N. Sansh Hegde, J. - (1.) One Rassik Woodworth Limited (4th respondent herein) entered in a contract with M/s. PVO Kazpishepromsyrio, a State-owned Corporation of Kazakhstan (referred as the Kazak Corporation) for supply of 3,000 Metric ns of tea. The said agreement was entered in on or about 26th August, 1993, As per the original agreement, the payment for such tea exported was be made by the Kazak Corporation by barter of goods mentioned in the Schedule the said agreement, within 120 days of the date of delivery by the exporter. The agreement also provided that such payment be made by the Kazak Corporation is be guaranteed by the Government of Kazakhstan. Clause 6 of the agreement which provided for the mode of payment by barter of goods by the Kazak Corporation came be amended by an addendum on the very same day when the original agreement was executed. By the amended agreement it was specifically provided that if the contract of barter of goods cannot be finalised for any reason then the Kazak Corporation was pay the exporter for the goods received by it in US Dollars within 120 days from the date of the delivery. Such payment was be remitted by the Kazak Corporation the bank account of the exporter at Delhi. This amended agreement also provided for a guarantee being given by the Ministry of Foreign Economic Relations of Kazakhstan for prompt payment of such consideration, The addendum specifically stated that the same was form an integral part of the contract earlier entered between the parties on the same day viz. 26.8.1993.
(2.) After the said contract was entered in by the 4th respondent with the Kazak Corporation, by an agreement of parties, the 4th respondent assigned a part of the said export contract the first appellant herein on same terms. On a direction issued by the Reserve Bank of India cover the risk arising out of the export of tea made by the appellants as per the said assigned contract, the appellants approached the Export Credit Guarantee Corporation of India Ltd. (the first respondent herein) on 23rd September, 1993 insure the risk of payment of consideration that is involved in the said contract of export. On 30th. September, 1993, after considerable correspondence between the parties, the first respondent issued a comprehensive risk policy effective from 23rd September, 1993 30th September, 1995 covering the risk. The Kazakhstan Government as required in the contract through its Ministry of Foreign Economic Relations also gave an irrevocable guarantee that in the event the Kazak Corporation for any reason whatsoever is unable meet its obligation of payment due under the contract, said Government would make the payment the exporter in US dollars through remittance for tea delivered. It is the case of the appellant that the payment of consideration by barter of goods could not be finalised between the appellant and the Kazak Corporation, therefore, the said Corporation agreed pay the consideration amount for the goods received by it in US dollars and also paid certain sums of money in US dollars as part payment but failed pay the balance amount due under the contract. It is also the case of the appellant that even the Kazakhstan Government though admitted its liability pay the balance of consideration amount did not fulfil its part of the guarantee given in the contract due lack of funds. It is on the failure of the Kazakhstan Government fulfil its guarantee the appellants made a claim on the first respondent which had covered the said risk of compensating the loss suffered by it by the non-payment of the consideration amount for the supply of tea made the Kazak Corporation. The first respondent as per its letter dated 14.12.1994, however, repudiated the claim of the appellants stating that the appellants had changed the terms of the contract of payment without first consulting it, therefore, it had no obligation compensate the appellants for the loss suffered by it. This alleged change of terms of the contract, according the first respondent, was due the fact that the appellants had rejected the baiter offer made by the Kazak Corporation and had opted for cash payment in US dollars which, according the first respondent was not the mode of payment contemplated in the contract between the exporter and the Kazak Corporation. On further correspondence between the appellants and the first respondent, the latter reiterated its right repudiate the claim of the appellants by its second letter dated 26.5.1995 contending that the refusal of the barter offer by the appellants without first consulting it, amounts a change in the mode of recovery of dues, hence, the loss suffered by such change in the mode of recovery ok away the liability of, the first respondent pay for such loss.
(3.) Having failed persuade the first respondent adhere the contract of insurance between it and the appellant, the appellant filed a writ petition before a learned Single Judge of the Calcutta High Court, inter alia, praying for quashing of the letters of repudiation issued by the first respondent. It also consequentially prayed for a direction the first respondent make payment of the dues it under the contract of insurance. The learned Single Judge after hearing the parties came the conclusion that though the dispute between the parties arose out of a contract, the first respondent being a State for the purpose of Article 12, was bound by the terms of the contract therefore, for such non-performance, a writ was maintainable and after considering the arguments of the parties in regard the liability under the contract of insurance, allowed the writ petition and issued the writ and directions as prayed for by the appellants in the writ petition.;