SIVAKUMAR BOOLOGAPANDIAN Vs. SURYA EXPORTS AND IMPORTS, CHENNAI

JUDGEMENT

(1.) The suit was filed by a seller of goods to the first Defendant seeking to recover the sum of Rs.1,15,09,628.00, jointly and severally, from the first and second Defendants together with interest at 18% per annum on the principal sum of Rs.1,06,33,863.00 from the date of plaint till the date of realization.

(2.) The Plaintiff is a proprietary concern, represented by Mr.Sivakumar, Proprietor. The Plaintiff is engaged in the business of selling construction materials, including ferrous and non-ferrous metal products, wood scrap, rubber waste, etc. The first Defendant requested the Plaintiff to supply thermo-mechanically treated (TMT) bars. Based on such request, the Plaintiff supplied TMT bars to the first Defendant from time to time and received payments in respect thereof. Upon receipt of the proforma invoice dtd. 22/5/2017 from the Plaintiff offering to supply TMT bars at Rs.38.20 per kg., the first Defendant issued the purchase order dtd. 23/5/2017 (PO No.006-5/170523/05-006/M-AJAY/TMT). The purchase order mandated that the payment for the consignment was to be made on a bill of exchange payable 90 days after the date of acceptance(at sight) by the first Defendant's banker, the second Defendant herein. Pursuant thereto, the goods were dispatched and delivered to the first Defendant under Invoice Nos.139 to 150 for an aggregate sum of Rs.1,02,49,709.00. According to the Plaintiff, the bill of exchange dtd. 24/5/2017 was also accepted for payment by the first Defendant and co-accepted by his banker, the second Defendant herein, albeit without making endorsements thereon. The Plaintiff had discounted the bill with his banker, the third Defendant herein and, therefore, the third Defendant, by a collection bill dtd. 24/5/2017, requested the second Defendant to convey its acceptance through the Structured Financial Messaging System (SFMS) and requested payment on the bill of exchange upon its maturity.

(3.) In response thereto, the Plaintiff stated that the second Defendant, by a SFMS message dtd. 29/5/2017, accepted the bill of exchange. According to the Plaintiff, the message was a "IFN754" message, which is used to indicate that the accepting bank unconditionally undertakes to make payments. The Plaintiff asserted that the undertaking by the second Defendant is on the strength of a letter of credit in favour of the first Defendant. The Plaintiff stated that both the first and second Defendants failed to honour the bill of exchange, subsequently, on the false pretext that the goods were returned by the buyer/first Defendant on account of quality issues. The Plaintiff stated that the buyer not only took delivery of the goods but sold the same to third parties. The Plaintiff further stated that no quality related issues were raised contemporaneously or otherwise by the first Defendant. On account of the refusal by the first and second Defendants to honour the bill of exchange, the third Defendant debited the account of the Plaintiff for a sum of Rs.1,02,49,709.00 along with penal interest (until 6/11/2017) of Rs.3,84,154.00. Thus, the Plaintiff stated that it had to pay the third Defendant for goods sold by it to the first Defendant.