M/S HIRA LALL AND SONS AND ORS.versusM/S. LAKSHMI COMMERCIAL BANK

A                   MIS HIRA LALL AND SONS AND ORS.
                                    v.
                     MIS. LAKSHMI COMMERCIAL BANK

                                 AUGUST 5, 2002

B        [S. RAJENDRA BABU AND P. VENKATARAMA REDDI, JJ.]


           Constitution of India, 1950-Article 139 A-Transfer Petition-Suit
    based on letter of credit issued by bank pending before Debt Recovery
C   Tribunal-Regarding same transaction suit, based on insurance claim,
    pending, before High Court-Plea to transfer the case before Tribunal to
    High Court-Held, cannot be transferred since suit based on insurance claim
    and the suit based on letter of credit arise out of different cause of action-
    Jurisdiction of other Courts stands ousted in view of exclusive jurisdiction
    given to the Tribunal-Article 139 A not attracted in case of transfer from
D   Trial Court to High Court-Recovery of Debts Due to Banks and Financial
    Institutions Act, 1993-Sections 17, 18 and 31-Code of Civil Procedure,
    1908-Section 25-Constitution of Ind~a-Artic/e 142.

          On the request of petitioner-importer, the respondent bank opened letter
E   of credit in respect of payment for certain consignment When the respondent-
    bank presented the documents to the petitioner asking it to pay the amount,
    it did not a~cept the documents finding them discrepant and invalid for
    acceptance. In the meantime the ship carrying the consignment sunk in the
    sea. Respondent Bank was informed about the same. Bank filed a suit for
    recovery of the amount After enactment of Recovery of Debts Due to Banks
F   and Financial Institutions Act, 1993, the suit got transferred to Debt Recovery
    Tribunal. Suits were filed by the importers against the insurai:ice companies
    on account of sinking of ship.

          Petitioners filed transfer petition under Article 139A of the Constitution
    of India praying for transfer of the case before the Tribunal to High Court on
G   the ground that in suits filed by importers against insurance companies
    pending in High Court and in the suit filed by the Bank pending before the
    Tribunal, common issues were involved.

          Dismissing the petition, the Court
H                                         444
               H!RA LALL AND SONS v. LAKSHMI COMMERCIAL BANK                 445

      HELD: I. The instant case is not a case where transfer of a case from          A
one High Court to another High Court is sought for. Article 139-A of the
Constitution is not attracted to cases of this nature. It is also doubtful whether
Section 25 of the Code of Civil Procedure would be applicable since the transfer
of the proceeding is not from one State to another State. Whether inherent
jurisdiction of this Court would be attracted to a proceeding of this nature is      B
also in doubt. However, it is not necessary to go into that aspect. [447-BJ

      2. A suit based on insurance claim and a claim based on Letter of Credit
arise out of different causes of action though it may be true that in the case
pending before the High Court against Insurance Company and in the
application before the Tribunal certain common issues may arise. The exact           C
nature of the other suits filed by other parties which are stated to be pending
in the High Court and the cause for retention on its file is not available on
record. Apart from this fact, when exclusive jurisdiction has been given to
the Tribunal under the Act in respect of matters that could be dealt with under
Section 17 of the Recovery of Debts Due to Banks and Financial Institutions          D
Act, 1993 the jurisdiction in other courts to entertain and decide such matters
for recovery of debts due to banks and financial institutions stood ousted as
provided under Section 18 of the Act. Further Section 31 of the Act provides
for transfer of cases from Civil Courts to the Tribunal. Hence it is not
expedient to direct the case pending before the Tribunal to High Court.
                                                         [447-E, F, G; 448-B-A]      E

      Union of India and Anr. v. Delhi High Court Bar Association and Ors.,
[2002) 2 SCR 450, referred to.

        CIVIL ORIGINAL JURISDICTION: Transfer Petition (Civil) No. 193/              p
1997.

        (Under Article 139-A of the Constitution.)

     P. Chidambaram, Bhargava V. Desai, Sanjeev Kumar Singh and Ms.
Vanita Mehta for the Appellant.                                                      G
     Ms. Kamini Jaiswal, Y.P. Narula, Ms. Shomila Bakshi and Ms. Aishwariya
Rao for the Respondent.

        The Judgment of the Court was delivered by
                                                                                     H
    446                     SUPREME COURT REPORTS [2002) SUPP. I S.C.R.

A         RAJENDRA BABU, J. This is a petition filed for transfer of original
    application No. 846 of 1996 pending before the Debts recovery Tribunal
    (hereinafter referred to as 'the tribunal') to the High Court of Delhi.

          The allegations in the application before the Tribunal are that the
B petitioners requested for opening Letters of Credit in favour of Mis Palmex
    Enterprises of Singapore for a sum of US dollars 205992.51 to cover the
    payment of consignment of PVC, C & F Bombay; that the respondent issued
    letter of credit in favour of the said seller for the said sum; that the letter of
    credit was transmitted to the seller through a negotiating bank authorising
    him under this Letter of Credit and to claim reimbursement by debiting the
C   account of respondent-bank with their New York office; that the seller is
    purported to have shipped goods on 30.8.1979 and negotiated documents as
    required under the Letter of Credit on 31.8.1979 with the negotiating bank;
    that the negotiating bank made the payment and on receipt of the original
    documents the issuing bank presented them to the buyer and asked the
D   buyer to pay the amount; that the petitioner did not pay and hence the
    application before the Tribunal. The petitioner took the stand that it had come
    to know that the ship carrying the goods had sunk; that this fact was
    informed to the bank and the documents of goods were received by the
    respondent as sent by the petitioners; that the bank lodged formal claims with
E   the Insurance Company under copy to the petitioners; that the bank retired
    the documents despite non-acceptance by the petitioner and informed the
    petitioner accordingly; that the petitioner informed the respondent of their
    negligence; that a suit had been filed by the respondent-bank against the
    petitioners on 9.7.1980; that leave to defend having been refused, a decree
    was passed; that an appeal was filed against the order refusing to grant leave.
F   In the meanwhile, the Recovery of Debts Due to Banks and Financial
    Institutions Act, 1993 [hereinafter referred to as the Act] came into force
    which established a Tribunal thereunder to exercise the jurisdiction, power
    and authority under the Act in respect of cases filed by the banks and
    financial institutions. Thus, the aforesaid suit also stood transferred to the
G   Tribunal. It is claimed that there are several cases of similar nature pending
    before the High Court wherein on account of sinking of the ships importers
    lodged claims with the Insurance Companies, while Banks filed suits against
    the various importers under the Letters of Credit since importers disputed
    documents as discrepant and not in terms thereof. On refusal by the Insurance
    Companies to pay the claims of the importers, they filed suits for recovery
H   of insurance claim. It is contended that in the suits filed by importers against
HIRA LALL AND SONS v. LAKSHMI COMMERCIAL BANK [S. RAJENDRA BABU, I.] 447

Insurance Companies and in the suits filed by the Banks certain common                A
issues arise. Therefore, it is prayed that this matter should be re-transferred
to the High Court. The petitioners' request is strongly resisted by the
respondent.

      It is clear that Article J39- A of the Constitution is not attracted to cases
of this nature as this is not a case where transfer of a case from one High           B
Court to another High Court is sought for. It is also doubtful whether Section
25 of the Code of Civil Procedure would be applicable since the transfer of
the proceeding is not one State to another State. Whether inherent jurisdiction
of this Court would be attracted to a proceeding of this nature is also in
doubt. However, it may not be necessary to go into that aspect of the matter          C
in the view we propose to take in this case.

      This is an application based on a Letter of Credit. The settled legal
position is that a Letter of Credit constitutes sole contract with the banker
and its authorising the bank issuing Letter of Credit has no concern with any
question that may arise between that seller and the purchaser of goods in             D
respect of the purchase price; that there should however, be strict compliance
both by the customer at whose instance Letter of Credit was issued and by
the banker, with his instructions; that in a claim on Letter of Credit defence
of fraud or apprehension of irretrievable injustice or non- compliance with
instructions could also be raised. All such defences could be urged or agitated       E
before the Tribunal by the petitioner and on a decision by it, an appeal also
could be filed.

      A suit based on insurance claim and a claim based on Letter of Credit
arise out of different causes of action though it may be true that in the case
pending before the High Court against Insurance Company and in the                    F
application before the Tribunal certain common issues may arise. The exact
nature of the other suits filed by other parties which are stated to be pending
in the High Court and the cause for retention on its file is not available on
record. Apart from this fact, we may notice that when exclusive jurisdiction
has been given to the Tribunal under the Act in respect of matters that could
be dealt with under Section 17 of the Act, the jurisdiction in other courts to        G
entertain and decide such matters for recovery of debts due to banks and
financial institutions stood ousted as provided under Section 18 of the Act.
Further Section 31 of the Act provide for transfer of cases from civil courts
to the Tribunal. Our view in this regard is consistent with what has been
enunciated in Union of India and Anr. v. Delhi High Court Bar Association             H
    448                    SUPREME COURT REPORTS (2002) SUPP. I S.C.R.

A and Ors., [2002) 2 SCR 450, wherein this Court, after examining the entire
    scheme of the Act, upheld the constitutional validity of the same.

          In this background, we do not think that it is expedient for the ends of
    justice to direct transfer of this case to the High Court.

B         In the result, this petition is dismissed.

    K.KT.                                                     Petition dismissed.