TaxTMI 
TaxTMI 
2014 (9) TMI 1117
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....ue by the respondent to the appellant. The learned Judge has dismissed the petition on the ground that the claim is not properly pleaded. We are unable to agree. The error is probably on account of the learned Judge's attention not having been invited to the true nature of the transaction. 4. It would be convenient to preface our judgment with a summary thereof. (A)(i) The parties entered into an agreement where under the respondent company exported its goods to foreign buyers in the name of the appellant. The exports were routed through the appellant as the respondent desired availing the advantage of the appellant's international image for facilitating large volume of business. The respondent, however, undertook the entire responsibility in every respect in connection with the export of the goods, including the realization of the price thereof. The shipping documents were prepared in the name of the appellant to enable it to negotiate the same with its bank. The appellant received funds from its bank and admittedly paid about Rs. 350 crores to the respondent. Under the agreement the respondent undertook the full responsibility for payment to the appellant in the event o....
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.... The "SHIPPER" undertakes to obtain the Export Order from the prospective "FOREIGN BUYER" in the name of the "EXPORTER", which shall be duly transferred in the name of "SHIPPER" for the purpose of execution. ........................................................................................... 7. The "SHIPPER" shall monitor and carry out all the formalities of procuring the goods, packaging, shipment of goods, documentation, movement and realization of the export proceeds and shall be solely responsible for the successful execution of the export order and realization of the due/proceeds from the "FOREIGN BUYER". 8. DOCUMENTATION The "SHIPPER" hereby agrees to prepare and execute all necessary and relevant documents, at its own cost/expense, enumerating The State Trading Corporation of India Ltd., as the "EXPORTER" , being in compliance with the stipulations as provided under the Export Order. It is further agreed that the "SHIPPER" shall comply with all the necessary statutory formalities. .......................................................................................... 10. MODE OF PAYMENT a) The Shipping documents will be prepared and signed by SHIPPER ....
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.... vi) The SHIPPER shall submit the original shipping documents to the EXPORTER. The 'EXPORTER' in turn shall present the shipping documents along with the other negotiable documents to the negotiating / discounting Bank only upon unconditional acceptance of Bills of Exchange by the FOREIGN BUYER by means of a fax confirmation by them. The attested copy of the said acceptances shall form part of the negotiable documents. c) The SHIPPER shall bear all the bank charges arising in respect of the Export Order and the exchange loss or gain if any, shall also be to its account only. d) The 'EXPORTER' agrees to draw Bills of Exchange in hard currency (US$) on 'FOREIGN BUYER', whereas all the payments made by the 'EXPORTER' to the 'SHIPPER' shall be in Indian Rupees at the prevalent exchange rates as may be received from the Bank. ........................................................................................... 13. PRODUCT GUARANTEE / WARRANTY / PERFORMANCE The "SHIPPER" shall be solely and exclusively responsible for the product guarantee, warranty, performance and claims arising herein, if any and the Directors of the SHIPPER shall ....
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.... aggregate amount of Rs. 163 crores. Cheques, only in the sum of about Rs. 3 crores were honoured. The remaining cheques were dishonoured. The appellant has filed proceedings under section 138 of the Negotiable Instruments Act. 8. The position, therefore, is this. The respondent has received the entire amounts under the agreement from the appellant. The appellant has not recovered any amounts under the export bills. The respondent is clearly liable for the same under the express terms and conditions of the agreement. The respondent is also liable to the appellant on account of the Corporate Guarantees. The respondent is further liable to the appellant in respect of the said cheques. The respondent does not even contend that it has repaid the amounts demanded by the respondent. There is absolutely no defence to the appellant's claim. To leave no room for doubt, we repeatedly asked Mr. Doctor whether he controverted any of these facts. He did not deny any of these facts. We fail to see, therefore, even a semblance of a defence to the appellant's claim. 9. Even the correspondence establishes the appellant's case beyond any doubt. The respondent has, throughout admitted ....
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....as been dismissed only due to the manner in which the petition is drafted. The learned Judge himself rightly noted that the terms of the agreement are plain and they present no difficulty. The learned Judge however, held that the petition is not laid on the agreement at all and that its case proceeds on the basis set out in paragraph 8 of the petition viz. that the respondent had obtained post-shipment finance from the appellant's bankers - Exim Bank. The observations are on account of the following averments in paragraphs 8 and 12 of the petition. "8. ... ... ... ... The petitioner states that the said M/s Ushma Jewellery and Packaging Exports Pvt. Ltd. had availed of post Shipment finance in the year 2007- 08-09 from the Banker of the Petitioner i.e. Exim Bank after following the procedure laid down in Cl.10 of the Said Agreement dt. 25.07.2006." "12. The petitioner states that in the year 2007-08- 09 Gold Jewellery, Cut and Polished Diamonds were sold to the said foreign buyers and as per the Terms and Conditions of the Said Agreement dt.25.07.2007, the said M/s. Ushma Jewellery & Packaging Exports Pvt. Ltd. and the Respondent Company as on 31.03.2011 has availed of Post....
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.... Bank, I say that this Petition would not be maintainable as no debt would be owed by the Respondent to the Petitioner." [emphasis supplied] Mr. Doctor was unable to and did not even deny that, in fact, this was so viz. that the respondent received the amount directly from the appellant. He contended that the averment is inaccurate as it states that the respondent availed the finance from the appellant's banker whereas in fact it availed the same from the appellant. Let us presume that the averments to that effect is inaccurate. The draftsman probably considered the respondent having availed the finance from the appellant's banker because the appellant in the first place received the amounts upon discounting the bills with its banker and thereafter paid over 83.50% thereof to the respondent. The appellant therefore, qualified the first part of the sentence by stating that it availed of the finance "after following the procedure laid down in clause 10". The procedure laid down in clause 10 is clear. It is not the respondent's case that the procedure in clause 10 was not followed. In fact, the respondent admits that the procedure in clause 10 was followed. The misco....
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....Corporate Guarantees issued by the respondent, the cheques issued by the respondent and on the admissions contained in the correspondence. 20. The guarantees are undoubtedly limited to Rs. 100 crores and Rs. 250 crores. The cheques, are of an aggregate value of Rs. 163 crores. Together with interest the amount due thereon would be over Rs. 280 crores. The cheques, except to the extent of Rs. 3 crores, were dishonoured. The learned Judge held that there might have been substance in the appellant's case had the claim been based on the guarantees. We find that it is. The petition refers to the agreement in paragraphs 6 and 7. Paragraph 6 of the petition also expressly refers to the Corporate Guarantee. The agreement and the guarantee are annexed to the petition. Paragraph 11 refers to another Corporate Guarantee dated 6th June, 2008. The petitioner stated that the company had furnished a "... ... ... Corporate Guarantee dated 6th June, 2008, accepting its liability to make the payment to the petitioner in consideration of Export of plain Gold Jewellery under an Agreement dated 25.07.2006 executed between the petitioner and the Respondent Company." It is clear, therefore, that th....