State Bank Of India vs Siddhartha Enterprises
1995 Latest Caselaw 961 Del

JUDGMENT

Manmohan Sarin, J.

(1) The present application has been filed under Order 1 Rule 10 Civil Procedure Code read with Section 151 Civil Procedure Code by the defendant to implead M/s Canara Bank, Foreign Department, New Delhi and Citi Bank, Parliament Street, New Delhi as parties/defendants to the present suit. Reply has been filed opposing the application.

(2) The plaintiff, M/S. State Bank of India, has filed the above suit for recovery of Rs. 5,99,000.00 against the defendant M/S. Siddarth Enterprises, its proprietor M/s. Manorama Gardner and her husband Mr. Brian Anthony Gardner as the guarantor. A major item of the claim in the suit is an export bill of $32,000 which had been negotiated under the Letter of Credit dated 19-3- 84. The export bill was not honoured on presentation by the Citi Bank, New York on the ground that documents contained discrepancies and the objection as to bifurcation of Letter of Credit.

(3) Learned counsel for the defendant has argued that there were no grounds for the Citi Bank to refuse to honour the export bill under the Letter of Credit. It is stated that the plaintiff itself was convinced of there being no ground for refusal to honour the export bill and had taken up the matter with the Citi Bank in correspondence. The plaintiff Bank had corresponded with the Canara Bank as well as Citi Bank. This correspondence, it is stated, is in the custody of plaintiff, Canara Bank and Citi Bank. The documents having been negotiated, the responsibility for getting the credit rests with the plaintiff, the Corresponding Bank and the negotiating Bank, which transfer the Letter of credit. In these circumstances, Mr. Singh submits, that the Open ing Bank was obliged to make the payment under the Let Pter of Credit and the liability should not have been foist on the defendant. Learned counsel submits that the plaintiffs contention that the Export Bill was negotiated "under reserve" is an after thought. Accordingly, the presence of the Canara Bank and the Citi Bank is necessary for a proper and effective adjudication of the matter in controversy. Mr. Singh further states that in any case, if for some reason the Court was to come to a conclusion that they are not a necessary party they are definitely a proper party. Counsel for the defendant relies on a Division Bench decision of this Court Gurmauj Saran Baluja Vs. Mrs. Joyce C Salim and Others reported at and Mis. The State Trading Corporation of India Vs. Chittoor Cooperative Sugar Ltd and Others reported at .

(4) Counsel for the plaintiff has opposed the application on the ground that this is a highly belated application and would result in denovo trial. Plaintiff is dominuslIT is and cannot be forced to implead other defendants against whom, it has no cause of action.. It has been further submitted that the plaintiff bank had negotiated purchase of export bill "under reserve". Therefore on its return as dishonoured, the defendant who had been given credit of the amount for the export bill, was liable to refund the same to the plaintiff Along with other expenses and charges incurred. Learned counsel submits that the correspondence with the Canara Bank was undertaken at the behest of the defendant to see if the Canara Bank and Citi Bank could be persuaded to remit the amount of the L.C, which had been declined on account of discrepancies pointed out.

(5) Having heard the counsel for the parties and perused the record, I find that the suit was filed in January, 1987 and the present application has been filed on the eve of the dates of trial fixed i.e. 27th and 28th November, 1995, although the defendant did raise a preliminary objection in the written statement that Canara Bank and Citi Bank were necessary parties and suit was bad on non- joinder. An issue has also been framed as to whether the suit is bad for non-joinder of necessary party? The present application is highly belated but this by itself would not be a ground for its rejection.

(6) Coming to the merits of the application, I find that the plaintiffs case right from the beginning has been that the export bill was negotiated under reserve or under protest. Besides EXP2, which is an admitted document by the defendant, records that the export bill has been negotiated "under reserve". Accordingly, there is no merit in the defendant's contention that the plea of the document having been executed "under reserve" is an after thought. In fact, ExP5 which is again an admitted document of the defendant itself supports the plaintiffs contention. Accordingly, it is clear that when the export bill itself was negotiated, the factum of their being discrepancies was recognized by the parties. The plaintiffs case is once the document is negotiated "under reserve" and in case the same is dishonoured for whatever reasons, the defendant would be liable. Accordingly, the plaintiff would have no cause of action against the other defendants. It is also noticed that the relevant correspondence has been placed on record. As observed earlier, the plaintiff has a cause of action against the defendant, the defendant in turn may have its cause of action against the Canara Bank and Citi Bank, for which it was at liberty to proceed. However, the plaintiff cannot in these circumstances be forced to implead the said Banks i.e. the Citi Bank and the Canara Bank against whom the defendant has a cause of action. Learned counsel for the defendant stales that the presence of Canara Bank and Citi Bank would enable it to place on record the entire correspondence to show that non-payment under the L.C. was not justifiable. Most of the relevant correspondence is already on record. It would be open for the defendant to summon as permissible under Law any witness from these parties for placing on record the required correspondence.

(7) The case relied on by the defendant namely State Trading Corporation of India Ltd. Vs. Chittor Cooperative Sugar Ltd.(Supra) does not advance the defendant's case. The Court had found that the foundation of plaintiffs claim was coming into being of a fresh agreement between def. No. 2 and 3. Further that terms had been agreed between the parties for payment to def. No. 1. Accordingly def. No.2 and 3 were proper parties if not necessary parties to decide the question of fresh agreement having come into existence or not? Similarly in Gurmauj Saran Baluja Vs. Joyce C Salim & Others (Supra), the Court approved the addition of a transferee as a defendant in a suit for specific performance, holding that the party ought to be added had interest in the whole of the subject matter of the suit, which was direct and substantial and not merely commercial, the presence of the parly was held to be necessary to effectually and completely adjudicate up. in and settle the questions in suit.

(8) Learned counsel for the plaintiff has relied on Ramesh Hira Chand Kandan Mall reported at , wherein it was held that the lessee of the site, namely M/s. Hindustan Petoleuim, was not a necessary party or proper party in a suit by its dealer challenging the notice issued by Mcd for unauthorized construction of chattels. The Supreme Court held of chattels by the dealer, impleadment of lessee would enlarge the scope of the suit. It was held that the mere fact that fresh litigation would be avoided was no ground to add a party, which would result in widening the issue that was required to be decided or add new cause of action.

(9) The addition of parties under Order 1 Rule 10 Civil Procedure Code is a matter of judicious discretion to be exercised, in the light of the facts and circumstances of the case. The fact that a party has relevant evidence to give will not make it a necessary or proper party, it would only make him a necessary witness.

(10) From the foregoing discussion, I am of the view that in the facts and circumstances of the case, Canara Bank and City Bank are neither necessary nor proper parties and they cannot be foisted on the plaintiff. Besides allowing the application now would result in a denovo trial to the prejudice of the plaintiff, especially when presence of the said parties is neither necessary nor does it cause any prejudice to the defendant as the record desired by it can be otherwise summoned. The application has no merit and is dismissed but with no order as to costs.