager, HUA XIA Bank China, Kunming Branch, Kunming, China as 3rd defendant and he made the Relationship manger, Commercial relationship, Global Commercial Bank, Citibank, M.G.Road, Bangalore as defendant No.4. Thus, the pleadings are very much vague and it is not possible to decide to whom plaintiff refers in the plaint pleadings whether to defendant No.3 or to defendant No.4. The same mistake crept in even in the affidavit evidence of P.W.1. This mistake is not clarified by plaintiff, though defendant No.4 has taken said specific plea in its written statement.
22. In the affidavit evidence at para No.4, it is stated that the specification for the supply of industrial salt, its 29 O.S.No.2140/2010 quantity and the manner in which it needs necessarily required to be supplied on the basis of the commercial invoice to be shipped to the beneficiary-consignee together with the original and copies of the original shipment advice, shipped on Board Marine Bill of Lading covering Port to Port shipments made out to order of Vietnam International Commercial Joint Stock Bank and also stated that the defendant banks has to make the payment as per the letter of credit issued by them with clause of payable "at sight" immediately after receipt of documents. Even in this para, plaintiff has not made clear which bank is liable whether defendant No.3 bank or defendant No.4 bank or both banks as he has only stated the defendant bank.
23. In next para No.5 of the affidavit evidence of P.W.1, it is further stated that 3rd defendant was required to release stocks on the bill of lading after the receipt of payment. 3rd defendant referred in this para is whether HUA XIA Bank, China or Citibank is not clear. P.W.1 30 O.S.No.2140/2010 further stated in the same para that "the 2 banks are defendant No.3 & 4 in consensus with the defendant No.4". This sentence is not giving any meaning. P.W.1 further stated in the same para that the bill of lading transported by him to the 1st defendant on placing order to Vietnam International Commercial Joint Bank to be handed over to the consignee- 1st defendant for release of such articles of goods shipped.
24. Even though there is specific mention about this Vietnam International Commercial Joint Bank in the plaint and also in the affidavit evidence of plaintiff, plaintiff has not made this Vietnam International Commercial Joint Bank as party to the suit. According to documents produced by plaintiff i.e., Ex.P.3 to Ex.P.5, this Vietnam International Commercial Joint Bank is the issuing bank. The reasons for not making said issuing bank as party to the suit is not even explained by plaintiff.
25. Ex.P.3 is the new DC Advice dtd:14/3/2009 issued by defendant No.3 bank and it was reproduced in the 31 O.S.No.2140/2010 letterhead of HSBC Bank i.e., Hongkong and Shanghai Bank Corporation Limited, M.G.Road, Bangalore. Ex.P.3 is the letter written by HSBC Bank in favour of plaintiff mentioned their commission and other details of the DC. Ex.P.4 is also issued by HSBC Bank to plaintiff dtd:14/3/2009 charge receipt stating that they have debited Rs.1,654/- towards commission, service tax, education cess to the plaintiff's account. Ex.P.5 is also in the letter head of HSBC Bank addressed to plaintiff for USD One Million one hundred twenty five thousand only. This is the reproduction of DC (Documentary credit) issued by 3rd defendant bank. But, said HSBC Bank is also not made as party in the suit and plaintiff has not given any explanation for not making HSBC Bank as party to the suit.
26. It is narrated in Ex.P.5 that "in accordance with the version of the UCP Rules issued by ICC, as specified in the credit, we advise, having received the following authenticated teletransmission from HUA XIA Bank (3rd defendant)".
32 O.S.No.2140/2010
27. According to this Ex.P.5, this is irrevocable telex- transmission documentary credit without confirmation and reference and D.C. No.0903311100319 is mentioned. Date of issue of this document is 13/3/2009; Applicable rules is UCP latest version, expiry date and place is 5/4/2009 in China and DC issuing bank is VNIBVNVX which refers to Vietnam International Commercial Joint Stock Bank.
28. Under Ex.P.5, 1st beneficiary is defendant No.1 and 2nd beneficiary is plaintiff and it is drafts at sight, available with any bank by negotiation sight and drawee bank is again VNIBVNVXXXX. It refers to nature of goods i.e., industrial salt, its quality and quantity.
29. Ex.P.5 further reveals that several conditions were imposed and additional conditions were also imposed to 2nd beneficiary i.e., to plaintiff that all documents are to be presented through his banker and must be received by transferring bank's counter within 7 days after the date of 33 O.S.No.2140/2010 shipment, but in any event, not later than the validity of this Transferred Credit.
30. There were other special instructions to the presenting bank or 2nd beneficiary (plaintiff) that "1st beneficiary has irrevocably retained the right to refuse to allow us to advise amendments to the 2nd beneficiary and noted that 1st beneficiary requires to substitute their own documents for those of 2nd beneficiary" and further stated the documents are to be sent to defendant No.3 bank. It is further stated that "in strict conformity with the terms and conditions of this transferred DC are to be presented to us and will be sent onward to the DC issuing bank after substitution by the 1st beneficiary. Upon receipt of funds by the paying bank, we shall remit the proceeds to you (plaintiff) in accordance with your instruction" It is further stated that "we reserve the right to forward the documents to the DC issuing bank for approval and payment". It is further reiterated that "in the event that documents are presented to us (defendant No.3) with 34 O.S.No.2140/2010 discrepancies and unless expressly advise by you (plaintiff) to the contrary, we will forward documents to the documentary credit issuing bank for approval and payment". It is further stated that "at the request of first beneficiary (first defendant), we transfer the letter of credit without our responsibility".
31. As discussed above, Ex.P.5 is the transferred LC issued by Vietnam International Commercial Joint Bank and it was sent to plaintiff from defendant No.3 bank through HSBC bank. According to Ex.P.5, documentary credit was issued on 13/3/2009 and it was valid up to 5/4/2009 in China and plaintiff is 2nd beneficiary under this document. Defendant No.1 had retained the right to refuse to allow any advise amendment to 2nd beneficiary i.e., to plaintiff. The expiry date is 5/4/2009.
32. P.W.1 also in his cross-examination at page No.7 deposed that the last date for delivery of documents to defendant No.4 was 5/4/2009, defendant No.4 was supposed to deliver his documents to defendant No.3 35 O.S.No.2140/2010 immediately after he handed over those documents to defendant No.4. However, he has further deposed that on 13/5/2009 he has given documents to defendant No.4. Thus, apparently, there is clear violation of terms of LC.
33. Plaintiff has produced Ex.P.7 - amended LC. According to this document, there was an amendment No.1 to LC and this amendment was done on 2/4/2009. According to it, the new expiry date is 25/5/2009 and latest date of shipment is 15/4.2009. This document should be read with Ex.P.5 with all other conditions. According to Ex.P.5, the latest date of shipment was 29/3/2009, but after expiry of said date i.e., 2/4/2009, amendment No.1 was done and according to it, the latest date of shipment was 15/4/2009. But, P.W.1 has deposed that he shipmented the goods subsequently.
34. Even according to the documents produced by plaintiff, the shipment was not before 15/4/2009, but it was done on 22/4/2009 by plaintiff. Within 7 days from the date of shipment, plaintiff ought to submit the 36 O.S.No.2140/2010 documents from his banker to defendant No.3. But, as per his own documents and own evidence, he submitted documents only on 11/5/2009. Hence, according to documents produced by plaintiff, even though LC amendment is considered as genuine, plaintiff has not shipmented the goods in accordance with the terms of LC amendment and not submitted documents as per LC amendment. Hence, apparently, there is violation of terms of LC and its amendment.
35. Defendant No.4 contended that it is only a forwarding bank and not issuing bank or confirming bank and thus, it is in no way responsible for the goods sold by plaintiff to 1st defendant.
36. It is to be noted here that as per Ex.P.5, the nature of documentary credit was "at sight". As per UCP Rules, if documentary credit is issued "at sight"; then, it means the confirming bank or issuing bank must honour the credit if it is available for said payment.
37 O.S.No.2140/2010
37. Under these circumstances, the documents of plaintiff ought to have been submitted only after payment. It is the specific arguments of plaintiff's counsel that though there is such a condition in the LC, defendant No.4 without confirming about payment, has forwarded documents to defendant No.3 and thus, defendant No.4 bank is also liable for making payment.
38. In this regard, plaintiff mainly relied upon Ex.P.9 & Ex.P.10. Ex.P.9 is addressed to defendant No.4 bank. It is stated in Ex.P.9 that plaintiff has exported the consignment as per LETTER OF CREDIT received by your bank (defendant No.4 bank) and he has enclosed the document for collection and also requested to receive and acknowledge the same and also requested for credit proceeds to the plaintiff account No.343788002.
39. There is no mention in this letter as per Ex.P.9 that plaintiff directed defendant No.4 to forward the document only after receipt of payment. However, plaintiff has also written letter as per Ex.P.10 to defendant No.3 wherein 38 O.S.No.2140/2010 there is specific mention "at sight" of this bill of exchange pay to Citibank, MG Road, it ordered a sum of USD.201,600/- and charge the same to the account of M/s.Kunming Teng Yue Hao Trade and Economy Ltd., Company i.e., 1st defendant company and also mentioned LETTER OF CREDIT No.060TR0900091A dt:13/3/2009. It also mentioned the BILL OF LADING No.dtd:9/5/2009. Thus, according to Ex.P.9 and Ex.P.10, plaintiff has only directed defendant No.3 to disburse the document after payment and not directed defendant No.4 to do so.
40. As discussed above, Ex.P.5 is the LC issued by Vietnam International Commercial Joint Bank and not defendant No.4 bank. Said LC was transferred to defendant No.3 bank and hence, it was called as transferred LC and it was submitted to plaintiff through HSBC bank. Under these circumstances, plaintiff ought to have made Vietnam International Commercial Joint Bank and HSBC bank and transferring bank as parties in this suit, but plaintiff has not made those 2 banks as parties in 39 O.S.No.2140/2010 this suit and made only defendant No.3 and 4 banks as parties in this suit. No reason is given by plaintiff for not making those 2 banks Vietnam International Commercial Joint Bank and HSBC bank as parties in this suit.
41. It is to be noted here that defendant No.4 has produced the computerized print out of Ex.P.3 to Ex.P.5 as per Ex.P.5. Defendant No.4 categorically stated that it has received only these documents from issuing and transferring bank and not the amended LC as produced by plaintiff as per Ex.P.7. Ex.D.5 is nothing but replica of Ex.P.3 to Ex.P.5. Even though defendant No.4 has not received the amended LC, plaintiff has produced the amended LC as per Ex.P.7. Hence, it could be looked into. Even though it could be looked into, as discussed above, the plaintiff has violated even the terms of Ex.P.7 and not adhered to terms of Ex.P.7.
42. In this regard, defendant No.4 contended that as there is breach of promise, it forwarded the document to defendant No.3 at risk of plaintiff. In this regard, 40 O.S.No.2140/2010 defendant No.4 has produced Ex.D.6 - Advise given by defendant No.4 bank to defendant No.3. According to this document, defendant No.4 bank has forwarded the document of plaintiff to defendant No.3 bank. According to this document, plaintiff is the exporter and defendant No.1 is the importer. In this document, defendant No.4 noted that it confirmed that they have endorsed the value of the bill on the original LC and also directed defendant No.3 to deliver documents against payment and also requested to credit the proceeds to the account with defendant No.4 bank and it also mentioned that UCP rules for documentary credit are applicable to the present transaction.
43. Defendant No.4 has produced one more such Advice given by defendant No.4 bank to plaintiff as per Ex.D.7 dtd:12/5/2009. According to this document, it is stated that payment will be made subject to receipt of fund from the issuing or collecting bank except Confirmed Credit Complaint cases. It is not the case of plaintiff that plaintiff 41 O.S.No.2140/2010 is having this Confirmed Credit Facility with defendant No.4 bank. He has got the DOCUMENTARY CREDIT or LETTER OF CREDIT from Vietnam International Commercial Joint Bank as Issuing bank or defendant No.3 bank as Transferring bank, but not from defendant No.4 bank.
44. Ex.D.8 is the e-mail conversation between the employee of defendant No.4 with plaintiff dtd:13/5/2009. According to this letter, employee of defendant No.4 made it clear to plaintiff that LC was expired and shipment done not as per LC and they received the original LC and this is to confirm the documents processed and forwarded on collection of approval basis. Thus, in this letter, defendant No.4 categorically mentioned that LC expired even though it forwarded the document to defendant No.3 as per the instructions given by the plaintiff.
45. The above said documents made it very clear that defendant No.4 is only forwarding bank and not issuing/collecting/transferring bank to pay the claim of 42 O.S.No.2140/2010 plaintiff. If defendant No.4 bank has received any proceeds from defendant No.3 bank, then only, it could credit said amount to plaintiff's account.
46. Learned counsel for plaintiff submitted arguments that as per endorsement made on the backside of first page of Ex.P.5, defendant No.4 bank has received proceeds and hence, it has to credit the amount to plaintiff's account.
47. On perusal of the backside of 1st page of Ex.P.5, this court noticed that there is some handwriting on 30/3/2009 pertaining to 3 LC Nos. But, they are not tallying with the LC Nos. mentioned in the present case. According to the recitals on back side of 1st page of Ex.P.5, US$.11,25,000; US$.2,01,600; US$.2,01,600; US$.2,01,600 and then, balance is US$.5,20,200 and it bears the seal and signature of Citibank. Further on 13/5/2009 one more LC No. is written as Co50903509 and $.201,600 was written below that $.318,600 was written as balance and it also bears the seal and signature of Citibank. Below that also, 43 O.S.No.2140/2010 one more LC Number is written as Co50903145 with date 13/5/2009 which is also not tallying with the present LC and under this document also $.201,600 was written and the balance is written as $.117,000 and it also bears the seal and signature of Citibank.
48. On perusal of this endorsements on backside of first page of Ex.P.5, this court noticed that the above said recitals are not pertaining to the suit transaction. In this regard, D.W.1 in his cross-examination has deposed that he does not know anything about these recitals. There is no specific pleading in the plaint regarding these recitals and P.W.1 has not stated anything about these recitals in his affidavit evidence. Only for the first time, in the cross- examination of D.W.1 and at the time of arguments, learned counsel for plaintiff has raised this plea. But, as discussed above, this is not pertaining to the suit transaction. This fact is more substantiated from several messages produced by defendant No.4, which would be discussed below. There are specific recitals in these 44 O.S.No.2140/2010 subsequent Swift messages in between defendant Nos.4 and defendant No.3; defendant No.4 and Vietnam International Commercial Joint Bank that defendant No.4 has not received the proceeds from defendant No.3 or from Vietnam International Commercial Joint Bank. Hence, arguments of learned counsel for plaintiff on this point is not tenable.
49. The subsequent Swift messages between defendant Nos.4 and 3 and defendant No.4 and Vietnam International Commercial Joint Bank are very much relevant to decide whether there are any LC amendment was done and whether defendant No.4 had made any mistake or not. Hence, Ex.D.9 to Ex.D.22 are very relevant documents.
50. Ex.D.9 is the Swift message dtd:26/5/2009 from defendant No.4 bank to defendant No.3. According to this message, defendant No.4 requested defendant No.3 referring the documents forwarded by defendant No.4 to defendant No.3 bank pertaining to LC No.0903311100319 45 O.S.No.2140/2010 i.e., pertaining to present case transaction. It is noted that defendant No.4 has forwarded the documents under said LC on 12/5/2009 as per UCP DC 600 and hence, defendant No.3 bank is obligated to Refuse Or Accept The Documents And Requested For Providing Acceptance Telex And Confirm Regarding The Same By Tested Telex Message. Though defendant No.4 sent this message and it was reached defendant No.3 bank on 26/5/2009 at 21.43.24 hours, defendant No.3 bank has not given reply to it. Hence, again defendant No.4 bank sent another Swift message on 4/6/2009 to defendant No.3 pertaining to the same transaction as per Ex.D.10. This is nothing but replica of Ex.D.9 i.e., defendant No.4 reminded the earlier message to defendant No.3. Because, defendant No.3 has not replied to Ex.D.9. This was also reached defendant No.3 on 4/6/2009 at 21.49.41 hours. Defendant No.3 has not replied even to Ex.D.10. Hence, defendant No.4 bank has given another Swift message dtd:19/6/2009 to defendant No.3 bank as per Ex.D.11 pertaining to the same transaction and this is also replica of Ex.D.9 & 46 O.S.No.2140/2010 Ex.D.10 and stated that this is the 4th reminder sent by defendant No.4 to defendant No.3. This was also reached defendant No.3 on 19/6/2009 at 15:18:02 hours.
51. Afterwards, as per Ex.D.12 plaintiff through e-mail dtd:26/6/2009 sent message to defendant No.4 that to inform the buyer bank to return the documents immediately as the buyer is having financial problems.
52. As discussed above, on 11/5/2009 itself, plaintiff has submitted documents to defendant No.4 for forwarding the same to defendant No.3 and they were forwarded on 12/5/2009 itself to defendant No.3. Subsequently, 4 times defendant No.4 reminded defendant No.3 about receipt of those documents as stated above. Only afterwards i.e., on 26/6/2009 i.e., more than one month after forwarding documents, plaintiff had written letter to defendant No.4 to take back the documents as buyer was in financial problems. Defendant No.4 acted immediately as per and sent message to defendant No.3 bank. On 17/7/2009, defendant No.4 bank has received the telephonic 47 O.S.No.2140/2010 communication from defendant No.3 as per Ex.D.13 pertaining to message sent by defendant No.4 dtd:13/7/2009 pertaining to the same transaction. In this message, defendant No.3 bank has stated that they contacted with the issuing bank and required the status of the documents; the issuing bank responded that they have released the documents to the applicant according to the terms and conditions of the LC amendment and they are making efforts to chase the status of the documents and would inform defendant No.4 bank as soon as possible. Thus, according to Ex.D.13, the issuing bank had already given the document to the applicant immediately as per terms of LC amendment. This LC amendment document is not produced by either parties in this case. The LC amendment produced by plaintiff does not include this condition.
53. Defendant No.4 has produced the Swift message from defendant Nos.4 to 3 as per Ex.D.14 and it was received by defendant No.3 on 1/8/2009 at 16:13:21 48 O.S.No.2140/2010 hours. In this message again, defendant No.4 reiterated that they have forwarded the document under LC on 12/5/2009 under UCP DC 600 and further stated that "THIS IS REFERENCE TO TELEX DTD:17/7/2009 BY DEFENDANT NO.3 THAT THE ISSUING BANK HAVE RELEASED THE DOCS TO APPLICANT; AS PER OUR M.T. DTD:13/7/2009 BENEFICIARY HAS RECALLED THE DOCUMENTS TO GET BACK TO US IMMEDIATELY. TILL DATE, WE HAVE NEITHER RECEIVED THE DOCUMENTS NOR THE PAYMENT AND HENCE, PLS CONFIRM THE STATUS OF DOCUMENTS AND PAYMENT IMMEDIATELY. BENEFICIARY (PLAINTIFF) IS WAITING FOR PAYMENT". But, defendant No.4 has not received any message from defendant No.3 for this Swift message. Hence, again defendant No.4 has given another Swift message dtd:3/12/2009 to 3rd defendant as per Ex.D.15 which is nothing but replica of Ex.D.14 and further added that "ISSUING BANK HAVE RELEASED THE DOCUMENTS TO APPLICANT, THE DOCUMENTS SENT ON SIGHT BASIS. HENCE, DOCUMENTS CAN BE RELEASED AGAINST 49 O.S.No.2140/2010 PAYMENT". This message reached defendant No.3 on 3/12/2009 at 13:23:53 hours. Even for this message, defendant No.3 has not replied.
54. As per Ex.D.16, on 5/12/2009, the issuing bank - Vietnam International Commercial Joint Bank has sent telex message to defendant No.4 which reached defendant No.4 on the same day at 11:31:04 hours pertaining to the same transaction wherein it is stated that "PLS KINDLY BE ADVISED THAT UP TO DATE WE HAVE NOT RECEIVED THE A/M DOCUMENTS FROM YOUR GOOD BANK (DEFENDANT NO.4 BANK). THEREFORE, PLS INVESTIGATE YOUR RECORDS AND TO PROVIDE US THE NAME AND TRACKING NUMBER OF COURIER SERVICES BY RETURNING AUTHENTICATED SWIFT MSG".
55. On 8/12/2009, defendant No.4 has sent Swift message to defendant No.3 as per Ex.D.17 wherein it mentioned about the receipt of message from issuing bank as per Ex.D.16 and. It is stated in this message that "WE HAD FORWARDED THE DOCUMENTS UNDER LC ON 50 O.S.No.2140/2010 DTD:12/5/2009. THIS IS REFERENCE TO YOUR (DEFENDANT NO.3) TELEX DTD: 17/7/2009 UNDER REF NO.060TR0900091A THAT ISSUING BANK HAD RELEASED THE DOCS TO APPLICANT AS PER LC TERMS. BUT, AS PER THE TELEX RECEIVED FROM ISSUING BANK DTD:4/12/2009, ISSUING BANK HAD STATING THAT THEY HAVE NOT RECEIVED THE ABOVE MENTIONED DOCUMENTS UP TO DATE. THEREFORE, PLEASE IMMEDIATELY CHECK YOUR RECORDS AND PROVIDE US THE NAME AND TRACKING NUMBER OF COURIER SERVICES" and again reminded defendant No.3 that documents were sent on sight basis as per LC terms and hence, documents can be released only against payment and till date, they have not received the payment and requested urgently to confirm the status of payment and remit the proceeds to their account as soon as possible as beneficiary is awaiting for payment and claiming for interest.
56. On 11/12/2009 defendant No.4 received the Swift message from defendant No.3 as per Ex.D.18 that they 51 O.S.No.2140/2010 have not received any payment from the issuing bank and they were informed by 1st beneficiary that all shipping documents have been returned to the 1st beneficiary directly by the applicant and please notify the 2nd beneficiary to contact the 1st beneficiary.
57. Afterwards, again defendant No.4 sent telex message as per Ex.D.19 to issuing bank and it reached the issuing bank on 5/1/2010 at 13:47:18 hours. In this telex message, defendant No.4 referred about the telex message of issuing bank dtd:29/12/2009 and requested the issuing bank to confirm whether any payment has been made to transferring bank i.e., to defendant No.3 bank; if not, requested to remit the proceeds to transferring bank so that they could honour the payment for above said bill amount.
58. Even on 7/1/2010 defendant No.3 had sent the message to defendant No.4 as per Ex.D.20 that it has not received payment from issuing bank. On 15/1/2010, again defendant No.4 bank sent message to defendant No.3 52 O.S.No.2140/2010 bank as per Ex.D.21 that they have received message from Vietnam International Commercial Joint Bank on 7/1/2010 and had quoted the said message as follows: "IN ADDITION WE HAVE RECEIVED THE SET OF DOCUMENTS PRESENTED BY HUAXIA BANK (DEFENDANT NO.3) FOR AND ON BEHALF OF 1ST BENEFICIARY BL NO.HLCUBLR90461460 DD 090426 WITHOUT REIMBURSEMENT CLAIM AS PER TERMS AND CONDITIONS OF LC AMND 2 SINCE THE 1ST BENEFICIARY RETAINED THE RIGHT NOT TO ADVICE LC AMENDMENT TO 2ND BENEFICIARY. WE ARE UNABLE TO VERIFY WHICH PAYMENT IS RELATED TO YOUR BILL. WE CERTIFY THAT WE HAVE NOT RECEIVED ANY CLAIM FROM HUA XIA BANK" and thus, requested defendant No.3 bank to please claim reimbursement immediately for said reference and credit the proceeds to their account as soon as they received the payment from Vietnam International Commercial Joint Bank and they are awaiting for reimbursement claim from defendant No.3. 53 O.S.No.2140/2010
59. On perusal of all the above Swift messages in between defendant No.4 and 3 and defendant No.4 and the issuing bank - Vietnam International Commercial Joint Bank, it is crystal clear that at one stretch defendant No.3 claims that already issuing bank had released the documents to defendant No.1; at another stretch issuing bank - Vietnam International Commercial Joint Bank had contended that it has not yet received the documents; at another stretch, issuing bank contended that there is 2nd amendment to LC and according to this 2nd amendment, 1st defendant had received the documents since 1st defendant had retained the right not to advice LC amendment to plaintiff and according to this 2nd amendment, the 1st defendant can claim documents without reimbursement.
60. Plaintiff has not made this Vietnam International Commercial Joint Bank - issuing bank as party to the suit. If the Vietnam International Commercial Joint Bank is made as party to the suit and produced the 2nd LC amendment, it would be possible for the court to decide 54 O.S.No.2140/2010 whether the 2nd LC amendment had taken place or not, but for the reasons best known to plaintiff, he has not made the issuing bank as party to the suit.
61. It is to be noted here that in the LC as per Ex.P.5, there is specific condition that "1ST BENEFICIARY (1ST DEFENDANT) HAS IRREVOCABLY RETAINED THE RIGHT TO REFUSE TO ALLOW US TO ADVISE AMENDMENTS TO THE 2ND BENEFICIARY; 1ST BENEFICIARY REQUIRES TO SUBSTITUTE THEIR OWN DOCUMENTS FOR THOSE OF 2ND BENEFICIARY. NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY THAT APPEAR IN THE FOREGOING DOCUMENTARY CREDIT. IT IS ESSENTIAL THAT DOCUMENTS UNDER THE CREDIT BE SENT TO US (DEFENDANT NO.3)". It is further stated in Ex.P.5 that "THIS TRANSFERRED DC ARE TO BE PRESENTED TO US (3RD DEFENDANT) AND WILL BE SENT ONWARD TO THE DC ISSUING BANK AFTER SUBSTITUTION BY THE 1ST BENEFICIARY (WHERE THE FIRST BENEFICIARY HAS RETAINED THE RIGHT TO DO SO). UPON RECEIPT OF FUNDS FROM THE PAYING BANK WE SHALL REMIT 55 O.S.No.2140/2010 PROCEEDS TO YOU IN ACCORDANCE WITH YOUR INSTRUCTION. WE RESERVE THE RIGHT TO FORWARD THE DOCUMENTS TO THE DC ISSUING BANK FOR APPROVAL AND PAYMENT". It is further recited in Ex.P.5 that "NOTWITHSTANDING ARTICLE 16 OF UCP 600, IN THE EVENT THE DOCUMENTS ARE PRESENTED TO US WITH DISCREPANCIES AND UNLESS EXPRESSLY ADVISED BY YOU TO THE CONTRARY, WE WILL FORWARD THE DOCUMENTS TO THE DOCUMENTARY CREDIT ISSUING BANK FOR APPROVAL AND PAYMENT AND AT THE REQUEST OF THE 1ST BENEFICIARY, WE TRANSFER THIS LETTER OF CREDIT WITHOUT OUR RESPONSIBILITY;
CONFIRMATION INSTRUCTIONS WITHOUT RESPONSIBILITY". Thus, under Ex.P.5 itself, defendant No.1 had retained right of substitution and accordingly, it might have exercised the right of substitution i.e., as per LC amendment No.2 referred by the issuing bank.
62. As discussed above, as per Ex.P.7 and as per 1st amendment, there was amendment as to the date of 56 O.S.No.2140/2010 shipment and expiry date and place. But, as discussed above, even terms of said amendment was violated by the plaintiff. Under those circumstances, there might be 2nd amendment agreed between parties which plaintiff has not produced. But it is clear from Swift message of issuing bank to defendant No.4 bank which was forwarded to defendant No.3 bank as per Ex.D.17. Under these circumstances, it is crystal clear that issuing bank might have released the documents to 1st defendant and accordingly, 1st defendant has received goods which were sent by plaintiff, but it has not made payment to plaintiff as per terms and conditions of the agreement. As the LC was expired and as per its 2nd amendment, issuing bank might have released the documents to 1st defendant. Under these circumstances, this court holds that at any stretch of imagination, 4th defendant is not a party to all these contracts. 4th defendant is only a forwarding bank. It is Vietnam International Commercial Joint Bank, HSBC bank and defendant No.3 bank are involved in this 57 O.S.No.2140/2010 transaction and they are liable for the payment and not defendant No.4 bank.
63. As defendant No.1 has received the goods and not made the payment, defendant No.1 and its Managing Director - defendant No.2 are liable to make the payment to plaintiff. Defendant No.3 being the transferring bank is also liable to make payment to plaintiff because, as per the original terms of LC, defendant No.3 was obliged to send the documents only after payment and it ought to have made sure that payment was made before submitting documents, but it did not do so. Hence, this court holds that defendant Nos.1 to 3 are jointly and severally liable to make payment and not defendant No.4 bank. Accordingly, issue No.3 is answered partly in affirmative and issue No.5 is answered in affirmative. ISSUE No.4 & 6
64. These issues are considered together as they require common discussion. In view of findings on issue Nos.1 to 3 & 5, this court holds that plaintiff is entitled for suit claim from defendant Nos.1 to 3. There is no prayer in the 58 O.S.No.2140/2010 plaint regarding interest. However, by oversight, in these issues, even interest is also added. Accordingly, issue No.4 & 6 are answered partly in affirmative.
ISSUE No.7
65. In view of findings on issue Nos.1 to 6, this court proceeds to pass the following:
ORDER Suit is partly decreed with costs against defendant Nos.1 to 3 for a sum of Rs.94,75,200/-.
Suit against defendant No.4 is dismissed.
(Dictated to the Judgment Writer, transcribed and computerized by her, corrected and then pronounced by me in the open Court on this the 18th day of October, 2016).
(K.B.GEETHA) XIX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY.
ANNEXURE I. List of witnesses examined on behalf of :
(a) Plaintiff's side :
P.W.1 - N.A.Jayaram
b) Defendants' side :
D.W.1 - Anand Panda 59 O.S.No.2140/2010 II. List of documents exhibited on behalf of :
(a) Plaintiff's side :
Ex.P.1 Copy of legal notice dtd:16/9/2009 Ex.P.2 Postal receipt Ex.P.3 DC advice dtd:14/3/2009 Ex.P.4 Charge receipt dtd:14/3/2009 Ex.P.5 Acknowledgement dted:13/3/2009 Ex.P.6 Computer generated statement Ex.P.7 Letter dtd:2/4/2010 written by HSBC Bank to plaintiff Ex.P.8 Shipping bill dtd:22/4/2009 containing 3 pages Ex.P.9 Computerized copy of letter dtd:11/5/2009 Ex.P.10 Computerized copy of bill of exchange Ex.P.11 Computerized copy of invoice dtd:13/3/2009 Ex.P.12 Computerized copy of packing list Ex.P.13 Computerized copy of certificate of quantity and weight Ex.P.14 Computerized copy of certificate of quality Ex.P.15 Computerized copy of certificate of origin Ex.P.16 Computerized copy of certificate Ex.P.17 Computerized copy of certificate of shipping advice Ex.P.18 Computerized copy of declaration cum undertaking given by defendant No.4 Ex.P.19 Certificate U/S.65 - B of Evidence Act Ex.P.20 Affidavit required U/S.65-B of Evidence Act pertaining to Ex.P.9 to Ex.P.18 60 O.S.No.2140/2010
(b) Defendants' side : -
Ex.D.1 & Copies of letters dtd:20/11/2009 & Ex.D.2 23/4/2010 Ex.D.3 Copy of the letter written by plaintiff to RBI Ex.D.4 GPA executed by defendant No.4 Ex.D.5 Bank advices given by HSBC Bank to plaintiff containing 7 pages Ex.D.6 One more advice given by Bank to defendant No.3 containing 2 pages Ex.D.7 One more advice given by Bank to plaintiff Ex.D.8 E-mail conversation between Raut.Megha with plaintiff dtd:13/5/2009 Ex.D.9 Swift message dtd:26/5/2009 from bank to defendant No.3 containing 2 pages Ex.D.10 Swift message dtd:4/6/2009 from Bank to defendant No.3 containing 2 pages Ex.D.11 Swift message dtd:19/6/2009 from bank to defendant No.3 containing 2 pages Ex.D.12 E-mail conversation between plaintiff and Garg Mahima dtd:26/6/2009 Ex.D.13 Telex communication by defendant No.3 to bank dtd:17/7/2009 Ex.D.14 Swift message dtd:1/8/2009 from bank to defendant No.3 containing 2 pages Ex.D.15 Swift message dtd:3/12/2009 from bank to defendant No.3 containing 2 pages 61 O.S.No.2140/2010 Ex.D.16 Telex communication dtd:5/12/2009 from issuing bank i.e., Vietnam International Commercial Joint Stock Bank to defendant's bank Ex.D.17 Swift message dtd:8/12/2009 from Bank to defendant No.3 containing 2 pages Ex.D.18 Telex message from defendant No.3 to bank Ex.D.19 Swift message dtd:5/1/2010 from bank to defendant No.3 containing 2 pages Ex.D.20 Legible copy of Swift message dtd:7/1/2010 from defendant No.3 to bank Ex.D.21 Swift message dtd:15/1/2010 from bank to defendant No.3 containing 3 pages Ex.D.22 Certificate U/S.65-B of Indian Evidence Act (K.B.GEETHA) XIX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY.
GVU/-
62 O.S.No.2140/2010
Judgment pronounced in open court vide separate detailed judgment with the following operative portion:-
ORDER Suit is partly decreed with costs against defendant Nos.1 to 3 for a sum of Rs.94,75,200/-.
Suit against defendant No.4 is dismissed.
(K.B.GEETHA) XIX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY.