- (1.) Glencore, the sole defendant in the suit, has filed this application essentially for dismissal of the suit. The application has been made under Order 7 Rule 11 read with Section 151 of the CPC. The plaintiffs have filed a suit for recovery of damages aggregating to Rs.48 crores approximately for defective supply of French yellow peas in breach of contract and incidental reliefs. The short facts of the case made out in the plaint are:- i) A contract dated 17th April, 2008 was made between Glencore and State Trading Corporation of India Ltd. (hereinafter referred to as "STC") for sale by Glencore of a quantity of 21,500 metric tonnes of French yellow peas on agreed terms and conditions; ii) Subsequently, by a contract dated 19th May, 2008 made between the plaintiffs themselves, it was agreed that the goods would be sold on High Sea sale basis by STC to Ratanlal Piyarelall Import & Exports Ltd. (hereinafter referred to as "RPI"); and the agreement between them was that any quality or quantity claim was to be lodged and pursued by STC at the cost of RPI but the claim proceeds would be reimbursed to RPI; and no claim would lie against STC by reason of any quality or quantity claim; iii) In performance of their contract STC opened a Letter of Credit through Vijaya Bank in favour of Glencore. iv) In terms of the contract dated April 17, 2008, Glencore shipped 18,106.698 MT of goods in seven consignments from Rouen, France, to the Port of Navasheva, Mumbai; v) Glencore obtained payment for the entire quantity of goods shipped by invoking the letter of credit upon presentation of the required documents. vi) Upon inspection at Navasheva, Mumbai, of all the seven consignments shipped by Glencore only one consignment covered by Bill of Lading No.MSCUFU510761 conformed to the specifications and the other contractual specifications. vii) The quality of the goods were found to be substandard. The plaintiff No.2 could only sell 19.920 metric tonnes and that too at a lower price of Rs.18,410 MT. viii) The goods under the aforesaid six consignments were of un-merchantable quality and by reason thereof, the plaintiff No.2 had suffered loss and damages being the price paid for the entire balance quantity of 16084.982 M.Ts French Yellow Peas. The expenses incurred by the plaintiff No.2 for the said goods was US$1156460.65 which is equivalent to Indian Rs.47,41,53,190/- at the prevailing exchange rate. ix) By reason of the breach of the terms of the contract by the defendant, the plaintiffs had suffered loss and damages for the sum of Rs.47,41,53,190/-.
(2.) The applicant-defendant, however, contended that Glencore and RPI had entered into a contract on 17th April 2008 being Contract No. 624330 for sale on settled terms and conditions of an agreed quantity of peas to be dispatched to India. The existing contract was replaced between the same parties on 10th June 2008 with certain fresh terms and conditions being incorporated but the contract continued to be numbered as Contract No. 624330. The original contract as well as the substituted contract contained an arbitration clause by virtue whereof all disputes are to be referred to arbitration at London in accordance with GAFTA Rules.
(3.) On 23rd December 2008, STC claiming to be the buyer in Contract No. 624330 filed a suit being CS No. 266 of 2008 praying, inter alia, for injunction restraining payments being made by the bankers under the LCs. Initially, STC obtained an ex parte order of injunction but since payments had been released by Glencore prior thereto, the said suit has now become infructuous. Subsequently, STC and RPI as joint plaintiffs filed the instant suit alleging inter alia that the goods exported were defective in quality and claimed a decree for Rs.48 crore and other incidental reliefs.;