(July 30, 2001) 2001 (TLS)125414

2001-DLT-93-694 :: 2001-AD (Del)-7-131

SAWHNEY BROTHERS Vs. HONG KONG and SHANGHAI BANKING CORPORATION Limited

J. D. Kapoor

( 1 ) THROUGH this application filed under Order 11 rule 21 read with Section 3. 51 Civil Procedure Code the plaintiff has prayed for - striking out the defence of defendant no. 1 (Hong Kong and Shanghai Banking Corporation) on account of its deliberate and intentional failure to give full reply to the interrogatories of the plaintiff.

( 2 ) PACTS relevant for the purpose of aforesaid application, put briefly, are as under:- the plaintiffs are a business house engaged in export and import trade, fhe defendant n0. 1 is carrying on business in foreign tr ade banking at Singapore.

( 3 ) THE defendants 2 to 5 (hereinafter referred to as surjs) approached the plaintiff with representation that they had arranged for an indent for the import of brass scrap/cloves of c. i. f. value of approximately Rs. 40 lacs but as the Suris were not in a position to open the Letter of Credit for that amount the plaintiff should arrange for credit facility and other facilities in consideration of ,a service charge. On this representation the plaintiff entered into an agreement with them on 26/07/1979 to provide the credit facilities through their Bankers. On 30th July. 1979 the plaintiff approached the Central Bank of India with a request for opening of Letter of Credit. The Central bank of India established a letter of Credit bearing no. 5/164 dated 10/08/1979 in favour of bentrex for a sum of US Dollars 4,86,800/~ on C and F basis. However due to negligence the Central Bank of India failed to specify in the Letter of Credit that it was only payable against shipment on any 1st class or approved steamer. On 28/08/1979 the plaintiff wrote to the central Bank of India instructing an amendment to the letter of Credit by which the merchandise quality approval before shipment from the Letter of Credit opener as well as the Indentors was made obligatory. Pursuant to the aforesaid instructions the Central Bank cabled the HKS bank carrying out the amendment to the Letter of Credit. On 30th August, 1979 Bentrex cabled the plaintiff and stated that the clove had been shipped on board SS ohdai.

( 4 ) THE defendant no. 1 claims to have negotiated the documents on 30/08/1979 itself. As a commercial practice the defendant Bank normally draws drafts on negotiation of documents and sends them by post end reimbursement is made in several days. Again on the representation made by Suris and the delivery of the cheque by them the plaintiff wrote to the Central Bank requesting them to withdraw the amendment dated 2 9/08/1979 and accordingly the Central Bank deleted the amendment by a cable dated 4/09/1979. On 5/09/1979 the Bentrex wrote to the plaintiff stating that they had effected the shipment. The defendant Bank wrote to the Central Bank stating that it was sending therewith what was represented by the defendant Bank as being the Bill of Lading, Surveyor s Certificate, commercial Invoice, the Bill of Exchange and other documents and demanded the money from the Central Bank on the basis. of Letter of Credit.

( 5 ) ON 12/09/1979 the plaintiff wrote to the Central Banllh that it was not clear whether the ship was a first class one or one approved by Lloyds or was sea worthy and, therefore, sent the cable to the defendant bank to put the payment under reserve till--the receipt of confirmation. On 16/09/1979 it was learnt that the ship oh DAI had sunk on 8/09/1979 at a position which was later on reported to be 16. 2 North and 92. 3 East, On 18/09/1979 the Central Bank wrote to the Insurance Company for claim papers. On 2 8/09/1979 the plaintiff delivered a letter in writing to the Central Bank pointing out certain discrepancies in the documents. On 29/09/1979 the Central Bank sent a cable to the defendant Bank pointing out some of the discrepancies and requesting reimbursement but the defendant Bank