IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUIT NO.1628 OF 1996. Microlabs Ltd. & Anr. ..Plaintiffs. versus Extracciiones Del Sureste S.A. & Ors. ..Defendants. .... Mr. Omprakash Shukla, i/b. Shukla & Shukla, for the Plaintiffs. None for the Defendants. .... CORAM CORAM CORAM : A.S.OKA, J. : A.S.OKA, J. : A.S.OKA, J. DATE DATE DATE : 10th October 2008. : 10th October 2008. : 10th October 2008. ORAL ORAL ORAL JUDGMENT : JUDGMENT : JUDGMENT : 1. The case of the plaintiffs is that on 18th September 1995, the first plaintiff placed an order for purchase of 250 Kgs of SILYMARIN having price of US $ 27,500. In consideration thereof, the second plaintiff opened in favour of the first defendant a letter of credit in the sum of US $ 27,500/-, payable after 90 days on presentation of the documents. The third defendant- Bank on instructions of the second plaintiff acting for and on behalf of the first plaintiff opened a letter of credit on 26th September 1995. One of the documents required to be tendered under the aforesaid letter of credit was a certificate of analysis. On 4th 2 December 1995, the consignment arrived at Bombay. The first plaintiff on arrival of the consignment filed necessary bills of the entry to the Customs Department. The plaintiffs were also required to obtain necessary clearance from the Drugs Controller of India before the consignment could be actually released to them. On 14th February 1996, the Director of the Central Drugs Laboratory issued a certificate recording that the sample of "SILYMARIN" did not conform to the manufacturer’s specification. 2. The dispute arose between the parties about the payment of price. The stand taken by the first defendant was that the goods were not of the defective quality and that the first defendant had never agreed for re-shipment of the goods to Spain. The letter of credit was sought to be invoked by the first defendant. 3. In the suit, the prayer of the plaintiffs is that the invocation of the letter of credit by the first defendant is fraudulent and wrongful and the first defendant was not entitled to receive the payment thereunder from third or fourth defendants and that third and fourth defendants are not entitled to make 3 payment to the first defendant under the said letter of credit. 4. As none of the defendants contested the suit by filing written statement, the suit was placed on board for "Ex-parte hearing". The plaintiffs have filed affidavit in lieu of examination-in-chief of one Babulal Siroya, who is the constituted attorney of the first plaintiff and an employee of the second plaintiff. The examination-in-chief of the said witness was recorded on 8th October 2008 when none appeared for the defendants. The original documents produced by the plaintiffs have been admitted in evidence and have been marked as Exhibit ‘P-2’ to ‘P-10’ respectively. Exhibit ‘P-3’ is the letter of intent dated 18th September 1985 addressed by the first plaintiff to the first defendant. The Exhibit ‘P-4’ is the letter dated 26th September 1995 by which the second plaintiff for and on behalf of the first plaintiff opened a letter of credit for US $ 27,500 in favour of the first defendant. Exhibit ‘P-5’ is the test report dated 13th February 1996 of the Director of Central Drugs Laboratory which records that the sample did not conform to the manufacturer’s specification in respect of ‘Solubility’ and ‘Assay’. 4 By letter dated 20th February 1996 addressed by the second plaintiff to the second defendant (Exhibit ‘P-6’), the test report was forwarded to the second defendant. The telefax message dated 18th March 1996 (Exhibit ’P-9’) forwarded by the second defendants to M/s. Apexfarma in which it was stated that a letter of shipment shall be forwarded by the second defendant so that re-export procedure can be started and material can be re-shippped to Spain. The document at Exhibit ‘P-10’ is the communication issued by the third defendant - Bank which shows the invocation of letter of credit by the second defendant. 5. There is no contest by the defendants. Therefore, the case made out by the plaintiffs that a fraud was perpetrated by the first defendant by not sending the product as per their specification will have to be accepted on the basis of the test report of the Central Drugs Laboratory which has been duly proved and exhibited. In the circumstances, the second defendant was not entitled to invoke the letter of credit. 6. It must be stated here that on notice of motion no.1415 of 1996, ad-interim relief as prayed for by the 5 plaintiffs was granted. The said notice of motion was not contested by the defendants and therefore interim relief as prayed was thereafter granted. As a result, the third and the fourth defendants could not make payment of the amount payable under the letter of credit till today. 7. Considering the evidence of the witness examined by the plaintiffs and the exhibited documents on record, the case made out by the plaintiffs of a fraud played by the first and the second defendants deserves to be accepted. A case is made out for passing an ex-parte decree against the defendants in terms of prayer clauses (a) and (b). 8. Hence, I pas the following order :- (1) The suit stands decreed in terms of prayer clauses (a) and (b). (2) the first and the second defendants shall be liable to pay costs of the suit to the plaintiffs. 6 (3) There will be no orders as to the costs in respect of the third and the fourth defendants. (A.S.Oka,J)