JAMMU AND KASHMIR BANK LTD Vs. DIGVIJAY CEMENT

JUDGEMENT

(1.) THIS is an appeal filed by the Jammu and Kashmir Bank Ltd. against the decision of a Single Judge of this Court dated 8th March, 2006 whereby the bank's application for leave to defend a suit instituted by the respondent, shree Digvijay Cement Company Ltd. under Order 37 of the Code of Civil procedure was refused, and the suit decreed in favour of the respondent and against the bank. The facts relevant to this appeal are noted hereinafter.

(2.) ON 4. 7. 1994, Shree Digvijay Cement Company, respondent herein, agreed to sell 12500 metric tonnes of Cement Clinker to M/s. Impression international. The contract, inter alia, required the buyer to provide an "irrevocable and confirmed letter of credit (LC) for 100% payment at sight. in favour of the respondent through M/s. State Bank of Saurashtra. " On the same day, a message was conveyed by M/s Impression International that since the cargo had to be finally supplied by it to a foreign buyer, namely, m/s. Chittagong Cement Clinker, a foreign Letter of Credit had been opened in its favour by the foreign buyer and that the payment to the respondent would be made through a Back-to-Back LC. On the basis of the foreign LC, m/s. Impression International opened an irrevocable LC (LN/lv/05/95) in favour of the respondent which was to be advised through Jammu and kashmir Bank Ltd. (hereinafter "the appellant" ). The documents named for negotiating inter alia required the "full set of original Mate Receipts". Vide a subsequent amendment on 12. 08. 1994 the expiry date for negotiation was extended upto 30. 08. 1994.

(3.) PURSUANT to the boarding of the goods, the requisite mate receipts and other documents were supplied by the respondent to State Bank of saurastra which, in turn, forwarded the same to the Appellant bank on 30. 08. 1994 for payment. On 6. 9. 1994, the appellant informed to State Bank of Saurastra that there were discrepancies in the submitted documents and consequently expressed its inability to release the payment.