M/S Millennium Wires P Ltd vs State Trading Corp. Of India Ltd & Ors

Leave granted in both the matters.

Briefly stated, the facts of the case are that M/s. Millenium Wires (P) Ltd. (hereinafter referred to as "Millenium Wires") and State Trading Corporation of India Limited (hereinafter referred to as "STC") entered into an Associateship Agreement (hereafter referred to as "the Agreement"), for importing continuous cast copper wire rods from Synergic Material Services PTE Limited, Singapore and Synergic Industrial Material Services, Malaysia (hereinafter referred to as "Synergic, Singapore" and "Synergic, Malaysia" severally and collectively as the "Synergic Companies"). The STC opened 4 Letters of Credit with the Allahabad Bank being Issuing Bank and the Malayn Banking BHD, Malaysia being the Confirming Bank.

Under the said Agreement, STC was to import the said copper wire rods for Millenium Wires from the Synergic Companies. The agreement stipulated that Millenium Wires shall provide STC with margin money as advance of 25% of the value of Letter of Credit to be opened by STC (clause 4 of the Agreement) along with 25% cash advance and a post dated cheque 102.5% of the value of consignment in favour of STC along with an undertaking. The mode of effecting the transaction between the Millenium Wires and STC on one hand and the Synergic Companies on other hand, was this: Oral orders were placed by the Millenium Wires on the two Synergic Companies and the latter sent sales contract/proforma invoices to STC. The proforma invoices were to be issued by Synergic, Singapore in favour of STC, specifically mentioning Millenium Wire's name as "A/c- Millenium Wires Pvt. Ltd.". On acceptance of the said proforma invoice, final invoice was to be issued by the two Synergic Companies, which on acceptance by Millenium Wires was to be sent back to the Synergic Companies. This would constitute the contract between STC/Millenium Wires on one side and the Synergic Companies on the other. At this stage Letters of Credit were to be opened by STC through Allahabad Bank payable to the Synergic Companies through the Malayn Bank.

On these grounds the learned Single Judge allowed the application under Order VII Rule 11 of the Code of Civil Procedure, 1908 and dismissed the plaint as showing no cause of action against the Malayn Bank, giving liberty to the Plaintiffs to pursue other appropriate remedies against the Synergic Companies. Against the order of the learned Single Judge, both the appellants filed separate appeals before the Division Bench of the High Court. The Division Bench also dismissed both the appeals on same grounds as that of the learned Single Judge.

In the circumstances as narrated above and in light of the settled law on the point of injunction against the banks to honour their guarantees, we are of the view that these appeals are to be dismissed and accordingly appeals are dismissed.

Before we part with, it would be most appropriate for us to point out that the appellants can pursue their remedies against the Synergic Companies in appropriate forum by instituting appropriate proceedings, if so advised. However, we make it clear that the opinion expressed by us in this judgment shall not stand in the way of deciding such proceedings on merits.

March 23, 2015.

Petition(s) for Special Leave to Appeal (C) No(s). 9689/2014 (Arising out of impugned final judgment and order dated 17/12/2013 in RFA No. 142/2013 passed by the High Court Of Delhi At New Delhi) M/S MILLENNIUM WIRES P LTD Petitioner(s) VERSUS STATE TRADING CORP. OF INDIA LTD & ORS Respondent(s) WITH SLP(C) No. 11848/2014 Date : 23/03/2015 These petitions were called on for pronouncement of judgment today.

Hon'ble Mr. Justice Pinaki Chandra Ghose pronounced the reportable judgment of the Bench comprising Hon'ble Mr. Justice M.Y. Eqbal and His Lordship.

Leave granted in both the matters.

The appeals are dismissed in terms of the signed reportable judgment.

(Signed reportable judgment is placed on the file)