High Court of Madras
Case Law Search
Sorin Biomedica v. Heart Care India - CRP.PD.1565 of 2005  RD-TN 2360 (17 July 2007)
IN THE HIGH COURT OF JUDICATURE AT MADRAS
THE HON'BLE MR.JUSTICE S.ASHOK KUMAR
CRP(PD) No. 1565 of 2005
C.M.P.No. 18152 of 2005
M/s.Sorin Biomedica Cardio S.p.A.
Rep. By its Far East Regional Business Manager
having its Registered Office at
Via Borgonuovo, No.14, Milan,
1. M/s.Heart Care India Co,
rep.by its President Marketing
New No.31, 4th main Road,
Kasthuribai Nagar, Adyar,
2. The Chief Manager,
Punjab National Bank
Chennai 600 004. ...Respondents
Civil Revision Petition
is filed against the fair and decretal order dated 13.10.2005 made in I.A.No. 18317 of 2005 and to vacate the ad interim injunction
granted on 9.6.2005 in I.A.No:10801 of 2005 in O.S.No:3410 of 2005 on the file of the learned VI Assistant Judge, City Civil Court,
For Petitioner :Mr.A.R.Karunakaran
For respondents :Mr.P.Anbarasan for R.1
Mrs.Geetha Rajasekar for R.2
The above Civil Revision Petition is filed against the fair and decretal order dated 13.10.2005 made in I.A.No. 18317 of 2005 by which the order ad interim injunction granted on 9.6.2005 in I.A.No:10801 of 2005 in O.S.No:3410 of 2005 was made absolute by the learned VI Assistant Judge, City Civil Court, Chennai.
2. The brief facts of the case are as follows:- The revision petitioner is a manufacturer of medical products having its registered office at Milan, Italy. The petitioner does not have an office in India. The first respondent approached the petitioner and offered to act as the petitioner's Distributor. Thereafter an agreement was executed by the petitioner on 30.9.2004 at Italy and by the first respondent on 18.11.2004 at Chennai. Orders were placed by the first respondent on the petitioner at Italy. The first respondent obtained Irrevocable foreign Letters of Credit from the 2nd respondent. Therefore, consignments were sent by the petitioner from Italy to the 1st respondent at Chennai. The 1st respondent was to execute the necessary documents which were to be presented by the petitioner's bankers to the 2nd respondent for payment. Thus the 2nd respondent is obliged to make payments under the Letters of Credit as and when the goods are delivered to the 1st respondent/buyer and the proper documents are presented by the petitioner's bank to the 2nd respondent. This is the normal import procedure. Thus the second respondent issued two irrevocable Letters of Credit for US 27120 and for US $ 15645. The goods were despatched by the petitioner from Italy to the first respondent in Chennai. Title tot he goods passed at Italy as per the said agreement dated 3.9.2004. for commercial reasons the firs respondent's performance did not satisfy the petitioner who terminated the said agreement dated 30.9.2004 vide its letter dated 8.4.2005. After receiving the consignments of goods and admittedly selling most of the same, the first respondent filed O.S.No.3410 of 2005 for permanent injunction restraining the second respondent herein from making any payments to this petitioner under the aforesaid letters of credit. The first respondent also obtained an ex parte order of injunction in I.A.No:10801 of 2005 from the learned VI Assistant City Civil Judge, Chennai. The petitioner also filed I.A.No: 18317 of 2005 to vacate the order f injunction. But the trial court made the interim injunction absolute and hence this revision.
3. Learned counsel for the revision petitioner contended that the courts should refrain from granting injunction restraining the performance of contractual obligations arising out of a letters of credit or a Bank Guarantee between one bank and another as has been held by the Apex Court in AIR 1981 SC 1426; AIR 2000 SC 3166; AIR 1998 SC 634; 1988 (1) SCC 174 and also in AIR 1998 Bom 82 and 1999 (1) All ER 801. Further, the courts are not concerned with their difficulties to enforce such claims; these are the risks which the merchants take. The machinery and commitments of banks are on a different level. They must be allowed to be honoured, free from interference by the courts. Otherwise trust in international commerce could be irreparably damaged. It is also contended by the learned counsel that in the absence of pleadings of fraud or irretrievable damages by the first respondent, the court below has passed the injunction order as has been held by the Supreme Court in 1997 (6) SCC 450.
4. Further the learned counsel for the revision petitioner contended that as seen from Clause 29.2 of the contractual agreement, only the courts in Italy alone will have jurisdiction as Italy is where the orders were placed, where the petitioner caries on business, where the goods were manufactured and shipped to the first respondent. Clause 29.3 of the agreement enables the petitioner to choose the jurisdiction of the competent court to refer the disputes between the parties. In this respect the learned counsel relied on the judgment of the Apex Court in 1989 (2) SCC 163 wherein their their Lordships have held that the clause of ouster of jurisdiction clause is clear unambiguous and specific, accepted notions of contract would bind the parties and unless the absence of ad idem can be shown the other courts should avoid exercising jurisdiction. It is also contended that having suppressed the Clause 29 of the agreement the suit itself is liable to be struck off.
5. On the other hand, the learned counsel for the first respondent has submitted that the injunction order passed under Order 39 Rule 1 and 2 of the Code of Civil Procedure would attract an appeal only under Order 43 Rule 1(r) of the CPC and no revision under Article 227 is not maintainable as has been held by the Apex Court and followed by this court in the decisions reported in 2000 (7) SCC 695; 2003 (4) CTC 176 and 2004 (5) CTC 718.
6. Further, after cancelation of the distribution agreement the petitioner appointed another distributor and the petitioner company agreed to take all the stock inventory available with the plaintiff and sell it though their new distributor at Chennai as per Clause 22.2 (a) of the agreement. But the new distributor refused to take the stocks from the plaintiff. At the same time the petitioner also did not permit the plaintiff to sell the medicinal products. The goods available with the plaintiff is worth about Rs.13,58,165/= and if the second respondent bank is permitted to release the amount to the petitioner's bank, the plaintiff will not put to very great loss and hardship and it may not be able to recover the amount as the petitioner/first defendant company is a foreign company and it has no branch office in India. According to the learned counsel, unless the value of the goods are reshipped to the petitioner by the first respondent/plaintiff, and adjusted, the Foreign Letter of Credits cannot be paid as a dispute has been raised with regard to the same by the petitioner himself. In other words, if the FLC amount is paid without adjusting the value of the goods remained with the plaintiff, irreparable loss and hardship will be caused to the plaintiff. In the above circumstances the suit has been filed and having found a prima facie case and balance of convenience is in favour of the plaintiff, interim injunction was granted and the vacate injunction petition filed by the petitioner was also dismissed.
7. It is alleged that the petitioner with the fraudulent intention to cheat the plaintiff and knowing fully well that the the plaintiff cannot sell the goods after the termination of the distribution agreement as the new distributor would sue him for violation of their distribution agreement, had made the the plaintiff to suffer. Hence the act of the petitioner herein would amount to nothing but fraud. This court in the decision reported in AIR 1986 Madras 161 considering the Supreme court decision reported in AIR 1981 SC 1426 held that the courts will interfere by injunction restraining enforcement of Bank Guarantee if there is serious question for trial and particularly fraud and misrepresentation. In AIR 1988 Del.207 the Delhi High Court held that the court will grant injunction if there is a prima facie fraud, misrepresentation, suppression of material facts, violation of the terms of the guarantees. Therefore, the grant of injunction by the competent civil court is valid in the eye of law.
8. It is well settled law that one party cannot be permitted to enrich unjustly at the ruin of the other party based on the fraud perpetrated on the other party like on the plaintiff in the present case. Further, the Apex Court in very many cases held that a party to an agreement cannot be non suited because of forum non convenience and the court would look for hat forum with which the action had the most real and substantial connections in terms of convenience or expense availability of witness, the law governing the relevant transaction and the places where the parties resided or carried on business.
9. As far as the present case is concerned, most of the cause of actions, except manufacture of the medical products at Italy and shipment from Italy, arise only at Chennai and further Clause 29.3 of the Distribution Agreement gives right to one of the parties to the agreement to refer to any court of competent jurisdiction including the civil courts in India as rightly held by the trial court. More over, the plaintiff has reshipped the balance goods to the petitioner. Therefore the petitioner has to adjust the value of the goods received by them from the LC given by the plaintiff. Unless the injunction is granted by the trial court, the plaintiff would have lost the entire value of the balance inventory as the petitioner and the new distributor have refused to take back the balance stock. The request of the plaintiff to the petitioner to take back the balance inventory and adjust the amount from the LC is not considered by the petitioner.
10. In the above circumstances, I do not find any illegality or irregularity in the order passed by the trial court, making the interim injunction absolute. In fact the revision petitioner has to approach the appellate court as there is an alternative remedy of Appeal available to it under Order 43 Rule 1 of the Code of Civil Procedure. In the result, the CRP is dismissed. Consequently, connected CMP is also dismissed. No costs.
City Civil Court
Double Click on any word for its dictionary meaning or to get reference material on it.