Case Law Details
Satish Kansal Vs Synergy Tradeco NV (Delhi High Court)
Merely because there is a dispute between the buyer and the seller with regard to the contract of supply of goods, that cannot be ground for interfering with the LC. Therefore, the courts have recognized only two exceptions to the aforesaid principle where courts would pass an injunction in respect of payments under an LC, in cases of ‘egregious fraud and irretrievable injustice’. It has repeatedly been held by the courts that ‘egregious fraud’ has to be a fraud of the kind which goes to the very root of the matter.
Applying the aforesaid principles, in my opinion, no case for interference with the LCs has been made out by the plaintiff. Admittedly, in the present case, the documents have been duly presented by the defendant no.1 to its bankers, who, in turn, have sought acceptance from the defendant no.2/HDFC bank and such acceptance has been conveyed to the bankers of the defendant no.1 by the defendant no.2/HDFC bank.
E-mails relied upon by the plaintiff refer to the fact that the defendant no.1 is looking into the issues raised by the plaintiff with regard to the goods/materials and have assured the plaintiff that they will get back on the said issue. There is no admission on part of the defendant no.1 that the goods/materials supplied were defective. Even as per the plaintiff, the goods were in conformity, in two out of the four containers. It may be relevant to note that in Millenium Wires (supra), the Supreme Court was seized of a case where the goods were not even shipped by the supplier to the buyer. Therefore, injunction cannot be granted in respect of payments under the LCs based on the said e-mails.
This Court is in agreement with the submission of the counsel for the defendant no.2/HDFC bank that at best, the plaintiff has made out a case for breach of contract and in the event the grievance of the plaintiff is not remedied by the defendant no.1, the plaintiff would have recourse of filing appropriate legal proceedings against the defendant no.1.
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