w w w . L a w y e r S e r v i c e s . i n



Afro-Asian Agro Products Singapore Private Limited v/s National Fertilizers Limited


Company & Directors' Information:- NATIONAL FERTILIZERS LIMITED [Active] CIN = L74899DL1974GOI007417

Company & Directors' Information:- ASIAN FERTILIZERS LIMITED [Active] CIN = L99999UP1986PLC007621

Company & Directors' Information:- G H AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U15143PB1996PTC018159

Company & Directors' Information:- T J AGRO FERTILIZERS PVT LTD [Active] CIN = U15174GJ1985PTC008285

Company & Directors' Information:- S A AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U01403WB2013PTC195653

Company & Directors' Information:- B. D. AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U01400WB2009PTC136319

Company & Directors' Information:- D A P AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U01403WB2011PTC157956

Company & Directors' Information:- B. K. AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U70101WB1990PTC049682

Company & Directors' Information:- S V M A AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U15142TZ2003PTC010834

Company & Directors' Information:- K E AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U15314KL2002PTC015782

Company & Directors' Information:- AGRO (INDIA) PRODUCTS PRIVATE LIMITED [Active] CIN = U01500DL2013PTC250521

Company & Directors' Information:- W B AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U15400KA2014PTC073123

Company & Directors' Information:- ASIAN AGRO PRODUCTS LTD. [Strike Off] CIN = U01122DL1996PLC078385

Company & Directors' Information:- D M AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U74899DL1995PTC066893

Company & Directors' Information:- D N AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U15314UR2005PTC032824

Company & Directors' Information:- N K AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U15490PB2010PTC034534

Company & Directors' Information:- INDIA AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U01300TZ1991PTC003161

Company & Directors' Information:- S B R AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U01120TN2008PTC070170

Company & Directors' Information:- ASIAN AGRO PRIVATE LTD. [Strike Off] CIN = U51221DL1986PTC024318

Company & Directors' Information:- B S AGRO PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U29246WB1995PTC073119

Company & Directors' Information:- S C P AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U15400WB2010PTC154344

Company & Directors' Information:- B B AGRO PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U01111WB1999PTC089962

Company & Directors' Information:- B. R. AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U74999MP2020PTC052151

Company & Directors' Information:- J. M AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U01122UP2007PTC032828

Company & Directors' Information:- P M AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U01100MP2010PTC023037

Company & Directors' Information:- M. C. AGRO PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U74990WB2009PTC135219

Company & Directors' Information:- P G AGRO PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U01403WB2009PTC139377

Company & Directors' Information:- L. M. AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U15139DL2010PTC207504

Company & Directors' Information:- C K AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U01403AP2016PTC098332

Company & Directors' Information:- R J AGRO PRODUCTS INDIA PRIVATE LIMITED [Strike Off] CIN = U15311KA2005PTC036080

Company & Directors' Information:- AGRO PRODUCTS PVT LTD [Strike Off] CIN = U01131OR1983PTC001188

Company & Directors' Information:- R L R AGRO PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U01403TG2012PTC082514

Company & Directors' Information:- R P V AGRO PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U01300TZ1997PTC008071

Company & Directors' Information:- A V S AGRO-PRODUCTS COMPANY LIMITED [Dissolved] CIN = U74899DL1995PLC070790

Company & Directors' Information:- M R AGRO PRODUCTS PRIVATE LIMITED [Active] CIN = U01400MH2012PTC226708

Company & Directors' Information:- B. U. AGRO-PRODUCTS PRIVATE LIMITED [Active] CIN = U01100GJ2018PTC101009

Company & Directors' Information:- NATIONAL PRODUCTS CORPORATION PRIVATE LIMITED [Strike Off] CIN = U74999TN1945PTC001782

Company & Directors' Information:- NATIONAL FERTILIZERS LIMITED [Liquidated] CIN = U99999MH1948PLC006165

Company & Directors' Information:- AFRO ASIAN PRIVATE LIMITED [Dissolved] CIN = U99999MH1959PLC011503

    Interim Application Appeal No. 9435 of 1995, Suit Appeal No. 2285A of 1995

    Decided On, 01 February 1996

    At, High Court of Delhi

    By, THE HONOURABLE MR. JUSTICE K. RAMAMOORTHY

    For the Appearing Parties: : Ajit Singh, G. Rama Swamy, J.S. Arora, P.S. Arora, Rohit Mathur, V.P. Singh, Advocates.



Judgment Text

K. RAMAMOORTHY, J.


(1) THE petitioner has filed the present suit under Section 20 of the Arbitration Act, 1940 for the appointment of an arbitrator. Pending the suit the petitioner in


I. A. 9435/95 prays for injunction restraining the first respondent from encashing the Performance Guarantee Bond No. 86 of 95 dated 23rd of June 1995 and restraining the second respondent from making payment to the first respondent on the basis of the Performance Guarantee Bond.


(2) THE case of the petitioner briefly stated is this. The petitioner Co. is incorporated in Singapore under the Singapore Companies Act. It is engaged primarily in commodity trading in the global commodity markets. First respondent National Fertilisers Ltd. in the month of June 1995 had floated a global tender for the supply of 100,000 M. T. of Di-Ammonium Phosphate (hereinafter referred to as 'dap'). The tender stated that intending bidders could offer to supply such quantities that they are capable of and they can also quote their prices. M/s. Krishna International at New Delhi participated in the above tender and offer to supply 100,000 M. T. of DAP @ US $ 253 per M. T. which was then the prevailing market rate. The first respondent by letter dated 13. 6. 1995 accepted the offer made by Krishna International for the purchase of 100,000 M. T. in bulk form on C and F basis @ 253. 00 US Dollars per M. T. on arrival on designated Indian Ports during the months of August, September and October 1995. The letter of intent issued by the first respondent provided that the supplier should furnish the Performance Guarantee on the preserved formal for a sum equal to 2% of the value of the contract and also should submit a proof of having stock. It is also one of the conditions that the Performance Guarantee Should he furnished before the letter of intent could be opened by the first respondent. The aforesaid Krishna International assigned its right to supply in favour of the petitioner to the extent of 50,000 M. T. of DAP to the first defendant. On receipt of the transfer from the Krishna International, the petitioner made concrete arrangement for supply of DAP. On 20th of June 1995 the petitioner entered into an agreement with M/s. Union Hill International Co. for purchase of 50,000 M. T. of DAP. That agreement provided that the agreement would lapse on the failure of the petitioner furnishing a perfected Letter of Credit. On 13th of June 1995 the petitioner furnished the proof of stock issued by M/s. Union Hill International Co. to the first respondent. The petitioner instructed its bankers i. e. M/s. Indian Bank, Singapore to execute a Performance Guarantee in favour of the first respondent payable at Delhi. On 16th of May 1995 the Performance Guarantee was executed in favour of the first respondent for a sum of 253,000 US Dollars. The petitioner submitted the Performance Guarantee Bond with the first respondent and requested the first respondent to open a Letter of Credit in favour of the petitioner at the earliest point of time furnishing particulars of its Banking Coordinates i. e. M/s. Societies Generate (Singapore Branch), 80 Robinson Road 25-00, Singapore 0106. The petitioner by its letter dated 26th of June 1995 requested the respondent to execute and send the contract as soon as possible. On 11th of July 1995 i. e. 18 days after the petitioner submitted the Performance Guarantee and proof of stock sent a Letter of Credit issued by the State Bank of India, South Extension, New Delhi in favour of the petitioner, which was received by the petitioner on 13th of July 1995.


(3) THE Letter of Credit issued by the first respondent stipulated the last date for shipment to be 30th of September 1995 and for negotiation of documents to be 21st of October 1995. The Letter of Credit omitted to mention very material fact about the banking coordinate of the petitioner. The petitioner by its letter dated 14th of July 1995 informed the first respondent and requested for an extension of the period for the Letter of Credit from 30th of September 1995 upto 31st of October 1995 as there was delay in opening of the Letter of Credit by the first respondent. The petitioner also requested the first respondent to amend the Letter of Credit. The first respondent amended the Letter of Credit only to the extent of mentioning Banking coordinate but omitted to make over amendments required by the petitioner. By letter dated 9th of August 1995 the petitioner requested the first respondent to extend the last date of shipment upto 31st of October 1995 owing to the fact that the amended Letter of Credit was received only on 2nd of August 1995 though the Performance Guarantee was submitted on 23rd of June 1995. It is further stated that the petitioner would be in a position to supply partly quantity in September and the balance thereafter. The Union Hill International Co. with whom the petitioner had entered into a contract for the supply expressed their inability to supply full quantity of DAP before 30th of September 1995 on the ground that the Letter of Credit was opened by the first respondent very late and was also not transferable more than once. The said Company further stated that the shipment could be made only after the amendment was carried out in the Letter of Credit allowing it to be transferable twice. The petitioner requested the first respondent to extend the Letter of Credit 30 days beyond the 30th of September 1995. On 11th of September 1995 the petitioner wrote to the first respondent staling that if the amendments requested for by the petitioner are not carried out by 14th of September 1995, the petitioner would be taking appropriate steps against the first respondent. The petitioner entered into a contract with M/s. Toepfer International-Asia Pte Ltd. on 21st of September 1995 for supply of DAP to the first respondent. On 22nd of September 1995 the petitioner wrote to the first respondent about the availability of floating cargo carrying 38,000 M. T. of DAP and sent a copy of the Bill of Lading of the cargo. The petitioner again requested for the extension of the Letter of Credit. There was no reply from the first respondent. Owing to the unreasonable attitude of the first respondent, none of the bidders had been able to supply DAP to the first respondent this year. The first respondent wanted to defraud the petitioner. By an arbitrary action the first respondent sought to invoke the Performance Guarantee. The acts of the first respondent are dishonest and fraudulent. The petitioner was very much affected by the acts of the first respondent and, therefore, the petitioner is constrained to invoke clause 100 of the tender bid document for adjudicating on the disputes between the parties. It is stated in the plaint that the. petitioner made a request to the respondent for referring the disputes for arbitration.


(4) THE first respondent has filed a reply refuting the allegations in the petition. The first respondent maintains that there was no default of any kind on the part of the first respondent and it had acted as per the terms of the tender documents and it was the petitioner who committed breach, even though the petitioner was aware that time was the essence of the contract. The very purpose of the contract would have been defeated as the season for supply of DAP for Rabi crop is almost upto last week of November 1995 or first week of December 1995. The petitioner was not able to supply even the part of the quantity by 30th of September 1995. First respondent was not bound by the terms of the agreement between the petitioner and Union Hill International Co. The first respondent had made it clear that no extension would be granted to the petitioner. The first respondent has denied receipt of any Bill of Lading about the floating cargo. The first respondent has staled that no request was made by the petitioner for referring any dispute to the arbitrator. The first respondent prayed for the dismissal of the main petition.


(5) WITH reference to the relief of injunction the first respondent has stated in the reply that the petitioner has not made out any case for the grant of injunction and the delay has been caused by the fault on the part of the petitioner; the petitioner has not come forward with clean hands and the petitioner cannot pray for injunction with reference to invocation of the Performance Guarantee.


(6) ON these pleadings, the learned senior counsel for the petitioner Mr. G. Ramarnswamy contended that the contract specifically provides for supply of DAP during the months of August, September and October 1995 as the one of the terms in this behalf is "shipment arrival at designated Indian Port during the months of August, September and October 1995. " The argument of the learned senior counsel is that on or before 31st of October 1995 the petitioner could supply the DAP and the first respondent should have given Letter of Credit expiring by 31st of October 1995 and deliberately the first respondent gave Letter of Credit only upto 30th of September 1995 and, therefore, having committed breach with reference to a material term of the contract the first respondent cannot turn round and say that the petitioner had not supplied the material as agreed to by it and, therefore, the first respondent was not within its right in invoking the Performance Guarantee. The learned senior counsel submitted that first respondent committed breach of contract; first respondent cannot take advantage of its breach; the first respondent deliberately omitted to make major amendments to the Letter of Credit which if had been made the petitioner would have supplied the material on time and if the first respondent had extended the time of performance upto 31st of October 1995. The learned senior counsel also contended for a businessman like the petitioner liquidity is very important and the flow of cash is very important for doing business and the first respondent is trying to completely ruining the petitioner by in yoking the Performance Guarantee which had been given for a huge amount. The learned senior counsel contended that a perusal of the correspondence between the parties would show that the first respondent have been acting in a very arbitrary fashion and failed to perform its part of the contract. The very attitude of the first respondent would disentitle the first respondent from invoking the Performance Guarantee. The learned senior counsel further submitted that the disputes between the parties have to be adjudicated upon by the arbitrator. Before the arbitrator, the petitioner would be in a position to establish the various acts of omission and commission by which the first respondent prevented the petitioner from performing its part of the contract and the petitioner would be entitled to claim damages from the first respondent.


(7) THE learned senior counsel at this interlocutory stage would invite me to go into the question whether the first respondent is guilty of breach of contract or not on the facts and circumstances. He would also invite this Court to go into the question whether there was any justification on the part of the first respondent opening Letter of Credit only upto 30th of September 1995 which would amount to unilateral propounding of delivery of DAP which is against the spirit of the agreement between the parties.


(8) THE learned counsel for the first respondent Mr. J. S. Aurora contended that the principles relating to the grant of injunction against invocation of bank guarantees are well settled.


(9) ON the facts and circumstances of this case, the principles laid down by the Supreme Court would on all fours apply and the petitioner has not made out any case for the grant of injunction. The learned counsel for the first respondent relied upon the following decisions :-


1. United Commercial Bank vs. Bank of India and others, (1981) 2 SCC 766.


2. U. P. Cooperative Federation Ltd. vs. Singh Consultants and Engineers (P) Ltd. , (1988) I SCC 174.


3. General Electric Technical Services Co. Inc. vs. Punj Sons (P) Ltd. (1991) 4 SCC 230.


4. National Thermal Power Corporation Ltd. vs. M/s. Flowmore Private Ltd. , IT 1995 (5) S. C. 590.


5. Larsen and Toubro Limited vs. Maharashtra State Electricity Board JT 1995 (7) SC 18.


(10) THE Supreme Court had held in the case of Larsen and Toubro Ltd. (supra) as under :-


"before we adjudicate the rival plea urged before us by counsel for the parties, it will be useful to bear in mind the salient principles to be borne in mind by the Court in the matter of grant of injunction against the enforcement of a Bank Guarantee/ irrevocable Letter of Credit. After survey of the earlier decisions of this Court in United Commercial Bank v. Bank of India and others, 1981 (2) SCC 766, U. P. Cooperative Federation Ltd. v. Singh Consultants and Engineers (P) Ltd. , 1988 (1) SCC 174, General Electric Technical Services Company Inc. v Punj Sons (P) Ltd. and another, 1991 (4) SCC 230 and the decision of the Court of Appeal in England in Elian and Rabbath v. Matsas and Matsas, 1966 (2) Lloyd's Report 495 and a few American decisions, this Court in Svenska Handelsbanken v. M/s. Indian Charge Chrome And Others, 1994 (1) SCC 502, laid down the law thus:- ". . . . . in case of confirmed bank guarantees/irrevocable letters of credit, it cannot be interfered with unless there is fraud and irretrievable injustice involved in the case and fraud has to be an established fraud. . . . . . " (p. 523) ". . . irretrievable injustice which was made the basis for grant of injunction really was on the ground that the guarantee was not encashable on its terms. . . . ' (p. 524)


". . . . . there should be prima facie case of fraud and special equities in the form of preventing irretrievable injustice between the parties. Mere irretrievable injustice without prima facie case of established fraud is of no consequence in restraining the encashment of bank guarantee. . . . " (pp. 526- 527). "


(11) THE learned senior Mr. G. Ramarnswamy contended that he cannot have any quarrel with the law laid down by the Supreme Court of India but the facts of the present case present a peculiar situation and that wo

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uld distinguish the decisions of the Supreme Court relied upon by the learned counsel for the first respondent. He would submit that the first respondent having failed to amend the Letter of Credit, as requested by the petitioner, and having fixed the period of Letter of Credit only upto 30th of September 1995 had fore closed any attempt of the petitioner to pl 11. 7" conform to the terms of the contract and now cannot, on the ground that the petitioner had committed breach, invoke the Performance Guarantee. I am afraid, the contention of the petitioner cannot at all be accepted. The contract specifically stated that the arrival at the designated Indian Port during the months of August, September and October 1995 and, therefore, prima facie it cannot be contended that the first respondent had given time to the petitioner to even ship the DAP at ports of export even upto 31st of October 1995. The intention as reflected from the words used is that the DAP should arrive at the designated Indian Port during the months of August, September and October 1995. That is not to say even by 30th of October 1995 the petitioner would be entitled to ship DAP from any port in the globe for shipment to India. (12) FOR all these reasons, I have no hesitation to come to the conclusion that the petitioner has not made out any case for the grant of injunction. Therefore, I. A. 9435/95 is dismissed. There shall be no order as to costs. S. No. 2285a/95 (13) POST the suit on 14th of May 1996 to consider the question of appointment of arbitrator.
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