Sonia
Vs. Oriental Insurance Co. Ltd. & Ors [2007] Insc 809 (7 August 2007)
Tarun
Chatterjee & P.K.Balasubramanyan
CIVIL
APPEAL NO.3521 OF 2007 [Arising out of SLP [C] No.22070 of 2004] TARUN
CHATTERJEE, J.
1.
Leave granted.
2.
This appeal is directed against the Judgment and order dated 23rd August, 2004 passed by a Division Bench of the
High Court of Punjab and Haryana at Chandigarh whereby the High Court dismissed a writ application filed by the
appellant only on the ground that no legal right of the appellant had been
infringed.
3. A
writ petition was filed by the appellant for a direction upon the respondent to
consider the case of the appellant for promotion to the cadre of Assistant
Administrative Officer (AAO) against the vacancy reserved for Scheduled Tribe
candidates. A further direction was also prayed by the appellant to the extent
that the respondents should keep one vacancy reserved for the appellant who had
competed and was found successful as a candidate from Scheduled Caste reserved
category and for other incidental reliefs.
4. The
facts of the present case may briefly be stated as follows:
5. The
appellant who is a Scheduled Caste by birth has been working as Assistant [T]
in the Oriental Insurance Company on and from 2nd January, 1997. Applications were invited from eligible and desirous
employees for appointment to the post of Assistant Administrative Officer in
terms of the promotional policy of the respondents. There are two modes of
appointment to the post of Assistant Administrative Officer, namely,
(i) promotion
from the departmental candidates; and
(ii) by
direct recruitment through competitive examination.
In the
said promotional policy, pre-examination training to Scheduled Caste/Scheduled
Tribes/Other Backward Classes candidates who are eligible to appear in the
aforesaid test has also been allowed.
It is
also evident from the policy that if no eligible candidate is available in a
particular category, an exchange of vacancy between Scheduled Caste and
Scheduled Tribes categories can be allowed to the extent of non-availability of
eligible candidates in a particular category. Advertisement was published on 30th October, 2003 and accordingly the appellant
applied on the basis of the said advertisement to the post of Assistant Administrative
Officer. There were in all five vacancies out of which one was reserved for
candidates belonging to the Scheduled Tribes category and both Scheduled Caste
and Scheduled Tribes candidates were eligible to compete for this reserved
vacancy.
The
appellant was permitted to undergo a pre-examination training between 1st December, 2003 to 19th December, 2003 which was imparted to Scheduled Caste and Scheduled
Tribes employees in accordance with the aforesaid promotional policy.
The
appellant was permitted to appear for the competitive examination held on 21st December, 2003 against the vacancy reserved for
candidates belonging to Scheduled Tribes category.
The
name of the appellant appeared at Sl.No.23 in the list of successful
candidates. Since her name had appeared in the list of successful candidates,
the appellant claimed that she was entitled to be called for interview and
considered for selection. A notice dated 27th February, 2004 was issued by the
respondents that no exchange of vacancies between Scheduled Caste and Scheduled
Tribes categories could be allowed even if no eligible candidate was available
under either of the two categories in view of OM No.36012/17/2002-Estt.(Res)
dated 6th November, 2003, clarifying that it was not permissible to fill a post
reserved for Scheduled Tribes by a Scheduled Caste candidate or vice versa by
exchange of vacancies between the two. Feeling aggrieved by refusal of the
authorities to empanel the appellant for the interview, the aforesaid writ
petition was filed before the High Court which, as noted herein earlier, was
dismissed with the observation that no legal right of the appellant had been
infringed for not empanelling her as a successful candidate to appear before
the Interview Board set up by the respondents.
6. It
is this order of the High Court which the appellant has challenged before this
Court by way of a special leave petition in respect of which leave has already
been granted.
7. We
have heard the learned counsel appearing for the parties and examined the
judgment of the High Court and other materials on record. A perusal of the
order of the High Court impugned in this appeal shows that the writ petition of
the appellant as noted herein above, was dismissed solely on the ground that in
view of OM dated 6th November, 2003, the exchange of vacancies between Scheduled Caste and
Scheduled Tribes categories was not permissible. Before we take up this
question for our decision, we may note that the respondents on 30th October, 2003, notified the number of vacancies
required to be filled under various categories. It is also evident from the
advertisement that out of five vacancies, four were unreserved and one was
reserved for a candidate belonging to Scheduled Tribes. In this advertisement,
the respondents specifically mentioned that in case no eligible candidates are
available in a particular reserved category, i.e., Scheduled Caste and
Scheduled Tribes, exchange of vacancies between these two categories was
permitted. It would be necessary for us to reproduce the portion of the
Promotional Policy regarding reservation for Scheduled Caste and Scheduled
Tribes candidates: "As regards exchange of vacancies between SC/ST
categories in case no eligible candidate is available in a particular category
such exchange is allowed between these two categories to the extent of
non-availability of eligible candidates in a particular category." From
the above, it cannot be said to be in dispute that when no eligible candidate
is available in a particular category, exchange of vacancies between Scheduled
Caste and Scheduled Tribes categories can be allowed to the extent of non
availability of eligible candidate in a particular category. It may also, at
this stage, be noted that the Office Memorandum dated 6th November, 2003 by
which permission of exchange of reservation between Scheduled Caste and
Scheduled Tribes was withdrawn, was issued at a time when candidates including
the appellant had already acted on the basis of the advertisement dated 30th
October, 2003 in which permission was granted for exchange of reservation
between Scheduled Caste and Scheduled Tribes. Even on a plain reading of clause
[6] of the Office Memorandum dated 6th November, 2003, it can be seen that in
case some posts reserved for Scheduled Tribes might have been filled by
Scheduled Caste candidates by exchange of reservation or vice versa before
issuance of the said Office Memorandum, such cases need not be re-opened. This
clause would clearly show that the posts reserved for Scheduled Tribes which
have been filled by Scheduled Caste candidates by exchange of reservation
before issuance of this Office Memorandum need not be disturbed. As noted
herein earlier, applications were invited by the respondents on 30th October, 2003 whereas the Office Memorandum
withdrawing permission of exchange of vacancies between Scheduled Caste and
Scheduled Tribes candidates was issued on 6th November, 2003. Let us now, therefore, consider
whether this Office Memorandum could have a retrospective effect or not. In our
view, the Office Memorandum dated 6th November, 2003 cannot have or could not
have retrospective effect as the appellant would be governed or covered by the
date on which applications were invited to fill up the posts of Assistant
Administrative Officer, i.e., on 30th October , 2003 and also for the reason
that no retrospective effect has been given to the said Office Memorandum. In
N.T. Devin Katti vs. Karnataka Public Service Commission [ 1990[3] SCC 157 ]
this Court has held that where selection process has been initiated by issuing
an advertisement inviting applications, selection should normally be regulated
by the rule or order then prevalent and also when advertisement expressly
states that the appointment shall be made in accordance with the existing rule
or order, subsequent amendment in the existing rule or order will not affect
the pending selection process unless contrary intention is expressly or
impliedly indicated. In the present case, admittedly, while inviting
applications, respondents advertised the number of vacancies required to be
filled under various categories. Notice inviting application also mentioned
that if under a particular category an eligible candidate was not available,
exchange of vacancies between the two categories was permitted. The appellant
acted on the basis of the aforesaid advertisement which permitted her to apply
for the post and in fact she was permitted to sit in the examination and was
subsequently also found to be a successful candidate in the said examination.
Therefore, in view of the aforesaid decision in the case of N.T. Devin Katti
vs.
Karnataka
Public Service Commission [ 1990[3] SCC 157 ], we are of the view that OM dated
6th November, 2003 cannot have any retrospective effect and the date on which
the applications were invited should be the relevant date for consideration
whether exchange of Scheduled Caste and Scheduled Tribes candidates was
permissible. The decision in the case of N.T. Devin Katti vs. Karnataka Public
Service Commission [ 1990[3] SCC 157 ]has also been echoed by a decision of
this Court in the case of P. Mahendran and Ors. vs. State of Karnataka and Ors. [ 1990 [1] SCC 411 ]. In
any view of the matter, law is well settled that an Office Memorandum cannot
have a retrospective effect unless and until intention of the authorities to
make it as such is revealed expressly or by necessary implication in the Office
Memorandum. On the other hand from the Office Memorandum, as noted herein
above, we find that the candidates who had already been selected, the case of
such candidates would not be re-opened. A close examination of clause [6] of
the Office Memorandum dated 6th November, 2003, in our view, would show that it does not speak about the pending
process of selection. It only speaks about the appointments already made and
for which a retrospective effect has not been given.
Therefore,
in view of the principles laid down by the aforesaid two decisions of this
Court, the Office Memorandum dated 6th November, 2003, in our view, would not apply to
the selection process which started before the said Office Memorandum was
issued by the respondents. It may be repeated at this stage that the appellant
was permitted to appear for the examination for the post of Assistant
Administrative Officer in respect of which she was declared successful on 17th February, 2004 well after the Office Memorandum
was issued by the respondents.
8. In
view of the above, we are of the view that the High Court was not justified in
dismissing the writ petition of the appellant only on the ground that in view
of Office Memorandum dated 6th November, 2003, no legal right of the appellant was infringed.
Since,
we have already held that the Office Memorandum will not be applicable in the
case of the appellant and to the pending process of selection, we are of the
view that the appellant would be entitled to be empanelled to appear before the
Interview Board for selection to the post of Assistant Administrative Officer.
9. For
the above reasons, we set aside the Judgment of the High Court and allow this
appeal. The respondents are directed to call the appellant for interview before
the Interview Board for selection to the post of Assistant Administrative
Officer and if she is selected by the Interview Board, she should be promoted
or appointed to the post of Assistant Administrative Officer. There will,
however, be no order as to costs. + 5 3522 2007 ! Himadri Chemicals Industries
Ltd Coal Tar Refining Company @ August 07, 2007 # Tarun Chatterjee & P.K. Balasubramanyan
CIVIL
APPEAL NO.3522 OF 2007 [Arising out of SLP [C] No. 13775 of 2007] TARUN
CHATTERJEE, J.
1.
Application for permission to file special leave petition is allowed. Leave
granted.
2.
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. 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.
3. At
this stage, we feel it proper to narrate the facts which have given rise to the
filing of this appeal in this Court.
4. The
appellant entered into a contract 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 contract. In the said contract, 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. Initially, under the said Letter of Credit, payment was to be made
"at sight". 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 not as per the terms of the Letter of Credit. 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. 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. We accept to make the
following payments. (Emphasis supplied) Total amount against above mentioned
three (3) Bills Euro 2348915.00 Less: Advance payment already Made through
Central Bank of India Kol. Main Office Euro 387788.82 Amount to be paid against
the above three Bills Euro 1961126.18"
5.
Before accepting the documents and agreeing to make payments, by a
communication 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.
6.
Thereafter, correspondence 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". On the basis of the amended Letter of Credit, the payment was,
thereafter, payable on or before 10th April, 2007. 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. The issue regarding the quality of goods remained undecided although
an inspection report was submitted by SGS India Pvt. Ltd. with the concurrence
of the respondent.
Inspite
of various steps taken by the appellant and promises made by the respondent, no
effective 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 consignment supplied by
the respondent to the appellant.
Therefore,
in the application for injunction, it was pleaded that the act of the
respondent for not resolving the dispute on the quality of goods in the second
consignment amounted to fraud as the respondent had dishonestly and with
ulterior motive not resolved the dispute as raised by the appellant and in any
event, an order of injunction should be granted, otherwise, it would not be
possible for the appellant to recover the money released under the Letter of
Credit as the respondent is a foreign company from Iran and has no assets in
India.
7. 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.
So far
as the first shipment was concerned, goods were received, documents negotiated
and payment released.
Therefore,
there could not be any dispute in respect of the goods relating to the first
shipment. 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.
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. However, for the balance 10,000
metric tons, documents were not negotiated and no payment was released. It was
further alleged by the respondent that there was no reason for not negotiating
the documents or effecting release of the payment as payments for part
consignment as noted hereinabove were already released. It was also the case of
the respondent in support of its contention for vacating the interim order of
status quo that despite discrepancies raised by the appellant, by its
communication 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. 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 could
not 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, could be recovered in the said arbitration
proceeding. According to the respondent, since the Letter of Credit was an
independent contract and the appellant could not satisfy any breach of the
terms of the Letter of Credit, no order of injunction could be passed by the
court for stopping the respondent from realizing the payment relating to the
price of the goods supplied. The respondent further stated that the appellant
could not make out any case of fraud for which an order of injunction
restraining the respondent from realizing the payment by encashing the Letter
of Credit could be granted and therefore the application for injunction must be
rejected.
8. As
noted 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. 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 noted 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.
9. We
have heard the learned counsel for the parties and carefully examined the
orders of the learned Single Judge as well as that of the Division Bench. We
have also examined in detail the application for injunction, the original
contract, the Letter of Credit as amended and the other documents on record.
Having noted salient facts and materials on record, let us now consider whether
the Division Bench was justified in affirming the order of the learned Single
Judge vacating the interim order of status quo in the matter of stopping the
payment in terms of the Letter of Credit. But before dealing with this aspect
of the matter, let us consider the principles for grant or refusal to grant
injunction in the matter of release of payment in terms of a Letter of Credit
or a Bank Guarantee.
10.
The law relating to grant or refusal to grant injunction in the matter of
invocation of a Bank Guarantee or a Letter of Credit is now well settled by a
plethora of decisions not only of this court but also of the different High
Courts in India. In U.P. State Sugar SCC 568], this
court considered its various earlier decisions. In this decision, the principle
that has been laid down clearly on the enforcement of a Bank guarantee or a
Letter of Credit is that in respect of a Bank Guarantee or a Letter of Credit
which is sought to be encashed by a beneficiary, the bank giving such a
guarantee is bound to honour it as per its terms irrespective of any dispute
raised by its customer.
Accordingly
this Court held that the courts should be slow in granting an order of
injunction to restrain the realization of such a Bank Guarantee. It has also
been held by this court in that decision that the existence of any dispute
between the parties to the contract is not a ground to restrain the enforcement
of Bank guarantees or Letters of Credit. However this court made two exceptions
for grant of an order of injunction to restrain the enforcement of a Bank
Guarantee or a Letter of Credit.
(i)
Fraud committed in the notice of the bank which would vitiate the very foundation
of guarantee;
(ii) injustice
of the kind which would make it impossible for the guarantor to reimburse
himself.
11.
Except under these circumstances, the courts should not readily issue
injunction to restrain the realization of a Bank Guarantee or a Letter of
Credit. So far as the first exception is concerned, i.e. of fraud, one has to
satisfy the court that the fraud in connection with the Bank Guarantee or
Letter of Credit would vitiate the very foundation of such a Bank Guarantee or
Letter of Credit. So far as the second exception is concerned, this court has
held in that decision that it relates to cases where allowing encashment of an
unconditional bank guarantee would result in irretrievable harm or injustice to
one of the parties concerned. While dealing with the case of fraud, this court
in the case of U.P. Coop. (P) Ltd. (1988) 1 SCC 174 held as follows:
"The
fraud must be of an egregious nature such as to vitiate the entire underlying
transaction. While coming to a conclusion as to what constitutes fraud, this
court in the above case quoted with approval the observations of Sir John
Donaldson, M.R. in Bolivinter Oil SA V/s. Chase Manhattan Bank (1984) 1 All ER
351 at p. 352 which is as follows, " The wholly exceptional case where an
injunction may be granted is where it is proved that the bank knows that any
demand for payment already made or which may thereafter be made will clearly be
fraudulent. But the evidence must be clear both as to the fact of fraud and as
to the bank's knowledge. It would certainly not normally be sufficient that
this rests on the uncorroborated statement of the customer, for irreparable
damage can be done to a bank's Credit in the relatively brief time which must
elapse between the granting of such an injunction and an application by the
bank to have it charged." (Emphasis supplied) Chrome [(1994) 1 SCC 502],
it has also been held that a confirmed Bank Guarantee/irrevocable Letter of
Credit cannot be interfered with unless there is established fraud or
irretrievable injustice involved in the case. In fact, on the question of
fraud, this decision approved the observations made by this court in the case
of U.P. Engineers (P) Ltd. [(1988) 1 SCC 174].
13. So
far as the second exception is concerned, this International Ltd. [(1997) 1 SCC
as considered herein earlier, at para 14 on page 575 observed as follows :
"On
the question of irretrievable injury which is the second exception to the rule
against granting of injunctions when unconditional bank guarantees are sought
to be realized the court said in the above case that the irretrievable injury
must be of the kind which was the subject matter of the decision in the Itek Corpn.
Case (566 Fed Supp 1210). In that case an exporter in USA entered into an agreement with the Imperial
government of Iran and sought an order terminating its
liability on stand by letter of credit issued by an American Bank in favour of
an Iranian Bank as part of the contract. The relief was sought on account of
the situation created after the Iranian revolution when the American Government
cancelled the export licences in relation to Iran and the Iranian government
had forcibly taken 52 American citizens as hostages. The US Government had
blocked all Iranian assets under the jurisdiction of United States and had cancelled the export
contract.
The
court upheld the contention of the exporter that any claim for damages against
the purchaser if decreed by the American courts would not be executable in Iran under these circumstances and realization of the bank
guarantee/letters of credit would cause irreparable harm to the Plaintiff. This
contention was upheld. To avail of this exception, therefore, exceptional
circumstances which make it impossible for the guarantor to reimburse himself
it he ultimately succeeds, will have to be decisively established. Clearly, a
mere apprehension that the other party will not be able to pay, is not enough.
In Itek case, there was certainty on this issue. Secondly, there was good
reason, in that case for the Court to be prima facie satisfied that the
guarantors i.e. the bank and its customer would be found entitled to receive
the amount paid under the guarantee." (Emphasis supplied)
14.
From the discussions made hereinabove relating to the principles for grant or
refusal to grant of injunction to restrain enforcement of a Bank Guarantee or a
Letter of Credit, we find that the following principles should be noted in the
matter of injunction to restrain the encashment of a Bank Guarantee or a Letter
of Credit :-
(i)
While dealing with an application for injunction in the course of commercial
dealings, and when an unconditional Bank Guarantee or Letter of Credit is given
or accepted, the Beneficiary is entitled to realize such a Bank Guarantee or a
Letter of Credit in terms thereof irrespective of any pending disputes relating
to the terms of the contract.
(ii)
The Bank giving such guarantee is bound to honour it as per its terms
irrespective of any dispute raised by its customer.
(iii)
The Courts should be slow in granting an order of injunction to restrain the
realization of a Bank Guarantee or a Letter of Credit.
(iv)
Since a Bank Guarantee or a Letter of Credit is an independent and a separate
contract and is absolute in nature, the existence of any dispute between the
parties to the contract is not a ground for issuing an order of injunction to
restrain enforcement of Bank Guarantees or Letters of Credit.
(v)
Fraud of an egregious nature which would vitiate the very foundation of such a
Bank Guarantee or Letter of Credit and the beneficiary seeks to take advantage
of the situation.
(vi)
Allowing encashment of an unconditional Bank Guarantee or a Letter of Credit
would result in irretrievable harm or injustice to one of the parties
concerned.
15.
Keeping these principles in mind and applying the same on the facts of this
case, we can only draw this conclusion that no good ground has been made out by
the appellant to interfere with the impugned order. As noted herein above,
there are two exceptions when courts can grant an order of injunction in favour
of an aggrieved party in the matter of encashment of a Bank Guarantee or a
Letter of credit. Condition Nos. (v) and (vi), as noted herein above, are two
such exceptions. For this reason, let us first deal with the case of fraud pleaded
by the appellant in their application for injunction. The particulars of fraud
have been pleaded in paragraph 45 of the application for injunction filed by
the appellant in the High Court. From a close scrutiny of the facts pleaded in
the said paragraph of the application for injunction, in our view, it cannot be
held that such facts have constituted fraud for which an order of injunction in
the matter of encashment of Letter of Credit could be passed by the courts. The
facts pleaded in paragraph 45 of the application for injunction would only show
that although the respondent had agreed to remove the defects in the goods by
saying that it shall take steps to reduce the ash content of the goods to 0.3 %
before the payment date of the Letter of Credit as extended, but they
deliberately and with ulterior motive had not fulfilled their intention to do
so. It is not in dispute that the particulars of the fraud prima facie were
restricted to 10,000 metric tones of the goods supplied by the respondent in respect
of which documents were not negotiated by the appellant. The entire consignment
which was admittedly shipped by M.V.Iran Takhti was 12,503 metric tones out of
which 2503 metric tones were negotiated and payments released by the Central
Bank of India. Admittedly, as noted herein above,
a case of fraud was alleged only in respect of a part of the consignment of the
second shipment. It has been rightly held by the High Court that this could not
constitute fraud as fraud must be in respect of the whole consignment and not
in respect of a part of the same. In this view of the matter, we are,
therefore, in agreement with the High Court that the pleadings made relating to
fraud in paragraph 45 of the application for injunction were not sufficient nor
any strong prima facie case of fraud could be made out in the petition which
would warrant a continuance of the order of status quo.
16.
That apart, as noted herein earlier, in the matter of invocation of a Bank
Guarantee or a Letter of Credit, it is not open for the bank to rely upon the
terms of the underlying contract between the parties.
17. In
view of the discussions made herein above and in view of the admitted fact that
in respect of 2503 metric tones of goods out of 12503 metric tones of goods in
the second consignment, documents were admittedly negotiated and payments were
released and further in view of the communication dated 3rd October, 2006 by
the appellant to the banker that it had agreed to accept the discrepancies
raised in respect of the goods and also agreed to make payment of the same, we
are not satisfied that a case of fraud even prima facie has been made out by
the appellant for grant of injunction. It is difficult to conceive that the
appellant having accepted a part of the second consignment and having directed
to release payments in respect of the same, would be defrauded by the
respondent in respect of the balance quantity of goods which had arrived at Calcutta in the second shipment. In any view
of the matter, in our view, the defective quality of goods in respect of which
an order of injunction of the encashment of the Letter of credit was sought
could at all be a reasonable ground for grant of injunction as it was related
to payment dated 29th May, 2006 which was the subject matter of the arbitration
proceeding and the claim, if any, can be recovered in the said arbitration
proceeding.
18.
Let us now consider the other exception, namely, case where allowing encashment
of an unconditional Bank Guarantee or a Letter of Credit would result in an
irretrievable harm or injustice to one of the parties concerned. In our view,
irretrievable injury was not caused to the appellant by a refusal to grant an
order of injunction restraining the encashment of the Letter of Credit for two reasons
:-
(i) Exceptional
circumstances have not been made out by the appellant which would make it
impossible for the Guarantor to reimburse himself if he ultimately succeeds.
Only a case of apprehension has been shown in the application for injunction to
the extent that if ultimately, the application for injunction is allowed, it
would be impossible to recover the amount encashed on the basis of the Letter
of Credit because the respondent is a Foreign Company in Iran which has no assets in India. In our view, this cannot come
within the second exception indicated above.
(ii)
Admittedly in this case, the appellant has already filed an Admiralty Suit No.
14 of 2006 in the original side of the Calcutta High Court claiming damages in
respect of the same set of goods. In the said suit filed in the month of
November 2006, the respondent was given liberty to furnish a Bank Guarantee for
a sum of Rs. 21,86,68,540/- being the sum claimed by the appellant on account
of damages to the credit of the said suit and a Bank Guarantee to the extent of
this amount has already been furnished by the respondent. Such being the
position, the question of irretrievable injury even prima facie which would
lead to injustice and harm the appellant cannot at all be conceived of since
the appellant has been duly protected by the furnishing of Bank Guarantee. In
our view, only because the respondent has no assets in India would not lead us to hold that the
appellant was entitled to an injunction on the ground that he would suffer an
irretrievable injury. In this view of the matter, we echo the finding of the
High Court in refusing to grant an order of injunction in favour of the
appellant and hold that the High Court was fully justified in doing so.
19.
For the reasons aforesaid, we do not find any merit in this appeal. The appeal
is thus dismissed. We may, however, make it clear that whatever findings have
been arrived at by us in this appeal or by the High Court while dealing with
the prayer for grant of an interim order of injunction, shall not be taken to
be final as to the disposal of the application for injunction by the High
Court. There will be no order as to costs.
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