Back
2001 Supreme(Cal) 229
HIGH COURT OF CALCUTTA
D.K. Seth, J.
Paharpur Cooling Towers Ltd.
vs.
Hong Kong & Shanghai Banking Corporation Ltd.
T. No. 272 of 2001 C.S. No. 189 of 2001
Decided On : April 24, 2001
A party must come with clean hands in legal proceedings and any attempt to mislead the court by suppressing material facts may result in the vacation of an interim order.
Headnote:
LETTER OF CREDIT - INJUNCTION - SHIPPING DOCUMENTS - DISCHARGE OF CARGO - CLEAN HANDS DOCTRINE - MISREPRESENTATION - INTERIM ORDER - VACATION - WITHDRAWAL OF SUIT - DAMAGES - COSTS - HSBC (PLC) - PAHARPUR COOLING TOWERS LTD. - RUSSAGRO INTERNATIONAL PVT. LTD. - LIMA 1 - HALDIA PORT - P & I CLUB - INTERCOASTAL SHIP-OWNERS - LEE AND MUIRHEAD - GRIFFITH (INDIA) PVT. LTD. - J.B. BODA SURVEYORS PVT. LTD. - SEASCAN SERVICES SURVEYORS - INDIAN PENAL CODE, SECTION 195 - CODE OF CRIMINAL PROCEDURE, SECTION 340.
Fact of the Case:
Paharpur Cooling Towers Ltd. (Plaintiff) obtained an interim order invoking a Letter of Credit against HSBC (Defendant No.1) and Rusagro International Pvt. Ltd. (Defendant No.2). The interim order was granted ex parte on the ground that the shipping documents were not in order and the negotiating bank, HSBC PLC, had a responsibility to check the documents. The Plaintiff alleged that due to the defect in the shipping document, the vessel was not allowed to berth at the Haldia Port and was about to move away, resulting in the loss of goods. Defendant No.2 appeared and pointed out that the vessel had already berthed and the cargo was being discharged, but this fact was suppressed by the Plaintiff. The Defendant No.2 also produced documents supporting its claim and argued that the Plaintiff had not come with clean hands and withheld information from the Court.
Finding of the Court:
The Court found that the vessel had berthed at Haldia Port on 9th April, 2001, and the cargo was ready for discharge on 10th April, 2001. The Plaintiff was well aware of this information but did not disclose it to the Court during the hearing on 11th April, 2001, when the interim order was continued. The Court held that the Plaintiff had not come with clean hands and that the interim order could not have been extended on the basis of the facts as they stood on 11th April, 2001.
Issues: 1. Whether the Plaintiff had come with clean hands in obtaining the interim order. 2. Whether the interim order could be extended on the basis of the facts as they stood on 11th April, 2001.
Ratio Decidendi: 1. The Court held that the Plaintiff had not come with clean hands in obtaining the interim order as it had withheld information from the Court regarding the berthing of the vessel and the readiness of the cargo for discharge. 2. The Court held that the interim order could not have been extended on the basis of the facts as they stood on 11th April, 2001, as the ground of irretrievable loss had fallen through and the defect in the shipping document became irrelevant and immaterial once the vessel was berthed and the cargo was ready to discharge.
Final Decision: The interim order was vacated and the suit was dismissed as withdrawn. The Court also ordered the Plaintiff to pay costs of 300 Gms. to the Defendant No. 1.
D.K. Seth, J. : An interim order invoking the Letter of Credit was granted ex parte on 6th April, 2001. Mr. Hirak Mitra, learned Counsel for the Hong Kong and Shanghai Banking Corporation Ltd. shortly HSBC had mentioned the matter. On 11th April the matter was taken up and the application for injunction was disposed of by continuing the interim order as is apparent from the order dated 11.4.2001. The ground on which the interim order was continued was that the shipping document was not in order and the negotiating bank in England being HSBC PLC had the responsibility of checking the document in view of the decision of the Apex Court with regard to its responsibility while accepting documents. The allegation was that in view of the defect in the shipping document the vessel was not allowed to be berthed in the Haldia Port and was about to move away and then the goods would be lost and the loss that would be suffered by the plaintiff could not be retrieved. The said order was supported by reasons as would be apparent from the order.
2. The defendant No.2 had appeared and mentioned the matter yesterday and pointed out that the vessel had already berthed and the cargo was being discharged but the said fact was suppressed. According to him it all started from 9.4.2001. Mr. Mitra, learned counsel for the HSBC had also produced certain documents which supported the counsel for the defendant No.2 and had pointed out that the foundation, on which the interim order rests, having disappeared and proved to be incorrect, the interim order cannot continue. Both these learned counsel had pointed out that the plaintiff had not come with clean hands and withheld information from the Court in order to lead the court to believe certain state of affair which weighed with the court in continuing the interim order. According to Mr. Mitra this is a sufficient ground for vacating the interim order. Since Mr. Chakraborty, learned counsel appearing for the plaintiff had informed the court that he had no instruction and he wants to take instruction, the matter was adjourned yesterday. The documents on which the defendant No.2 had relied upon have since been placed on record today by means of affidavit. Certain other documents have also been placed which are taken on record. This matter is being argued today and is being treated as on day's list by consent of the parties for the purpose of final disposal in view of the submission made by Mr. Chakraborty.
3. Mr. Chakraborty in his submission made it clear that he had received instruction that the cargo is being discharged after the vessel was allowed to be berthed by the Port Authority. Therefore, his client has already written a letter to the bank on 17.4.2001 stating that his account may be debited in terms of the Letter of Credit and that he would seek to obtain an order vacating the interim order and also the withdrawal of the suit. He had made an oral prayer that this matter should be treated as on day's list and after vacating the interim order the plaintiff should be permitted to withdraw the suit only with the leave that this withdrawal will not prevent the plaintiff from taking advantage of the arbitration clause contained in the contract in between the plaintiff and the defendant No.2, if he has any right under the same and if occasion so arise.
4. The learned counsel for the defendant No.2 on the other hand contends that the suit should not be allowed to be withdrawn. On the other hand the defendant No.2 should be allowed damages and interest since the defendant No.2 had suffered on account of continuance of the interim order for about 20 days and an appropriate order or decree should be passed to compensate the defendant No.2. Mr. Mitra, however, has not objected to the withdrawal of the suit. According to him his client is interested in vacating the interim order. Once the interim order is vacated his client would be entitled to take appropriate steps as permissible in law.
5. I hav
