TMI Blog1986 (8) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... a demand being made by the beneficiary the bank became liable to honour the same, regardless of any controversy between the parties i.e. the appellant who is the buyer, and respondent No. 1, the sellers, as to whether the contract of sale had been performed. 2. Briefly stated, the facts are that the appellant, the buyer, covenanted to purchase and respondent No. 1 Messrs Vinmar Impex Inc., Singapore, the sellers, agreed to sell and supply 100 M.T. of High Density Polythene Powder called HOPE @ $565 per M.T. CIF, Calcutta on an irrevocable letter of credit being opened by the appellant in favour of respondent No. 1, the sellers. One of the terms of the contract as per the letter of intent dated April 29,1985 signed by both the parties per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in favour of the Shipping Company. On the strength of the said letter of indemnity the Shipping Company delivered the goods to the appellant without production of the original bills of lading, marine insurance policy signed invoices etc. After taking delivery of the goods, the appellan sold them in the market and realised the proceeds amounting to ₹ 17,50,000. The Shipping Company having made a demand upon the Allahabad Bank to honour the letters of indemnity and the Bank having called upon the appellant to pay the amount due, the appellant brought a suit in the Original Side of the Calcutta High Court seeking to recover ₹ 9,25,020.80p. as damages from respondent No. 1, the sellers alleging that they were in breach in that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assuming that the appellant had suffered the damages, it has assessed the same at ₹ 9,25,020. 80p., there still remained a clear margin of over ₹ 8 lakhs in the hands of the appellant on account of the sale price of the goods, the agreed price of the siad goods being ₹ 6,90,000. The learned Judge felt that there was no reason why the appellant should retain the entire sale proceeds amounting to ₹ 17,50,000 and pay nothing to respondent No. 1 towards the price. A Division Bench of the High Court by its judgement dated February 3, 1986 upheld the order of the learned Single Judge. The learned Judges, in the course of their reasoned judgement, referred in detail to the relevant documents as also to various authorities, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e injunction prayed for i.e. in allowing the banking transaction to go forward. The appellant would also not be put to any irreparable loss if no injunction is granted. 5. This case is really an extension of the principles laid down by this Court in United Commercial Bank's case. The main point in controversy in that case was whether the Court should in a transaction between a banker and banker grant an injunction at the instance of the beneficiary of an irrevocable letter of credit, restraining the issuing bank from recalling the amount paid under reserve from the negotiating bank, acting on behalf of the beneficiary against a documents of guarantee indemnity at the instance of the beneficiary. In dealing with the nature of a banker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The Court referred to, with approval, the following observations of Kerr, J. in Section 4D. Harbottle (Mercantile) Ltd. v. National Westminster Bank Ltd. It is only in exceptional cases that the courts will interfere with the machinery of irrevocable obligations assumed by banks. They are the lifeblood of international commerce. And added: Except possibly in clear cases of fraud of which the banks have notice, the courts will leave the merchants to settle their disputes under the contracts by litigation or arbitration as available to them or stipulated in the contracts. 6. We do not see why the same principles should not apply to a banker's letter of indemnity. 7. Accordingly, the appeal must fail and is dismissed with ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
