Facts:
Running Page 28, Para H: The suit has been brought by M/s. Tarapore & Co., Madras (hereinafter referred to as the "Indian Firm"). That firm had taken up on contract the work of excavation of a canal as a part of the Farakka Barrage Project. In that connection they entered into a contract with M/s. V.O. Tractors Export, Moscow (which will hereinafter referred to as the "Russian Firm") for the supply of construction machinery such as Scrapers and Bulldozers. ………
Running Page 30, Para E : On the strength of the aforementioned contract, the Russian Firm supplied all the machinery it undertook to supply by about the end of December, 1965, which were duly taken possession of by the Indian Firm and put to work at Farakka Barrage Project. They are still in the possession of the Indian Firm. After the machinery was used for some time, the Indian Firm complained to the Russian Firm that the performance of the machinery supplied by it was not as efficient as represented at the time of entering into the contract and consequently it had incurred and continues to incur considerable loss.

Seller has no Assets in India:
Running Page 35, Para H, Page NO. 36, Para A: The main grievance of the Indian Firm is that if the Russian Firm is allowed to take away the money secured to it by the letter of credit, it cannot effectively enforce its claim arising from the breach of the contract it complains of. It was urged on its behalf that the Russian Firm has no assets in this country and therefore any decree that it may be able to obtain cannot be executed. Therefore, it was contended that the trial court was justified in issuing the impugned orders. The allegation that Russian Firm has no assets in this country was not made in the pleadings. That apart in the circumstances of this case that allegation has no relevance.

Allegation of defective goods – Injunction refused:
Running Page 36, Para F: Case of Hamzeh Malas and Sons v. British Imex Industries Ltd. ((1958) 2 QB 127) Therein the plaintiffs, a Jordanian firm contracted to purchase from the defendants, a British firm, a large quantity of reinforced steel rods, to be delivered in two instalments. Payment was to be effected by opening in favour of the defendants of two confirmed letters of credit with the Midland Bank Ltd. in London, one in respect of each instalment. The letters of credit were duly opened and the first was realized by the defendants on the delivery of the first instalment. The plaintiffs complained that that instalment was defective and sought an injunction to bar the defendants from realising the second letter of credit. – INJUNCTION WAS REFUSED.

Clever drafting of suit does not make out a case of fraud:
Running Page 38, Para H: A half-hearted attempt was made on behalf of the Indian Firm to persuade us not to apply the principles noticed above as in these appeals we are dealing with a complaint of fraud. The facts pleading in the plaint do not amount to a plea of fraud despite the assertions of the Indian Firm that Russian Firm was guilty of fraud.

Other Important Case Laws relating to Letter of Credit/ Bank Guarantee

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