- (1.) Leave granted.
(2.) The appellant Federal Bank at Bombay was the 3rd defendant in the suit and has a branch at Pune. It has preferred this appeal against the order of the High Court dated 8-10-99 summarily dismissing the appellant's appeal AFO No. 818 of 1999. The appeal was preferred against the order of the trial Court dated 29-4-99 whereby the trial Court had confirmed an ex parte interim injunction dated 20-5-98 granted by it earlier, rejecting the appellant's application to vacate the same. The matter relates to a Letter of Credit issued by the 2nd defendant, Bank of Maharashtra, Pune (3rd respondent) at the instance of the plaintiff-buyers (1st respondent), M/s. V. M. Jog Engineering Co., Pune. The sellers are M/s. Jaswant Steel, Nagpur (1s defendant) (1st respondent). The appellant Federal Bank was the Negotiating Bank (3rd defendant) while the 3rd respondent, Bank of Maharashra was the Issuing Bank
(3.) The main point arising in the case can be stated briefly as follows : The appellant, the Negotiating Bank received documents from the sellers which included five delivery challans purportedly signed by the buyers's officers acknowledging receipt of goods. The seller sent a Bill of Exchange for encashment against the letter of credit for 2 crores, taken out by the buyers. The appellant sent the Bill of Exchange, with endorsement of the buyers and the Letter of Credit and the connected documents including the 'delivery challan' - as received from the seller to the Issuing Bank and got the genuineness of the documents confirmed. The Negotiating Bank then released Rs. 1,94,39,252 in favour of the sellers on 25-3-98, after deducting its commission. But the buyers have obtained a temporary injunction against the Issuing Bank from honouring the Letter of Credit. This has resulted in the appellant Negotiating Bank not being able to obtain reimbursement from the Issuing Bank. The trial Court and the High Court, after noting that the Negotiating Bank had released to the seller the above sum upon due certification of the seller's documents by the Issuing Bank - have thus precluded the Negotiating Bank from getting reimbursement from the Issuing Bank. One other peculiar feature of the case is that while the appellant, Negotiating Bank was impleaded as the 3rd defendant in the suit, specific relief was not sought against it either in the suit or in the interlocutory application. In fact, was stated by the plaintiff-purchaser that the Negotiating Bank need not be heard in the interlocutory application and that the said Bank had no locus standi. Both the courts below thought it fit to accept this contention and grant injunction under Order 39, Rule 1, Code of Civil Procedure restraining the Issuing Bank from paying any amount to anybody under the Letter of Credit, pending suit. In the plaint or in the interlocutory application, the plaintiff has not alleged 'fraud' or forgery against the Negotiating Bank nor even knowledge of the fraud/forgery which is alleged against the sellers in respect of the delivery challans.;