Back
2008(7) Supreme 22
SUPREME COURT OF INDIA
Tarun Chatterjee and Dalveer Bhandari, JJ.
Bank of India — Appellant
versus
M/s Mehta Brothers & Ors. — Respondents
Civil Appeal No. 2982 of 2001
Decided on : 23-09-2008
AIR 1954 Assam 183 – Not good law.
(b) Code of Civil Procedure, 1908 – Order IX, rule 13, Proviso – An ex parte decree was ordinarily to be set aside only against the defendant against whom the decree was ex parte and the suit was to be revived only qua the said defendant applying for setting aside the ex parte decree – However, in cases where the decree is of such a nature that the same cannot be set aside only as against the defendant applying for setting it aside, the decree could also be set aside as against any or all of the other defendants. (Para 13)
(c) Code of Civil Procedure, 1908 – Order IX, rule 13, Proviso – The provision does not suggest that for the Order to apply the decree must be entirely ex parte – If the decree is being set aside as against some defendants, and the decree as against the other defendants is connected, interlinked or dependent on that part of the decree which is being set aside, the decree may have to be set aside as against the other defendants also – A decree against persons who appeared and contested, cannot be set aside, much less persons who not only appeared but in whose favour the suit was dismissed. (Para 14)
(d) Code of Civil Procedure, 1908 – Order IX, rule 13, Proviso – First proviso connotes decree in general and a decree can be set aside as against all or any of the other defendants, regardless of the fact whether they appeared, contested or not. (Para 15)
(e) Code of Civil Procedure, 1908 – Order IX, rule 13, Proviso – Since respondent No.6 alone was held liable to pay the decretal amount to the appellant Bank the suit had to be dismissed against respondent Nos. 1 to 5 as the relief claimed in the suit was in the alternative. (Para 17)
Facts of the case :
1. On the request of defendant nos. 1 to 5, namely, M/s Mehta Brothers and Ors. on 26th of June, 1979, the appellant Bank issued an irrevocable Letter of Credit for US $ 6,10,900, equivalent to Indian currency about Rs.50,00,000/-, in favour of M/s Bentrex and Co., Singapore.
2. On 1st of September, 1979, the beneficiary drew a site draft for an amount of US $ 6,10,740 and presented the same along with other documents to Deutsche Bank Asia - defendant No.6 - respondent no. 6 for negotiations. On 4th of September, 1979, respondent no.6 after negotiating the documents dispatched the original and duplicate set of the documents from Singapore directly to the Chandni Chowk Branch of the appellant Bank and called upon the New York Branch of the appellant Bank for reimbursement under the Letter of Credit.
3. This was done without furnishing the necessary certificate of compliance as required by UCP. However, on 5th of September, 1979, the New York Branch of the appellant Bank on receipt of the aforesaid claim, in good faith, paid on account, without prejudice, the said amount of US $ 6,10,740.
4. On 13th of September, 1979 the appellant Bank received the documents from respondent no.6 and found many discrepancies therein which were pointed out to respondent no.6 stating that the documents were being held at its risk and responsibility and requested them to reverse the reimbursement already claimed by it from the New York Branch of the appellant Bank.
5. On 14th of September, 1979, Mehta Brothers- defendant nos. 1 to 5 -respondent nos.1 to 5 also did not honour and return the documents as they were not at all in accordance with the terms of Letter of Credit.
6. Despite repeated requests and reminders, respondent nos. 1 to 5 did not honour and return the said documents and went on contending that there were discrepancies in the documents. Respondent nos. 1 to 5 also stated that their claim with the insurance company was likely to be finalized soon and the amount payable thereunder shall be received by the appellant Bank directly from the insurance company for the adjustment of the amount due and payable by them under the Letter of Credit.
7. The appellant - Bank of India, filed a suit for recovery of Rs.91,58,480.09 against the defendants - respondents on 30th of August, 1982.
8. The appellant Bank joined respondent nos.1 to 5 and respondent no.6 as parties to the suit in order to determine the question as to which of the defendants was liable to the appellant Bank and to what extent.
9. The suit was decreed on 10th of March, 1987 ex parte against respondent no.6 with costs. The suit against respondent nos. 1 to 5 was dismissed on contest. However, the appellant Bank did not file any appeal in so far as that part of the decree by which the suit against respondent nos. 1 to 5 had been dismissed.
10. Accepting this position, on 4th of April, 1988, two applications were filed by respondent no.6 under Order 9 Rule 13 of the Code of Civil Procedure for setting aside the ex parte decree and under Section 5 of the Limitation Act for condonation of delay in filing the application under Order 9 Rule 13 of the Code.
11. By the judgment and final order dated 9th of November, 2000 passed by a Division Bench of the High Court had set aside the order dated 28th of February, 1991 of the learned single judge to the extent that the said order had set aside an ex parte decree dated 10th of March, 1987 dismissing the suit of the appellant Bank against respondent nos. 1 to 5. In so far as the respondent no.6 was concerned, the Division Bench of the High Court affirmed the order dated 28th of February, 1991 setting aside the ex parte decree dated 10th of March, 1987 passed against the respondent no. 6.
Finding of the Court :
The ex parte decree being indivisible, had to be dismissed in toto.
Result : Appeal allowed.
Judgment
Tarun Chatterjee, J. —
1. The appellant - Bank of India, a body corporate constituted under the Banking Companies [Acquisition and Transfer of Undertakings] Act, 1970 filed a suit for recovery of Rs.91,58,480.09 against the defendants - respondents on 30th of August, 1982, inter alia, alleging that on the request of defendant nos. 1 to 5, namely, M/s Mehta Brothers and Ors. on 26th of June, 1979, the appellant Bank issued an irrevocable Letter of Credit for US $ 6,10,900, equivalent to Indian currency about Rs.50,00,000/-, in favour of M/s Bentrex and Co., Singapore. The said Letter of Credit was expressly made subject to the terms and conditions of Uniform Customs and Practice for Documentary Credits [1974] Revision, International Chamber of Commerce Publication No.290. On 1st of September, 1979, the beneficiary drew a site draft for an amount of US $ 6,10,740 and presented the same along with other documents to Deutsche Bank Asia [formerly known as European Asian Bank], a body corporate incorporated in West Germany being a foreign company under the Companies Act, 1956 - defendant No.6 - respondent no. 6 (in short ‘the respondent No.6') for negotiations. On 4th of September, 1979, respondent no.6 after negotiating the documents dispatched the original and duplicate set of the documents from Singapore directly to the Chandni Chowk Branch of the appellant Bank and called upon the New York Branch of the appellant Bank for reimbursement under the Letter of Credit. The appellant Bank further alleged that this was done without furnishing the necessary certificate of compliance which was required under the terms of letters of credit. On 5th of September, 1979, the New York Branch of the appellant Bank on receipt of the aforesaid claim, in good faith, paid on account, without prejudice, the said amount of US $ 6,10,740. On 13th of September, 1979 the appellant Bank received the documents from respondent no.6 and found that there were many discrepancies in the documents and they were not as per the Uniform Customs and Practice of Documentary Credits [1974 Revision]. On 14th of September, 1979, by a telex the appellant Bank pointed out to respondent no.6 some of the discrepancies in the documents and stated that the documents were being held at its risk and responsibility. Respondent no.6 was requested to reverse the reimbursement already claimed by it from the New York Branch of the appellant Bank. On the same day respondent no.6 by its telex to the appellant Bank rejected the claim of the appellant Bank alleging that these discrepancies were of minor nature and all the terms and conditions of the Letter of Credit were complied with. On 14th of September, 1979, Mehta Brothers- defendant nos. 1 to 5 - respondent nos.1 to 5 (in short ‘respondent nos. 1 to 5’) also did not honour and return the documents as they were not at all in accordance with the terms of Letter of Credit. The appellant Bank - further alleged that respondent no.6 had failed and neglected to reply and reimburse to the appellant Bank the amount received by it from the New York Branch. Respondent no.6 had failed to furnish to the New York Branch of the appellant Bank the certificates of compliance in terms of the said Letter of Credit, for that reason also respondent no.6 acted in breach of its obligation under the Letter of Credit to do so and, therefore, was not entitled to claim and return the payment received thereunder. Despite repeated requests and reminders, respondent nos. 1 to 5 did not honour and return the said documents and went on contending that there were discrepancies in the documents. Respondent nos. 1 to 5 also stated that their claim with the insurance company was likely to be finalized soon and the amount payable thereunder shall be received by the appellant Bank directly from the insurance company for the adjustment of the amount due and payable by them under the Letter of Credit. Respondent nos. 1 to 5 as also respondent no.6 had denied thei
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
