*

IN THE HIGH COURT OF DELHI AT NEW DELHI

Reserved on: 12.11.2013

Pronounced on: 10.12.2013

+

RFA (OS) 139/2013, C.M. NO.17920/2013 (for stay)

STATE TRADING CORPORATION OF INDIA LTD.

..... Appellant

Through: Mr. Dinesh Agnani, Sr. Advocate

with Ms. Leena Tuteja, Advocate.

versus

M/S. MILLENNIUM WIRES (P) LTD. AND ORS.

..... Respondents

Through: Mr. Ajay Monga with Mr. Ateev.

K. Mathur and Mr. Devmani Bansal,

Advocates, for Resp. No.5.

CORAM:

HON'BLE MR. JUSTICE S. RAVINDRA BHAT

HON'BLE MR. JUSTICE NAJMI WAZIRI

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,

2013:DHC:6358-DB

hereafter “theAA”) 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

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

2013:DHC:6358-DB

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 b