The Crown Commercial House & ... vs Icici Bank & Othersq
2009 Latest Caselaw 3347 Del

                                         REPORTED
*   IN THE HIGH COURT OF DELHI AT NEW DELHI
  %                  DATE OF RESERVE: August 04, 2009
                     DATE OF DECISION: August 25, 2009

+               IA No.12125/2007 in CS(OS) 373/2007
    THE CROWN COMMERCIAL HOUSE & ORS.                     ..... Plaintiffs
                     Through: Mr. Anil Aggarwal, Advocate.
              versus
    ICICI BANK & ORS.                            ..... Defendants
                     Through: Mr. Ravi Gupta, Advocate for D-1.
                              Mr. Ansul Singh, Advocate for D-3.
CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL
1.    Whether reporters of local papers may be allowed
      to see the judgment?
2.    To be referred to the Reporter or not?
3.    Whether judgment should be reported in Digest?
:     REVA KHETRAPAL, J.

1. The present application is filed by the plaintiffs under Order XII Rule 6

CPC praying for a judgment and decree in favour of the plaintiffs and against

the defendant No.1 in the sum of Rs.25,18,610/- (Rupees Twenty Five Lakh

Eighteen Thousand Six Hundred and Ten only) with pendente lite and future

interest on the admissions made by the said defendant as mentioned in

paragraph 23 of the present application.

2. The case of the plaintiffs, which the plaintiffs state has been admitted

by the defendant No.1 in their written statement, is that in or about August,

2005, an oral agreement was entered into between the plaintiffs and the

defendant No.2 whereby and whereunder the plaintiffs agreed to sell and the

defendant No.2 agreed to buy a consignment of Mulbury Silk Fabric of

Chinese origin to be shipped from Shanghai in China to New Delhi in India.

Pursuant to the said agreement, the defendant No.3 at the instance of the

plaintiffs drew a Bill of Exchange on the defendants No.1 and 2, payable

within sixty days from the date of Bill of Lading for a sum of USD 44,846.10

only (subsequently amended on 22.09.2005 so as to be payable within seventy

five days from the Bill of Lading date). It was a term of the said Bill of

Exchange that documents could be released only if duly avalised/co-accepted

by the defendant No.1. In course of time, the defendant No.3-Indian Overseas

Bank acting on the instructions of the plaintiff forwarded to the defendant No.1

the Bill of Lading and other documents by a covering letter dated 08.09.2005.

3. In or about September, 2005, the goods arrived at the destination at New

Delhi and the defendant No.1 allowed the defendant No.2 to remove the said

goods. Thereupon, the plaintiffs called upon the defendant No.1 to make

payment against the aforesaid Bill of Exchange, but it was alleged by the

defendant No.1 that it had no obligation to make payment thereunder. The

defendant No.1 having failed to make the payment, the present suit was filed

for recovery of USD 56,281.

4. Written statements were filed by the defendants No.1 to 3. The present

application has been filed on the basis of three admissions allegedly made by

the defendant No.1 in its written statement. According to the plaintiffs, the

said three admissions are as follows:

(i) The defendant No.1 along with its written statement has filed a

letter dated 19.10.2005 written by the defendant No.2 to the defendant

No.1, whereby the defendant No.2 had authorised the defendant No.1 to

debit its account towards payment of the Bill of Exchange in respect of

which the present suit has been filed. According to the plaintiffs, the

said letter is a clear cut and unconditional acknowledgment of the debt

and claim of the plaintiffs by the defendant No.2.

(ii) The defendant No.1, namely, ICICI Bank has filed an O.A.

against the defendant No.2 for the recovery of the amount in respect of

the transaction between the plaintiffs and the defendant No.2, as the

defendant No.1 which was the collecting bank "after duly accepting and

avalising the documents had released the goods to the defendant No.2".

The said case is pending before the Debt Recovery Tribunal,

Ahmedabad.

(iii) The defendant No.1 has along with the said O.A. filed a letter

dated 15.02.2006 sent by it to the defendant No.2 claiming the amount,

wherein the defendant No.1 specifically stated and admitted as under:

"You are very well aware that this is an international transaction and collecting bank will have to make the payment on the date of maturity or will have to return the documents to the drawer if the payment is not received from

the drawee. You would definitely appreciate that the original documents were given to you on the basis of your commitment and assurance that you will make the payment on the date of maturity positively."

5. Mr. Anil Aggarwal, the learned counsel for the plaintiffs has urged that

the defendant No.1 having filed a case before the Debt Recovery Tribunal for

the recovery of the suit amount against the defendant No.2, it clearly stands

admitted that due to the conduct of the defendants No.1 and 2, the plaintiffs

have been deprived of their legitimate dues. Therefore, it does not lie in the

mouth of the defendant Nos.1 and 2 to state that the amount is not due to the

plaintiffs.

6. The learned counsel for the plaintiffs further contends that the

defendant No.1, admittedly, not having raised any objection at the time of the

acceptance of the documents from the defendant No.3 or at the time of the

release of documents to the defendant No.2, the defendant No.1 must be

deemed to have admitted its liability to pay the suit amount to the plaintiffs.

Reliance is also placed on a swift message sent by the defendant No.1 to the

defendant No.3 in response to the swift message dated 27th October, 2005 sent

by the defendant No.3 to the defendant No.1. The relevant portion of the said

swift message reads as under:

"We shall arrange payment for the bill on receipt of funds from the buyer for the same.

We shall follow up from the buyer for the payment of bill."

7. Mr. Aggarwal, the learned counsel for the plaintiffs has referred to the

judgment of this Court in Guru Nanak Vidya Bhandar Trust vs. Union of

India & Ors. reported in 2006 IV AD (DELHI) 73 to urge that a bare reading

of the provisions of Order XII Rule 6 CPC would show that the requirement is

that an admission can be made either in pleadings or otherwise, orally or in

writing, and that such admissions may come at any stage of the suit, the object

being that where there are clear and unambiguous admissions, no purpose

would be served by going through the motion of trial as a formality. Thus,

what has to be seen is whether the case of the plaintiffs has been

unambiguously admitted in the pleadings and the documents on record.

8. Mr. Ravi Gupta, the learned counsel for the defendant No.1, on the

other hand, contended that a bare perusal of the written statement filed by the

defendant No.1 would show that the provisions of Order XII Rule 6 CPC

cannot be invoked by the plaintiffs in the instant case for the reason that the

issues raised by the defendant No.2 in present matter cannot be decided

without evidence, as the defence of the defendant No.2 - buyer is that he did

not pay the amount on account of the fact that the fabric supplied was

'Viscose', and not 'Mulbury Silk', (for which fabric the purchase order had been

issued by the defendant No.2). The learned counsel for the defendant No.1

also contended that in case this Court on trial of the suit comes to the

conclusion that serious irregularities had been committed by the plaintiffs in

supplying defective/sub-standard goods to the defendant No.2, and the

defendant No.2 was not liable to make payment under the purchase order, the

defendant No.1-Bank can by no stretch of imagination be held liable to pay

the said amount to the plaintiffs.

9. As regards the alleged first admission contained in the letter dated

19.10.2005, it is submitted by the counsel for the defendant No.1 that by the

said letter the defendant No.2 had undertaken to pay for the bill on the due

date, thus exonerating the defendant No.1 from any liability. In respect of the

second and third alleged admissions, it is urged that the defendant No.1 had

filed an O.A. against the defendant No.2 for the recovery of the amount in

respect of the transaction between the plaintiff and the defendant No.2 by way

of abundant caution and keeping in mind the fact that if this Court for any

reason comes to the conclusion that the plaintiffs are entitled to recover the suit

amount from the defendant No.2, the defendant No.1-Bank should not be left

hapless. It was in these circumstances that the defendant No.1 had along with

the said O.A. filed letter dated 15.02.2006 sent by it to the defendant No.2,

claiming the amount from the defendant No.2. Such a course of conduct

cannot be construed as an admission on the part of the defendant No.1 that the

amount is payable to the plaintiffs.

10. The learned counsel for the defendant No.1 also urged that as held by

this Court (Hon'ble Mr. Justice S.N. Aggarwal in his order dated 17.03.2009,

which order was affirmed in appeal by the Division Bench in FAO(OS)

No.221/2009 dated May 26, 2009, the question as to whether there was or was

not any privity of contract between the plaintiffs and the defendant No.1 can

only be decided after evidence had been adduced in the matter and not at the

threshold. Therefore, under no circumstances can the defendant No.1 be

called upon to pay the suit amount to the plaintiffs.

11. The learned counsel also heavily relied upon a swift message dated

October 21, 2005 sent by the defendant No.1 to the defendant No.3, whereby

the defendant No.1 conveyed the acceptance of the documents by the

defendant No.2 (the drawee), clearly indicating that the collection was subject

to the ICC Uniform Rules for Collections (URC-522). The said swift message

reads as follows:

"Document accepted (? expected) to mature on 25.10.2005. Collection subject to URC 1995 Revision ICC Publication 522."

12. According to the learned counsel for the defendant No.1, having

received the swift message dated October 21, 2005 sent by the defendant

No.1, neither the plaintiffs nor the defendant No.3 objected till maturity and

three weeks thereafter and it was, therefore, not open to the plaintiffs to

contend at this stage that the defendant No.1 was bound to avalise/co-accept

the documents, as there was no provision in the URC for co-

acceptance/avalisation by the defendant No.1.

13. Having heard the learned counsel for the parties and gone through the

documents on record, I am of the view that the plaintiffs have failed to make

out a case for the passing of a decree under the provisions of Order XII Rule 6

of the Code. It is trite that the provisions of Rule 6 of Order XII CPC can be

availed of by the plaintiffs only where there are clear-cut and unambiguous

admissions made in the written statement by the defendants. The law is well

settled that if a case involves questions which cannot be conveniently disposed

of on a motion under Rule 6 of Order XII CPC, the Court is free to refuse to

exercise discretion in favour of the party invoking it. Thus, where the

defendants have raised objections which go to the very root of the case, it

would be neither proper nor just to exercise this discretion and pass a decree in

favour of the plaintiffs. The rule is not intended to apply where there are

serious questions to be asked and determined. Likewise, where specific issues

have been raised in spite of admissions on the part of the defendant, the

plaintiff would be bound to lead evidence on those issues and prove the same

before he becomes entitled to a decree and in that event, cannot have a decree

by virtue of the provisions of Order XII Rule 6 CPC without proving those

issues [See: State Bank of India vs. Midland Industries AIR 1988 Delhi 153,

Raj Kumar Chawla vs. Lucas Indian Services AIR 2006 Delhi 266 and M/s.

Sachdeva and Sons Industries Pvt. Ltd. vs. Directorate of Revenue

Intelligence decided by this Court on February 20, 2009 in IA No.4924/2003

in CS(OS) 1570/2001].

14. The defendants in the instant case have, in my opinion, raised a number

of questions which go to the very root of the matter and are required to be

determined by this Court after giving an opportunity to the parties to adduce

evidence. Thus, for instance, it can only be decided post trial whether the

fabric dispatched by the plaintiffs to the defendant No.2 was in fact 'Mulbury

Silk' as ordered by the defendant No.2 or was an inferior/sub-standard fabric

known as 'Viscose'. Further, as held by the Division Bench, the plea of the

defendant No.1 that as per Article 16(b) of the U.R.C, the liability of the

defendant No.1 is only towards the remitting bank, i.e., the defendant No.3

and it has no privity of contract with the plaintiffs, can only be decided after

trial. Such type of pleas are ordinarily decided post trial and as held by the

Division Bench, there appears to be no reason in the present case to deviate

from the ordinary course. Also, the aspect of the conduct of the defendant

No.1 acting contrary to the Bill of Exchange is in question. The Bill of

Exchange shows that though the stipulation is of documents to be released on

acceptance of 60 days (subsequently amended to 75 days) from the Bill of

Lading date, there is a further qualification "only against duly avalised, co-

accepted by ICICI Bank, New Delhi, India". The plea of the defendant No.1,

on the other hand, relying upon Article 7 of the URC is that the Bill of

Exchange was not co-accepted/avalised by the defendant No.1, as such a

course of action would have been contrary to Article 7(b) of the URC, which

reads as under:

"Article 7 Release of commercial documents

Documents against acceptance (D/A) vs Documents against payment (D/P)

a. Collections should not contain bills of exchange payable at a future date with instructions that commercial documents are to be delivered against payment.

b. If a collection contains a bill of Exchange payable at a future date, the collection instruction should state whether the commercial documents are to be released to the drawee against acceptance (D/A) or against payment (D/P).

In the absence of such statement commercial documents will be released only against payment and the collecting bank will not be responsible for any consequences arising out of any delay in the delivery of documents.

c. If a collection contains a bill of exchange payable at a future date and the collection instruction indicates that commercial documents are to be released against payment, documents will be released only against such payment and the collecting bank will not be responsible for any consequences arising out of any delay in the delivery of

documents."

15. The defendant No.1 has specifically stated in the written statement filed

by it that it was not bound to follow any instructions contained in the Bill of

Exchange or any instructions of the defendant No.3, which were contrary to

the provisions of the ICC Uniform Rules for Collections (URC-522). The

further plea of the defendant No.1 that in accordance with the URC Rules it

had no option but to release the documents and that it was not bound to co-

accept or avalise the documents is again a matter, which, in my view, can only

be put to the test after a full-fledged trial of the case.

16. Thus, whether the goods supplied by the plaintiffs to the defendant No.2

were in conformity with the export order, whether the defendant No.2 was

bound to make payment to the plaintiffs despite the fact that it had supplied

defective goods, whether there was any privity of contract between the

plaintiffs and the defendant No.1, whether the refusal of the defendant No.1 to

co-accept/avalise the documents was in conformity with the ICC Uniform

Rules for Collections (URC-522) and, therefore, justified and if not, as to what

was the effect of the defendant No.1's omission to co-accept/avalise the

documents, whether the liability of the defendants is joint and several, are all

questions which cannot be summarily adjudicated upon and which are required

to be determined by this Court on the basis of evidence adduced by the parties.

17. The fact that the defendant No.1 has filed recovery proceedings against

the defendant No.2 or has called upon the defendant No.2 to pay the

outstanding amount cannot be construed as an admission of the liability of the

defendant No.1 to make payment to the plaintiffs. It is the contention of the

counsel for the defendant No.1 that recovery proceedings were filed by the

defendant No.1 and the demand letter issued by the defendant No.1 for the

reason that if at any subsequent point of time the defendant No.1 is held liable

to make payment to the plaintiffs, the defendant No.1's claim against the

defendant No.2 should not be barred by limitation, leaving the defendant No.1

high and dry. Thus, in my view, the present application filed by the plaintiffs

over-simplifies the matter by stating that the defendant No.1 was bound to co-

accept/avalise the documents and the defendant No.1 having failed to do so

and having released the same to the defendant No.2, it has become liable to

make payment of the suit amount to the plaintiffs, regardless of whether the

defendant No.2 is held liable by this Court to make payment to the plaintiffs in

view of the defective goods supplied by it to the plaintiffs. There is, therefore,

no merit in the application which is accordingly dismissed.

IA No.12125/2007 stands disposed of, leaving the parties to bear their

own costs.

REVA KHETRAPAL, J.

AUGUST 25, 2009/km