ORDER: In all these original applications and the connected applications, the common question involved is as to, “whether ‘the order of interim injunction granted earlier restraining the respective issuing banks from allowing letters of credit issued by them on behalf of the applicant in favour of the third respondent to be encashed through the second respondent should be confirmed or not” Therefore, all these original applications along with connected applications are disposed on by this common order. 2. Spices Trading Corporation Limited (in short, “STCL”) is the fourth respondent in the applications filed in C.S.No.417 of 2005. The first respondent-first defendant in the three suits, is the issuing bank, while the second respondents are stated to be negotiating foreign banks on behalf of the third respondent. The third respondent is the supplier of the applicant. The parties will be hereinafter to as “the applicant”, first respondent-issuing bank, second respondent-negotiating bank and the third respondent-seller respectively. The fourth respondent-fourth defendant in C.S.No.417 of 2005 will be referred to as ‘STCL’. 3. Mr.P.S.Raman, learned senior counsel appearing on behalf of the applicants narrated the facts by referring to the documents filed in C.S.No.417 of 2005 and stated that since the issue involved is common, such narration of facts will hold good and can be applied for other suits and the connected applications as well. 3. Mr.P.S.Raman, learned senior counsel appearing on behalf of the applicants narrated the facts by referring to the documents filed in C.S.No.417 of 2005 and stated that since the issue involved is common, such narration of facts will hold good and can be applied for other suits and the connected applications as well. Such facts are that there was a Memorandum of Understanding dated 30.7.2004 between the applicant and the fourth respondent ‘STCL’, who agreed to facilitate import of Heavy-Light Melting Scrap for and on behalf of the applicant, that there was a sales contract entered into between the applicant and the third respondent on 1.10.2004 on the terms agreed to between both of them, that the respective first respondents issued irrevocable letter of credit at the instance of the fourth respondent in favour of the third respondent to be negotiated through the second respondent, that while issuing such letters of credit, an additional document required to be submitted was pre-shipment inspection certificate issued by S.G.Agency or any other Agency approved by the Government of India to the effect that the consignment does not contain any type of arms, ammunition, mines, shells, cartridges, explosive shells, bombs or other hazardous materials in any form either used or otherwise, that such additional document was necessitated in view of the restriction imposed by the Government of India to ensure that the goods which are agreed to be imported as per the contract alone are brought into this country, that necessary commercial invoices in respect of the containers with reference to which the present controversy has arisen, were issued by the third respondent in favour of the fourth respondent on behalf of the applicant wherein, it is noted that as per the terms of the sales contract, the payment would be within 120 days from the date of negotiation, that all the containers were issued with necessary pre-shipment inspection certificates by an institution called “Alex Stewart International Corporation B.V.” (in short, “Alex Stewart”) certifying that the containers consisting of consignments were inspected both before and during stuffing into the containers and that all cargoes were safe for normal use and free from all types of radioactive material or otherwise, etc., that the same will not have any harmful effect to the environment. It is also stated that after the containers were unloaded in the Chennai Port and were weighed, it came to light that net contents of the consignment was far below than what was said to have been contained as per the packing list furnished by the third respondent, that on suspicion, when the containers were opened in the presence of the representatives of the applicant as well as the third respondent, the insurance surveyors and the fourth respondent, it was detected that the containers covered by different invoices contained either used tyres or sand and further when the fourth respondent, viz., STCL brought it to the notice of pre-shipment inspection certifying agency i.e., “Alex Stewart”, through their letter dated 8.4.2005, the said agency also confirmed by their letter dated 15.4.2005, to the fourth respondent that 54 containers covered by bill of lading dated 13.2.2005 to 27.5.2005 were unknown to them, that the pre-shipment inspection certificates issued were also unknown to them, that the certification was stated to have been performed on an incorrect letterhead of a different address and that the layout and format of the letterhead were also varied. The said agency also pointed out the difference in the signatures of the authorized signatories as well as the other discrepancies in the pre-shipment inspection certificates sent by the third respondent along with the bill of lading. 4. Added to the above facts, Shri R.Krishnamurthy, learned senior counsel appearing on behalf of the fourth respondent, viz., ‘STCL’, referred to an additional counter affidavit filed by the fourth respondent stating that the said agency, i.e., ‘Alex Stewart’ who was an authorized agency for conducting pre-shipment inspection for cargos imported by STCL, when encountered hardship due to discrepancy in the shipment of the cargo and issuance of pre-shipment inspection certificates, came forward to pay a specific amount as compensation and thereupon fresh agreement was made on 11.6.2005 between the said agency and STCL exclusively which was totally unrelated to any of the imports undertaken with the third respondent and also agreeing to deal with the third respondent separately. By virtue of the said agreement, the learned senior counsel submitted that STCL also agreed to continue patronage of the said institution for utilizing their services for inspection of future cargos of STCL. 5. By virtue of the said agreement, the learned senior counsel submitted that STCL also agreed to continue patronage of the said institution for utilizing their services for inspection of future cargos of STCL. 5. As per the Memorandum of Understanding between the applicant and the STCL, which is a Government of India undertaking, ‘STCL’ has agreed to facilitate the import of light-heavy melting scrap on behalf of the applicant by its foreign supplier. The third respondent entered into a sales contract with the plaintiff in C.S.No.307 of 2005 on 6.1.2005 and with the plaintiff in C.S.No.317 of 2005 on 16.1.2005, and similarly, the third respondent also entered into a sales contract with the plaintiff in C.S.No.417 of 2005 on seven different dates, viz.,1.10.2004, 23.10.2004 (two numbers), 29.11.2004, 6.1.2005 and 28.1.2005 (two numbers). 6. In the case of C.S.No.307 of 2005 , the letter of credit was opened on 7.1.2005 and the amended letter of credits are dated 19.1.2005 and 10.3.2005. In the case of plaintiff in C.S.No.341 of 2005, the letter of credit was dated 20.11.2004 and in the case of the plaintiff in C.S.No.417 of 2005, the letter of credit was dated 18.10.2004. 7. One other factor which was also pointed out on behalf of the applicant was that on 24.3.2005, the South India Importers Association communicated to its members cautioning that the third respondent committed big fraud by loading sand, used tyres and rubbish instead of steel scrap and that suchfraud had also taken place in other Ports in India. The members were asked to be more careful while purchasing cargo from the third respondent. 8. It was in the above said background, the plaintiff in C.S.No.307 of 2005 came forward with the suit along with an application in O.A.Nos.355 and 356 of 2005 for interim injunction after the date of joint inspection held on 24.3.2005. In O.A.No.355 of 2005, the applicant prays for an interim injunction to restrain the third respondent from invoking or releasing payment under the letter of credit, while in O.A.No.356 of 2005, it prays for an interim injunction to restrain the first and second respondents from making payment under the letter of credit. 9. In the above said applications, an order of interim injunction was granted on 31.3.2005 on finding prima facie case and balance of convenience in favour of the applicant. 9. In the above said applications, an order of interim injunction was granted on 31.3.2005 on finding prima facie case and balance of convenience in favour of the applicant. The said order was modified on 5.4.2005 to the effect that the first respondent, viz., Punjab National Bank and its men are restrained by an order of injunction until further orders from making payment on the strength of letter of credit dated 7.1.2000 and from allowing the said letter of credit issued by them on behalf of the applicant in favour of the third respondent to be negotiated by the third respondent through the second respondent. 10. Similarly, after the joint inspection held on 1.4.2005, the plaintiff in C.S.No.341 of 2005 has come forward with the above suit along with connected applications in O.A.Nos.409 and 410 of 2005 for interim injunction. In O.A.No.409 of 2005, the applicant prays for an interim injunction to restrain the third respondent from invoking or releasing the payment under the letter of credit and in O.A.No.410 of 2005, the applicant prays for an interim injunction to restrain the first and second respondents from making payments under the letter of credit. Similarly, the plaintiff in C.S.No.417 of 2005 has come forward with the above suit for permanent injunction, after the joint inspection held on 5.4.2005. The said plaintiff also filed O.A.Nos.481 and 482 of 2005. In O.A.No.481 of 2005, the applicant prays for an interim injunction to restrain the third respondent from invoking or releasing payment under the letter of credit and in O.A.No.482 of 2005, the applicant prays for the grant of an interim injunction to restrain first and second respondents from making payments under the leter of credit. In O.A.Nos.409 and 410 of 2005, an order of interim injunction as prayed for was granted on 12.4.2005. Similarly in O.A.No.481and 482 of 2005, similar orders were granted on 28.4.2005. 11. Notice was duly served through Court as well as by private notice. First, third and fourth respondents are represented by their counsel in C.S.No.417 of 2005, the second respondent in C.S.Nos.307 and 341 of 2005 is one and the same who is also represented by its counsel. The third respondent is common in all the three suits who is also represented by its counsel. First, third and fourth respondents are represented by their counsel in C.S.No.417 of 2005, the second respondent in C.S.Nos.307 and 341 of 2005 is one and the same who is also represented by its counsel. The third respondent is common in all the three suits who is also represented by its counsel. There is, however, no representation for the respective first respondent-issuing banks in C.S.No.307 and 341 of 2005 and the second respondent-Negotiating banks in C.S.No.417 of 2005. The first respondent in C.S.No.417 of 2005 filed Application Nos.2699 and 26700 of 2005 seeking for modification of the interim order dated 28.4.2005 since the said order covered the containers in respect of which, there was no dispute as regards the goods supplied. Therefore, those applications were ordered on 5.7.2005 and the modification was made in para. 7 of the said order which reads as under: "7. Accordingly, without adjudication as to the rival contentions and only in view of the fact that there is no dispute as regards the 8 letter of credits, the order of injunction granted on 28.4.2005 is modified as follows: "The order of injunction shall be in force in respect of the letter of credits detailed in Sl.Nos.7, 8, 9, 12 and 13. In respect of the letter of credits detailed in Sl.Nos.1 to 6, 10 and 11, the injunction order shall stand vacated." 12. The third respondent has not filed any applications for vacating the order of interim injunction granted in O.A.Nos.355 and 356 of 2005. The third respondent, however, has filed applications in A.Nos.2459 of 2005 in C.S.No.417 of 2005 for vacating the order of interim injunction granted in O.A.Nos.481 and 482 of 2005 and similar application in A.No.2461 of 2005 in C.S.No.341 of 2005 for vacating the interim injunction granted in O.A.Nos.409 and 410 of 2005. Though the first respondent has filed Application No.2460 of 2005 for vacating the order of interim injunction granted in O.A.No.482 of 2005, dated 28.4.2005, no arguments were addressed to press the said application. 13. Neither the first respondent nor the second respondent in C.S.Nos.307 and 341 of 2005 have come forward with any counter affidavit or application for vacating the interim orders granted in O.A.Nos.355 and 356 of 2005 and 409 and 410 of 2005. Similarly, the second respondent in C.S.No.417 of 2005 is also not seeking for vacation of the interim orders. 14. Neither the first respondent nor the second respondent in C.S.Nos.307 and 341 of 2005 have come forward with any counter affidavit or application for vacating the interim orders granted in O.A.Nos.355 and 356 of 2005 and 409 and 410 of 2005. Similarly, the second respondent in C.S.No.417 of 2005 is also not seeking for vacation of the interim orders. 14. It is in the above said back ground, these applications are to be disposed of by this common order. 15. Mr.P.S.Raman, learned senior counsel appearing on behalf of the applicants in all the three suits, mainly contended that as per the instructions of Government of India (Ministry of Finance), dated May, 2005, the issuance of the Pre-shipment Inspection Certificate by the Foreign Supplier became imperative which was also made as a mandatory requirement while opening letter of credit by the issuing bank, that the third respondent supplier furnished along with the bill of lading, such a certificate issued by an Institution, called Alex Stewart, confirming that the containers consisting of consignments were duly inspected and certified as containing the materials contracted to be supplied, that the issuing bank issued letters of credit based on the said certificate apart from the other required documents/letter of credit, also made it clear that as per the terms, the payment should be honoured within 120 days from the date of negotiation, that as a matter of fact, it was brought out in the joint inspection made in the presence of the applicant representatives and the third respondent representatives along with certain other officials, wherein, it came to light that 54 containers covered by the respective bill of lading were filled with either sand or used tyres and in the circumstances, it amounted to a rank fraud played by the third respondent which factor on being duly intimated to the issuing bank, immediately on its detection, would entitle the applicant to seek for withholding the payment based on the letter of credit issued by the respective issuing banks. The learned senior counsel would, therefore, contend that the case on hand would fall within the exceptional circumstances wherein, this Court can validly issue the order of interim injunction from invoking the Bank guarantee/letter of credit. The learned senior counsel would, therefore, contend that the case on hand would fall within the exceptional circumstances wherein, this Court can validly issue the order of interim injunction from invoking the Bank guarantee/letter of credit. According to the learned senior counsel, subsequent to the conduct of the third respondent in having issued certain cheques to STCL covering the whole of the value of the consignments covered by the letters of credit would only go to show that the third respondent was also fully aware of the fraud in the matter of supply of the consignment to the applicant and therefore, the interim injunction granted earlier should be confirmed. 16. As against the above submissions, Mr.K.Chandrasekaran learned counsel appearing for the third respondent, with all vehemence at his command, contended that a dichotomy should be maintained as between the privity of contract of the negotiating bank and the issuing bank on the one hand, and the privity between the seller and the buyer on the other hand, and that one cannot superimpose the other. In other words, according to the learned counsel, if there is a fraud in the performance of the contract between the seller and buyer that would not affect the letter of credit issued by the issuing bank in favour of the buyer through its negotiating bank. The learned counsel also contended that fraud should be egregious, i.e., outrageous or notorious and such fraud should vitiate the very underlying contract, that in any case, the knowledge of fraud should have been brought to the notice of the bank before honouring the payment and that it should be an established fraud. The learned counsel contended that as per the sales contract, the applicant specifically agreed to cover the risk by Insurance on its side and apart from agreeing to payment terms of letter of credit at sight meaning thereby that on presentation of the documents to be accompanied by the leter of credit being presented by the issuing bank and therefore, there would be no scope for withholding or from honouring the payment by the issuing bank at the instance of negotiating bank on behalf of the applicant. According to the learned counsel, in the case on hand, having regard to the fact that the leter of credit issued by the issuing bank to the second respondent negotiating banks contained all the requisite documents and on such issuance of leter of credit, the issuing bank ceased to have any authority to withhold payment and consequently, the interim injunction cannot be continued. The learned counsel also pointed out that the certifying agency, viz., communication dated 6.7.2005 confirming that the pre-shipment certificates which accompanied the 54 containers covered by the bill of lading dated 13.2.2005 to 27.2.2005 were all authentic certificates and in the circumstances, based on any other material, the allegation of fraud cannot be held to be established. It was also contended that since the certifying agency, viz., ‘Alex Stewart’ having entered into a substituted contract with STCL by making full payments, the sales contract itself stood superceded and therefore, there is no scope to stop the payments to the third respondent. It was lastly contended that in any case, since the parties specifically agreed in the contract that the said contract would be governed by the laws of Singapore, this Court lacks jurisdiction to try the suit itself. 17. Shri R.Krishnamurthy, learned senior counsel appearing for the ‘STCL’ brought to my notice the communication of the third respondent to the fourth respondent dated 18.4.2005 enclosing their cheques for the value of the consignments covered by 54 containers which were subsequently allowed to be dishonoured by the third respondent itself. In other words, according to the learned senior counsel such conduct of the third respondent really aggravated the ‘fraud’ played on the applicant. 18. Mr.N.V.Srinivasan, learned counsel appearing for the second respondent in C.S.No.307 and 341 of 2005, after taking me through the salient features of Uniformed Customs and Practice for Documentary Credits governing the issuing banks and the negotiating banks in the international trading sector, contended that the banks assume no liability or responsibility for the adequacy or inadequacy or the performance of the terms of agreement between buyer and seller and that the liabilities and the responsibilities of the issuing banks and the negotiating banks will be totally unaffected by any of the tussle between the buyer and seller. According to the learned counsel in the light of the decision of the Hon’ble Supreme Court reported in Federal Bank Limited v. V.M.Jog Engineering Limited,(2001)1S.C.C.663, when the issuing bank had no notice of fraud before forwarding the leter of credit to the negotiating banks, there would be no scope for interdicting with the commitment of the honour by the issuing bank at this point of time. 19. By way of reply, Mr.P.S.Raman, learned senior counsel appearing for the applicant contended that under Clause 12 of the letters patent, the plaintiff was entitled to file a suit in this Court after seeking leave, that accordingly, the applicant has obtained such a leave from this Court and in the circumstances, in the light of the decision of the Division Bench of this Court reported in P.T.Ummer Koya v. Tamil Nadu Chess Association, (2005)3 C.T.C. 86, as well as that of the one reported in New Moga Transport Company v. United India Insurance Company Limited and others, (2004)4 S.C.C.677, the same cannot be called in question. The learned counsel, then pointed out that even as per the stand of the third respondent while making the submissions in this Court by way of either counter affidavit or in the additional affidavit filed on its behalf, that it had realized the full payment from the negotiating bank and in the said circumstances, as on date, the third respondent cannot have any grievance at all as far as the realization of value of the consignment is concerned irrespective of the fact that the containers did not contain the materials agreed to be supplied to the applicant. 20. According to the learned counsel since neither the first respondent-issuing bank nor the second respondent-negotiating bank are aggrieved as against the interim injunction as on date, based on the third respondent’s prayer, the order of interim injunction need not be interfered with. The learned counsel pointed out that none of the negotiating banks in all the three suits have come forward with any counter affidavit and that the negotiating bank in C.S.No.417 of 2005 has not even chosen to enter appearance through its counsel. The learned counsel pointed out that none of the negotiating banks in all the three suits have come forward with any counter affidavit and that the negotiating bank in C.S.No.417 of 2005 has not even chosen to enter appearance through its counsel. In the said circumstances, according to the learned counsel when the negotiating banks have no grievance to express as regards the order of interim injunction and when fraud having been established beyond controversy based on the report of the Joint Inspection, a notice of which having been issued well before the payment terms, viz., 120 days from the date of negotiation and the date of issue of leter of credit, even applying the decision of the Hon’ble Supreme Court reported in Federal Bank Limited v. V.M.Jog Enginering Limited, (2001)1 S.C.C. 663 , the case on hand would fall within the exceptions stated therein and therefore, the injunction should be made absolute. The learned counsel by pointing out para.11 of the plaint submitted that irrespective of the various details furnished therein as regards the intimation about the fraud by the plaintiff and fourth respondent to the first respondent as well as third respondent apart from the certificate issuing agency, there was no demur about the said averments either by the third respondent or by the first and second respondents herein. According to the learned counsel in such circumstances, the order of interim injunction should not be varied. 21. Having heard the learned counsel for the respective parties and on a perusal of the pleadings as well as the documents, I take up the ‘jurisdiction issue’ in the first instance. According to the third respondent, as the applicant has agreed in the Sales Contract to the specific effect that the contract would be governed by the Laws of Singapore and any dispute arising between the parties should be settled only in Singapore, this Court lacks jurisdiction. On this issue, I do not propose to delve deep into the question inasmuch as on behalf of the applicant, reliance was placed upon the Division Bench Judgment of this Court reported in P.T.Ummer Koya v.Tamil nadu Chess Association, (2005)3 C.T.C. 86, wherein, in para.9, the Division Bench, after noting that the suit came to be filed after getting leave of this Court, has held as under: "9 . . . . . . . . . . . In other words, as rightly pointed out, the appellant herein/second defendant participated in, the proceedings subjected himself by filing counter affidavit for vacation of the same and later on filed petition to revoke the leave to sue. In such a circumstance, as rightly observed by the learned Judge, he (second defendant) acquiesced the jurisdiction of this Court and thereafter it would not open to him to contend that the leave granted is bad... " . . . The above position makes it clear that the person aggrieved of the grant of leave has to approach the Court at the earliest point of time and seek for revocation without due participation in the other proceedings. In other words, an application for revocation of leave should be made at the early stage of the suit and delay and acquiescence is a bar to such an application. . . . " . . . . We are satisfied that by their conduct in participating in the proceedings by filing affidavit opposing the injunction, they are acquiesced jurisdiction of this Court and they cannot be permitted to contend otherwise for revocation of leave. No doubt, based on the averments in the written statement, it would be open to the Court to frame a specific issue regarding jurisdiction and consider the same at the time of trial." 22. In the case on hand, admittedly, the applicants obtained the leave of this Court before filing the suit. The third respondent has not so far asked for revocation of the said leave granted earlier. On the other hand it has straight away filed the application for vacating the interim orders of injunction. Therefore, applying the above said Division Bench Ruling, it will have to be held that the jurisdiction question need not stand in the way of disposing of these applications on merits. In any event, the said issue can always be raised by the third respondent at the time of trial of the suits which has also been approved by this Court in the Division Bench judgment referred to above. 23. Moreover, in the judgment in New Moga Transport Company v. United India Insurance Company Limited, (2004)4 S.C.C. 677 , the Hon’ble Supreme Court has held as under in para. 14. "14. 23. Moreover, in the judgment in New Moga Transport Company v. United India Insurance Company Limited, (2004)4 S.C.C. 677 , the Hon’ble Supreme Court has held as under in para. 14. "14. By a long series of decisions it has been held that where two Courts or more have jurisdiction under C.P.C. to try a suit or proceeding, an agreement between the parties that the dispute between them shall be tried in any one of such Courts is not contrary to public and in no way contravenes Sec.28 of the Indian Contract Act, 1872. Therefore, if on the facts of a given case more than one Court has jurisdiction, parties by their consent may limit the jurisdiction to one of the two Courts. But by an agreement, parties cannot confer jurisdiction on a Court which otherwise does not have jurisdiction to deal with a matter. (See:Hakam Singh v. Gammon (India) Limited, (1971)1 S.C.C.286 and Shriram City Union Finance Corporation Limited v. Rama Mishra, (2002)9 S.C.C. 613". 24. Therefore, it is a matter for a detailed consideration at the time of trial of the suits, and at the present juncture, having regard to the leave granted earlier and in the absence of any application for revocation of the same by the third respondent, and the further fact that the third respondent has acquiesced to the present proceedings, the objection as regards the jurisdiction stands rejection for the present. 25. As far as the merits are concerned, the basis for the applications for injunction is, ‘the allegation of fraud’ against the third respondent. It is not in dispute that the goods contained in 54 containers supplied by the third respondent were found to be sand and used tyres. Immediately after the detection of the said fact, when the certifying agency was contacted, the reaction of the said Agency, viz., ‘Alex Stewart’ was that they have nothing to do with the certificates produced along with the ‘bill of lading’ furnished by the third respondent, that the communication of the said agency was dated 5.4.2005. Further, the third respondent itself admitted in categoric terms in its communication dated 18.4.2005 to the fourth respondent about the contents found in the containers, but was only attempting to state that it was not done at their end. Further, the third respondent itself admitted in categoric terms in its communication dated 18.4.2005 to the fourth respondent about the contents found in the containers, but was only attempting to state that it was not done at their end. Further, the third respondent came forward to pay the whole of the value of the materials which would have in the normal course contained in the said 54 containers, by way of five different cheques to the fourth respondent. Even the certifying agency, viz., ‘Alex Stewart’ also in no uncertain terms admitted the discrepancy in shipment and the issuance of the Pre-shipment Inspection Certificate as could be seen from the agreement dated 11.6.2005 entered into between STCL and ‘Alex Stewart’. Therefore, all the above factors cumulatively lead to the conclusion that the third respondent did not supply the goods, viz., the light melting scrap to the applicant as agreed to in the Sales Contract. The value of such goods is of the order of more than three lakh US dollars. Even in the documents filed at the instance of the third respondent, it is borne out that in May, 2004 itself, the Government of India has issued a circular, wherein a reference has been made to the public notice 65 of 2004 prescribing that import of melting scrap should be accompanied with pre-shipment inspection certificate since it was detected that such containers contained explosives and other hazardous substance. Therefore, it was in the national interest, such prescription seemed to have been made by the Government of India in regard to import of melting scrap. In such circumstances, the action of the third respondent in having supplied 54 containers to the applicants with sand and used tyres instead of melting scrap, can only be held as an act of ‘established fraud’ played on the applicants. 26. According to the third respondent, some body else might have played such fraud in high seas or at Manila. In any case, that is only an explanation that has been advanced on behalf of the third respondent. In the present moment, even assuming such a stand of the third respondent cannot be ruled out, how far that would mitigate the hardship caused to the applicant as against the fraud played on them by the third respondent is a matter for consideration. In the present moment, even assuming such a stand of the third respondent cannot be ruled out, how far that would mitigate the hardship caused to the applicant as against the fraud played on them by the third respondent is a matter for consideration. As on date, going by the available materials on record, the hard fact remains that the applicants were duped with the supply of sand and used tyres to an extent of about 54 containers while at the same time, the third respondent wanted to gain a benefit of more than three lakhs worth of US Dollars for the supply of such rubbish material on the ground that as per the Sales Contract whatever requisite documents to be furnished were duly furnished by it along with the bill of lading and that such documents were also forwarded by the initiating bank, viz., the first respondent to the negotiating bank, viz., the second respondent. 27. The other contention, viz., that the certifying agency, viz., ‘Alex Stewart’ had subsequently issued a different communication dated 6.7.2005 reaffirming the earlier certificates issued by it, when considered in the light of its agreement dated 11.5.2005 with the STCL, it only smacks of falsity and it will be highly unsafe to rely upon the said subsequent communication dated 6.7.2005 in order to hold that there was no fraud played at the instance of the third respondent. If really, the third respondent was not responsible in the sending of certain rubbish to the applicant, it is not known why the third respondent should come forward to part with five different cheques covering the value of Rs.2,79,654.47 US dollars on 18.4.2005 in favour of ‘STCL’. But even there, the third respondent went back on its commitment and it is stated that the very first cheque dated 19.4.2005 issued by the third respondent for the value of Rs.41,838.66 US Dollars was not honoured by the third respondent’s bankers and the same came to be returned. Later on the third respondent itself sent a communication dated 29.4.2005 issuing another cheque for the same value dating it as 20.6.2005 and subsequently by communication dated 17.5.2005, for certain reasons, the third respondent made it clear that it is not going to honour any of the cheques and called upon STCL to return all the post-dated cheques. 28. Later on the third respondent itself sent a communication dated 29.4.2005 issuing another cheque for the same value dating it as 20.6.2005 and subsequently by communication dated 17.5.2005, for certain reasons, the third respondent made it clear that it is not going to honour any of the cheques and called upon STCL to return all the post-dated cheques. 28. From the submissions made on behalf of the third respondent by the learned counsel, it was made clear that the third respondent has been paid the whole of the value of the consignments by the negotiating banks irrespective of the position existing in the leter of credit that the payment could be effected 120 days from the date of negotiation and the date of issue of leter of credit. A perusal of the commercial invoice issued by the third respondent in favour of the STCL makes it clear that as per the terms, the payment is 120 days from the date of negotiation as well as from the date of issue of leter of credit. In the Sales Contract, the payment terms have been mentioned as either LC AT SIGHT or USANCE LC. In the commercial parlance, ‘USANCE LC’ is, stated to be ‘prospective date agreed to between the parties for honouring the payment. When such being the terms between the parties, the question for consideration is, "whether issuing bank as well as the negotiating bank had due notice of fraud committed by the third respondent?". The fraud came to light on 23.3.2005 and 5.4.2005 when joint inspection was carried out in the presence of representatives of the applicant as well as the third respondent and the other officials. Thereafter, on 8.4.2005 STCL duly intimated the said fact to the applicant and since STCL being facilitator facilitating the transaction through the issuing bank, it will have to be taken that such notice was made available to the bankers. 29. In the light of the above said facts, the question that remains to be considered is as to, "whether there could be an order of injunction restraining the banks from honouring the leter of credit? In this context, a reference to the decision of the Hon’ble Supreme Court reported in Federal Bank Limited v. V.M.Jog Engineering Limited, (2001)1 S.C.C. 663 , will be more relevant. In this context, a reference to the decision of the Hon’ble Supreme Court reported in Federal Bank Limited v. V.M.Jog Engineering Limited, (2001)1 S.C.C. 663 , will be more relevant. That was a case where a negotiating bank who was affected by an order of injunction in respect of implementation of leter of credit by the issuing bank on behalf of the buyers, challenged the order of injunction granted by the High Court. While dealing with the said situation, the Hon’ble Supreme Court has as under in para. 65. “65. Summarising, we hold that when the plaintiff buyer has no case that the appellant negotiating bank had any knowledge of fraud, and when it took precaution in getting clearance for the document from the issuing bank on 20.3.1998 and such clearance was given on 23.3.1998 by the latter , it was not open to the issuing bank to contend that on fresh scrutiny in May 1998 it found that the documents were not in conformity with the letters of credit or that the buyer had so informed them. Prima facie, the appellant was in the position of a holder in due course. Points 2 and 3 are decided in favour of the appellant.” 30. In the above said judgment, the Hon’ble Supreme Court has laid down as to under what circumstances, an injunction can be granted to restrain encashment of bank guarantees or letters of credit. The statement of law has been set out in para.55. “55. In several judgments of this Court, it has been held that Courts ought not to grant injunction to restrain encashment of bank guarantees or letters of credit. Two exceptions have been mentioned: (i) fraud, and (ii) irretrievable damage. If the plaintiff is prima facie able to establish that the case comes within these two exceptions, temporary injunction under O.39, Rule 1, C.P.C., can be issued. It has also been held that the contract of the bank guarantee or the letter of credit is independent of the main contract between the seller and the buyer. This is also clear from Arts.3 and 4 of UCP (1983 Revision). In case of an irrevocable bank guarantee or letter of credit the buyer cannot obtain injunction against the banker on the ground that there was a breach of the contract by the seller. This is also clear from Arts.3 and 4 of UCP (1983 Revision). In case of an irrevocable bank guarantee or letter of credit the buyer cannot obtain injunction against the banker on the ground that there was a breach of the contract by the seller. The bank is to honour the demand for encashment if the seller prima facie complies with the terms of the bank guarantee or the letter of credit, viz., if the seller produces the documents enumerated in the bank guarantee or the letter of credit. If the bank is satisfied on the face of the documents that they are in conformity with the list of documents mentioned in the bank guarantee or the letter of credit and there is no discrepancy, it is bound to honour the demand of the seller for encashment. While doing so it must take reasonable care. It is not permissible for the bank to refuse payment on the ground that the buyer is claiming that there is a breach of contract. Nor can the bank try to decide this question of breach at that stage and refuse payment to the seller. Its obligation under the document having nothing to do with any dispute as to breach of contract between the seller and the buyer. As to its knowledge of fraud or forgery, we shall presently deal with it.” 31. However, the Hon’ble Supreme Court after referring to a decision of an American case in “Sztejn v. J.Heney Schroder Banking Corporation, (1941)31 N.Y.S. 2 d.631, has stated as under in para. 59: ”59. Applying the said principle, we may state that if the appellant Federal Bank was merely a collecting bank or agent which had approached the Bank of Maharashtra (the issuing bank) and if the issuing bank was sought to be restrained by the buyer before payment was made by the issuing bank to the collecting bank, the collecting bank could not have compelled the issuing bank to release the money for collection if the buyer informed the issuing bank in his plaint that the documents to be presented to it by the collecting bank were forged or fraudulent. But where, on the other hand, the negotiating bank, i.e., Federal Bank (appellant), has said on the basis of a clearance given by the issuing bank as to genuineness of documents, and seeks reimbursement, then the negotiating bank is in the position of a holder in due course and can claim that the suit of the buyer must fail if it sought to restrain the issuing bank from reimbursing the negotiating bank. These principles prima facie flow from Shientag, J’s judgment which has been followed both in England and by this Court, in several cases." [Italics for emphasis] 32. In the noted English case which has also been extracted in the judgment of the Hon’ble Supreme Court, it was held as under: "Where the seller’s fraud has been called to the bank’s attention before the drafts and documents have been presented for payment, the principle of the independence of the bank’s obligation under the letter of credit should not be extended to protect the unscrupulous seller. It is true that even though the documents are forged or fraudulent, if the issuing bank has already paid the draft before receiving notice of the seller’s fraud, it will be protected if it exercised reasonable diligence before making such payment." [Italics for emphasis] 33. On a reading of the above passages, from the above decision of the Hon’ble Supreme Court, it is by now well settled in respect of restraint of bank guarantee or letters of credit, unlike other cases of injunctions where the consideration is on prima facie case and balance of convenience, unless it is a case of fraud or causing of irretrievable damage, there is no scope for withholding implementation of a bank guarantee or letter of credit. Even as regards the fraud, a dichotomy is noted as between the contract of the buyer and seller and the arrangement between an issuing bank and negotiating bank. Yet irrespective of such a dichotomy being maintained, the Hon’ble Supreme Court has made it clear that in the event of the act of fraud by the seller being brought to the notice of the issuing bank and the negotiating bank prior to the encashment, it would be in order for such bank themselves to withhold payment instead of allowing an unscrupulous seller from encashing the payment. Therefore, it goes without saying that in those circumstances, it would be in order for the Courts to step in and pass appropriate orders stopping the implementation of such bank guarantee or encashment of Letters of Credit. 34. With the above said principle in mind, when the case on hand is analyzed, I find that as per the sales contract, the terms of payment is specifically mentioned as "LC AT SIGHT or USANCE LC". According to the applicant, in respect of the present transactions, the parties agreed for making payment within 120 days from the date of negotiation and the date of issue of letters of credit. Admittedly, though the issuing bank, viz., the first respondent has forwarded requisite documents along with Letters of Credit to the negotiating bank , there is nothing on record to suggest as on date that the USANCE period had expired by the time the fraud came to light and to the knowledge of the bankers. Even accepting the submission of the learned counsel for the third respondent that payment in full has been received by it from the negotiating bank for which statement, there is no supporting material at the instance of the second respondent, the fact remains that the issuing bank through STCL has not so far cleared the payment as it was duly informed of the fraud by ‘STCL’. It is also not the case of the third respondent that the USANCE period of Letters of Credit had expired in order to state that the commitment to be honoured both by the issuing bank as well as the negotiating bank had already occurred. In the meantime, it is common ground that both the banks had notice of the fraud of the third respondent. Therefore, even by applying the principles set out by the Hon’ble Supreme Court in Federal bank Limited v. V.M.Jog Engineering Limited, (2001)1 S.C.C. 663 , it can be safely held that in the case on hand, the interim injunction can be maintained and can be allowed to operate pending disposal of the suits. 35. It cannot also be varied inasmuch as, as pointed out earlier except the third respondent neither the issuing bank nor the negotiating bank have shown any interest in getting the order of injunction vacated. 35. It cannot also be varied inasmuch as, as pointed out earlier except the third respondent neither the issuing bank nor the negotiating bank have shown any interest in getting the order of injunction vacated. As rightly contended by the learned senior counsel for the applicants, the third respondent’s counsel having stated that his client has already received the full value of the goods, no prejudice is going to be caused to the third respondent by ordering continuation of injunction pending suits. 36. Though Mr.N.V.Sreenivasan, learned counsel appearing for one of the negotiating banks, attempted to support the application filed by the third respondent, in the absence of the material particulars as to on what date and how the negotiating bank parted with the funds to the third respondent, it will not be justified to vacate the injunction on the mere oral submissions made on behalf of the said negotiating bank. In the absence of those details as regards the payment, etc., which is a vital factor inasmuch as in the first place, the Sales Contract itself provides for the terms of payment also by USANCE LC which stipulation read along with the Commercial Invoice issued by the third respondent itself, makes it clear that in the case on hand, the parties agreed to provide 120 days period from the date of negotiation for effecting the payment, it would be travesty of justice to vacate the injunction. In the said factual situation, in spite of the notice of the admitted fraud in the month of April, 2005 itself, if the negotiating bank had proceeded to release the payment in favour of the third respondent, it can only be said that such action of the third respondent might have been carried out on its own peril. The Hon’ble Supreme Court has made it abundantly clear that the principle of the independence of the bank’s obligation under the letter of credit should not be extended to protect the unscrupulous seller when such a bank had notice of such fraud. The Hon’ble Supreme Court has made it abundantly clear that the principle of the independence of the bank’s obligation under the letter of credit should not be extended to protect the unscrupulous seller when such a bank had notice of such fraud. Therefore, in the absence of any counter affidavit at the instance of the negotiating bank explaining the various factors about the date of receipt of documents, date of intimation about the fraud, the actual date of release of payment if any to the third respondent, and also in the ansence of any specific application for vacating the injunction or atleast opposing the injunction application in the form of an affidavit, it will be wholly inappropriate to vacate the order of interim injunction. 37. As far as the contention made based on the subsequent agreement between STCL and the certifying agency, on a perusal of the additional affidavit filed on behalf of the fourth respondent STCL, prima facie, it is shown that the agreement dated 11.5.2005 as between STCL and the certifying agency was to patronage the said agency in future also. Clause (2) of the said agreement also makes it abundantly clear that the terms of the said agreement is exclusive between STCL and ‘Alex Stewart’ and is in no way related or concerned with the imports undertaken with the third respondent by STCL. Therefore, the same cannot be taken as a novation of the contract as pleaded by third respondent. 38. Though on behalf of the negotiating bank, Mr.N.V.Sreenivasan, learned counsel for the second respondent made an extensive reference to the Articles of Uniform Commercial Practice of Documentary Credits (1983), in the light of the ratio of the Hon’ble Supreme Court reported in Federal bank Limited v. V.M.Jog Engineering Limited, (2001)1 S.C.C. 663 , and on applying the said principles to the facts of the present case, I find that the injunction should be continued. Such submissions made on behalf of the negotiating bank do not improve the case of either the second respondent or the third respondent herein. 39. Mr.P.S.Raman learned senior counsel appearing for the applicant also pleaded that ‘irretrievable injury’ would be caused to the applicant if the respondents are allowed to encash the payment. Such submissions made on behalf of the negotiating bank do not improve the case of either the second respondent or the third respondent herein. 39. Mr.P.S.Raman learned senior counsel appearing for the applicant also pleaded that ‘irretrievable injury’ would be caused to the applicant if the respondents are allowed to encash the payment. According to the learned counsel, the third respondent being a foreign seller and its negotiating bank located in Singapore, if once the payments are cleared and if ultimately the plaintiff succeeds, it would cause irretrievable injury to the applicant-plainiff. In this context, it would be appropriate to refer to the earlier decision of the Hon’ble Supreme Court reported in U.P.Co-operative Federation Ltd v. Singh Consultants and Engineers (P) Limited, (1988)1 S.C.C.174, wherein, the Hon’ble Supreme Court has held as under: “....An irrevocable commitment either in the form of confirmed bank guarantee or irrevocable letter of credit cannot be interfered with except in case of fraud or in case of question of apprehension of irretrievable injustice has been made out. This is the well settled principle of the law in England. This is also a well settled principle of law in India ......”. 40. Going by the principle laid down by the Hon’ble Supreme Court either in the case of a fraud or in the case of an apprehended irretrievable injustice to the encashment of either the bank guarantee or irrevocable commitment of letter of credit, the Courts can interfere with by granting injunction. Therefore, keeping aside the contention of irretrievable injury, being caused raised on behalf of the applicants for the present moment, inasmuch as the allegation of fraud is uncontroverted, there is every justification for injuncting the encashment of letter of credit. 41. The decision relied upon by the learned counsel for the third respondent reported in I.T.C Limited v. Debts Recovery Appellate Tribunal and others, A.I.R.1998 S.C.634, is of no assistance as the facts are entirely different and of no comparison. 42. In the light of the above discussion, the balance of convenience is fully in favour of the applicant in continuing the injunction pending suit. I find that the interim injunctions granted on 5.4.2005 and 12.4.2005 cannot be vacated. 42. In the light of the above discussion, the balance of convenience is fully in favour of the applicant in continuing the injunction pending suit. I find that the interim injunctions granted on 5.4.2005 and 12.4.2005 cannot be vacated. Accordingly, the interim injunction granted in O.A.Nos.355 and 356 of 2005 in C.S.No.307 of 2005; O.A.Nos.409 and 410 of 2005 in C.S.No.341 of 2005 and O.A.Nos.481 and 482 of 2005 in C.S.No 417 of 2005 are made absolute and consequently, the applications filed by the third respondent in O.A.Nos. 2459 of 2005 in C.S.No 417 of 2005; O.A.No.2461 of 2005 in C.S.No341 of 2005 as well as the application filed by the first respondent in O.A.No.2460 of 2005 in C.S.No 417 of 2005 filed for vacating the interim orders shall stand dismissed. No costs.