O.A.No.775 of 2011 & A.No.5106 of 2011 in C.S.No.625 of 2011 VINOD K.SHARMA.J., The plaintiffs / applicants filed a suit against defendants / respondents including defendant no.3 Union Bank of India and Kredyt Bank-S.A ul of Poland. The suit is for declaration, that the sale transaction entered into between the plaintiffs and the second defendant through the first and fifth defendants stood cancelled and resultantly the proforma invoice sale contract dated 07.05.2011 also stood cancelled. The second defendant, therefore, was not entitled to receive the sale consideration for the delivered goods of 500MT of scrap delivered to the plaintiffs. The reason being that the commodity was not sent as per the proforma invoice sale contract. 2. The plaintiffs have also prayed for refund of Rs.1,09,94,000/- (Rupees One Crore Nine Lakhs Ninety Four Thousand only) as calculated on the present value of the US Dollar with interest and cost. 3. The prayer is also made to declare the second contract of delivery of goods of 1500MT to be cancelled for the same reason that goods were not as per the proforma invoice sale contract. 4. Consequential relief is for restraining the Bank for giving acceptance and confirmation to the fourth defendant to honor the Letter of Credit, issued in favour of the seller. 5. The applicants' / plaintiffs' company is a company, engaged in trading of Ferrous and Non Ferrous metal and scrap from various part within India as well as in foreign countries through agents and further sell it to the Industries manufacturing Steel by recycling process. 6. The second defendant was an agent in the transaction entered into between the plaintiffs and defendant no.1. The defendant no.2 was to identify proper seller and hold negotiation with them. It was through Officers of the first defendant that deal was struck with defendant no.2 for purchase of scrap. The supplies were to be made against Letter of Credit. 7. On the request of the plaintiffs, Letter of Credit was issued by the defendant no.3, i.e. Union Bank of India and negotiated with Kredyt Bank-S.A ul of Poland. 8. It is the case of the applicants / plaintiffs that materials supplied by defendant no.2 was not as per the agreed terms, therefore, was not acceptable. The applicants seek cancellation of the contract for the breach committed by defendant no.2. Injunction prayed for is against the Bank from honoring the Letter of Credit. 9. Along with the suit, the applicants filed an application under Order 39 Rules 1 & 2 of Code of Civil Procedure for grant of temporary injunction. Whereas, defendant no.3 has moved an application for vacation of interim injunction granted by this Court exparte. 10. Learned counsel appearing for the applicants, in support of application for grant of injunction, vehemently contended that the contract between the parties deserves to be cancelled, for want of materials being as per the proforma invoice sale contract. The case of the applicants / plaintiffs is that a particular group of steel was called for, but the supply made was not of the same steel, therefore, defendant no.2 is not entitled to claim any amount from the applicants / plaintiffs. 11. However, nothing has been placed on record to show that any other any offer for return of materials was made. 12. It is the contention of the learned counsel for the applicants that the material, being not in consonance with the proforma invoice sale contract, makes out prima facie case in favour of the applicants / plaintiffs. The contention of the learned counsel for the applicants / plaintiffs further was that pre-requisite for payment of steel price is that the goods should be as per the specification and if the goods are not as per the contract, the seller is not entitled to any amount. It is also the contention of the learned counsel for the applicants / plaintiffs that non grant of injunction will result in irreparable loss and injury to the applicants, as it will not be possible to recover the amount once it goes out of the hand of the applicants. It is pleaded that balance of convenience is also in favour of the applicants / plaintiffs. 13. This application is opposed by the respondent no.3 on the ground that the Letter of Credit and the documents presented by the defendants are in conformity with the Letter of Credit, therefore, under the Banking Law, defendant no.3 is bound to honor its commitment, as the contract with the Bank is treated to be independent between both of the parties. 14. In support of this contention, learned counsel for the defendant no.3 has placed reliance on the judgment of the Hon'ble Supreme Court in the case of Federal Bank Ltd vs. V.M.Jog Engineering Ltd, AIR 2000 SC 3166, wherein the Hon'ble Supreme Court has been pleased to lay down as under: "62. The contract between the issuing banker and the paying or negotiating (intermediary) banker may partake of a dual nature. The relationship is mainly that of principal and agent, mandator and mandatory. In order that he may claim reimbursement for any payment he makes under the credit or the indemnity of an agent, the intermediary banker must obey strictly, the instructions he receives, for by acting on them, he accepts then and thus enters into contractual relations with the issuing Bank. The instructions may take the form of an authority either to pay against documents or drafts accompanied by document, or to negotiate drafts drawn either on the issuing banker or on the buyer. The authority may be accompanied by instructions to the intermediary banker to confirm the credit, that is, to place himself in binding contractual relationship with the beneficiary. There is ordinarily no privity between the intermediary banker and the buyer. But the intermediary banker, though initially the agent of the issuing Bank, may also act as principal in relation to him. (Pagets' Law of Banking, 9th Ed., 1982 p. 543, 544). 67. Summarising, we hold that when the plaintiff buyer has no case that the appellant-Negotiating Bank had any knowledge of fraud, and when it took precaution in getting clearance for the document from the issuing Bank on 20-3-98 and such clearance was given on 23-3-98 by the latter, it was not open to the Issuing Bank to contend that on fresh scrutiny in May, 1998, it found that the documents were not in conformity with the letters of Credit or that the buyer had so informed them. Prima facie, the appellant was in the position of a holder in due course. Points 2 and 3 are decided in favour of the appellant. 68. For the aforesaid reasons, we allow the appeal and vacate the temporary injunction granted in favour of the plaintiff against the Bank of Maharashtra in so far as the said injunction precluded the Bank of Maharashtra from reimbursing the appellant-Federal Bank. It is clarified that the said injunction will not come in the way of the Bank of Maharashtra from complying with its obligation to reimburse the Federal Bank. The Appeal is allowed. No costs." 15. The applicants / plaintiffs have not alleged fraud or misrepresentation. The only allegation is that the material supplied was not in conformity with the order placed. This can only entitle the parties to determine their respective rights, after parties lead evidence, as it is not even the case of the applicants / plaintiffs that the materials were shifted back, being not in conformity with the contract. 16. The pleadings and the arguments raised in this Court do not make out prima facie case in favour of the applicants / plaintiffs to seek injunction against the Bank from honoring the Letter of Credit, once documents filed are in order. 17. In view of the law laid down by the Hon'ble Supreme Court in the case of Federal Bank Ltd vs. V.M.Jog Engineering Ltd (supra), finding no merits in this application, it is ordered to be dismissed. No costs. 18. In view of the detailed order passed in the above application, A.5106 of 2011 is dismissed as having been rendered infructuous. 30.11.2011 Index: Yes 1/2 Internet: Yes ar VINOD K.SHARMA.J., ar O.A.No.775 of 2011 & A.No.5106 of 2011 in C.S.No.625 of 2011 1/2 30.11.2011