JAI BALAJI INDUSTRIES LTD. versus PEC LTD. & ORS.

Citation: [2009] 15 S.C.R. 460 · Decided: 27-10-2009 · Supreme Court of India · Bench: ALTAMAS KABIR, CYRIAC JOSEPH · Disposal: Dismissed
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Judgment (excerpt)

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[2009] 15 (ADDL.) S.C.R. 460 
JAi BALAJI INDUSTRIES LTD. 
v. 
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PEC LTD. & ORS. 
(Civil Appeal No. 7155-56 of 2009) 
OCTOBER 27, 2009 
[ALTAMAS KABIR AND CYRIAC . JOSEPH, JJ.] 
Interim Order: 
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Import - Indian company entering into a purchase 
agreement with a foreign company - In terms of agreement 
quality and quantity of goods were to be inspected by buyer 
at Port of loading - Thereafter buyer entering into High Seas 
Sale Agreement with Government Company, which was 
described as "seller" - A deed of pledge executed pledging 
entire consignment to seller - Buyer stated to have purchased 
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a part of the con.signment and since it did not meet the tests 
relating to quality of goods, buyer rejected the entire 
consignment and refused to take delivery thereof from "seller" 
- Suit filed by buyer against seller claiming inter alia return 
of advance amount -
Plaintiff also prayed for interim 
injunction restraining the seller from encashing the security 
- Single Judge of High Court granting interim order in favour 
of buyer, but the Division Bench on appeal, granting liberty 
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to seller to encash the cheques on furnishing bank guarantee 
- HELD: It has to be kept in mind that the suit is still pending 
before High Court and rights and liabilities of parties are yet 
to be worked out in the suit - Whether the Bill of Lading has 
been endorsed in favour of plaintiff by defendant is also a 
matter to be decided in the suit -
On a prima facie 
assessment of terms and conditions of the agreement 
between the parties, the responsibility relating to quantity and 
quality of the cargo was to be that of the plaintiff - Nothing 
has come to notice of the Court whereby defendant was 
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JAi BALAJI INDUSTRIES LTD. v. PEC LTD. & ORS. 461 
prevented from encashing the cheques stated to have be~n A i. 
given by way of security - Order of Division Bench protects 
the plaintiff as the defendant would furnish bank guarantee of 
the like amount - Furthermore, goods in question are to be 
sold by receiver appointed by Court and sale proceeds have 
been directed to be handed over to plaintiff - It has also to 
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be kept in mind that defendant has already paid for the goods 
to the foreign company - Therefore, there is nor reason to 
interfere with the order passed by the Appeal Court of the High 
Court - Export-Import - High Seas Sale Agreement. 
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 
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7155-7156 of 2009. 
From the Judgment & Order dated 1.9.2009 of the High 
Court at Calcutta in APOT No. 235 of 2009 in GA No. 1682 of 
2009 and APOT No. 249 of 2009 in GA No. 1764 of 2009. 
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Abhrant Mitra, Rajshree Kajaria, Gaurav Kejriwal for the 
Appellant. 
Sanjeev Narula Subramonium Prasad for the 
Respondents. 
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The following Order of the Court was delivered 
ORDER 
1. Permission is granted to file the special leave petitions. 
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2. Leave granted. 
3. We have heard learned counsel for the parties at the 
very initial stage for issuance of notice since the Respondent 
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No.1 was duly represented on caveat. 
4. These appeals are directed against the judgment and 
order dated 1st September, 2009 passed by the Division 
Bench of the Calcutta High Court in APOT No.235 of 2009 and 
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SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R. 
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A APOT No.249 of 2009 and connected applications allowing the 
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appeals in terms of the following order : 
"(a) 
The appellant/defendant will be at liberty to encash 
the cheques and appropriate the amount subject to 
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furnishing a Bank Guarantee of like amount to be 
furnished in favour of the Registrar, Original Side. 
We also grant liberty to the appellant to furnish a 
letter of undertaking to furnish Bank Guarantee for 
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like amount from a Nationalised Bank in favour of 
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Registrar, Original side. Registrar, Original Side 
until the formal Bank Guarantee is furnished as 
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directed and upon doing so, the cheques may be 
encashed. The appellant shall keep the Bank 
Guarantee renew till the disposal of the suit. The 
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Bank Guarantee should be kept to the credit of this 
suit. 
(b) 
The Receiver already appointed shall sell the goods 
after issuing an advertisement in the Newspapers, 
once in "Statesman" once in "Ajkal" and once in 
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Hindi in "Sanmarg", either by way of public auction 
or by private party subject to confirmation by the 
Court. The cost charges and expenses of sale will 
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be borne by the app
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