MR. JUSTICE S. RAVINDRA BHAT

1. This is an appeal from an order of the learned Single Judge rejecting the plaint in CS(OS) 545/2012 under Order VII Rule 11 Code of Civil Procedure (hereafter “CPC”). The suit – of Millennium Wires,(hereafter “Millennium”) the first plaintiff and State Trading Corporation (STC, the second plaintiff) sought a permanent injunction against the Allahabad Bank; it also sought to restrain the other defendants, including the fourth defendant, the Malayan Bank (hereafter the “foreign bank”) from honouring a Letter of Credit (LC) issued by the Allahabad Bank at the behest of STC.

2. The suit relates to an “Associateship” agreement (dated 02.12.2011, hereafter “the AA”) between the STC and Millennium for the import of continuous cast copper rods. Millennium had been, as per its case before the learned Single Judge, importing such rods from Synergic Material Services PTE Ltd. and Synergic Industrial Material Services Malaysia, group companies based in Singapore and Malaysia respectively (hereinafter

“Synergic, Singapore” and “Synergic, Malaysia” respectively, and collectively as “the Synergic companies”). With a view to importing 400 metric tons of the rods, STC and Millennium entered into the agreement. Under the AA, STC was to import the rods for Millennium through the Synergic companies. Further, the agreement also stipulated that Millennium shall provide STC with margin money as advance of 25% of the value of the letter of credit to be opened by STC (Clause 4, agreement), along with a 25% cash advance and a post-dated cheque for 102.5% of the value of the consignment in favour of STC along with a legal undertaking. (Clause 3, of the agreement). The AA also provides for STC’s trading margin (Clause 5, AA), and stipulates in Clause 7, importantly, that Millennium shall,

“7..................approve acceptance of quantity and quality certificate issued at loan port by Supplier/Manufacturer. Hence, the Buyer [MWPL] shall ensure that quality and quantity are in order.................”

3. Under the structure of the transaction, an LC was to be opened by STC through Allahabad Bank, payable to the two Synergic companies through foreign bank (the negotiating and beneficiary bank). STC and Millennium stated-in the plaint, that the manner in which the transaction was worked was as follows: Oral orders were placed by Millennium on the two Synergic companies and thereafter, the latter sent sales contract/proforma invoices to STC. The proforma invoices were then to be issued by Synergic, Singapore in favour of STC, specifically mentioning Millennium’s name as “A/c -Millennium Wires Pvt. Ltd.” On the acceptance of the said proforma invoice, final invoice was to be issued by the two Synergic companies, as the case may be, which on acceptance by Millennium was to be sent back to the two companies, and this constituted the contract between STC/Millennium on one side and the two Synergic companies on the other. At that stage, LCs were to be opened by STC through Allahabad Bank payable to the two Synergic companies, as the case may be, through foreign bank.

4. In terms of this arrangement, the rods were despatched from Port Klang, Malaysia with the final destination being the International Container Depot, Ludhiana. A number of documents were, in the ordinary course, sent by the Synergic companies to Allahabad Bank, the issuing bank, with a copy to STC. These included a bill of lading, letter of credit, beneficiary certificate, beneficiary’s letter of undertaking, facsimile letter, inspection report, test certificate, advice of import bills received, invoice, packing list, marine cargo insurance policy, certificate of Malaysian origin, and shipping agent’s certificate. Here, it is stated that the advance copy of these documents were sent through courier to STC, which in turn sought acceptance from Millennium. The STC averred that the courier receipt of dispatch of the above documents was one of the negotiable docu