Hon'ble Judges/Coram:
Tarun Chatterjee and P.K. Balasubramanyan

JUDGMENT

Tarun Chatterjee, J.

1. Application for permission to file special leave petition is allowed. Leave granted.

2. This appeal is directed against the judgment and order dated 21^st June, 2007 passed by a Division Bench of the Calcutta High Court whereby an appeal preferred against an order dated 5^th June, 2007 of a learned Single Judge of the same High Court was dismissed and the order of the learned Single Judge was affirmed. The learned Single Judge by his order dated 5^th June, 2007 had vacated an interim order of status quo granted earlier on an application filed under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') for an order of injunction restraining the respondent from receiving any payment under a Letter of Credit.

3. At this stage, we feel it proper to narrate the facts which have given rise to the filing of this appeal in this Court.

4. The appellant entered into a contract on 29^th May, 2006 with the respondent by which the respondent had agreed to supply 26,000 metric tones of Extra Hard Pitch (Reprocessing Grade) (in short 'goods') to the appellant as per schedule set out in the contract. In the said contract, one of the terms of payment was that a Letter of Credit will be opened and accordingly an irrevocable Letter of Credit was opened by the appellant in favour of the respondent. Initially, under the said Letter of Credit, payment was to be made 'at sight'. The document against which payment was to be made, was received directly by the banker of the appellant and on presentation of the document it was found by the banker of the appellant that the description of the goods was not as per the terms of the Letter of Credit. Accordingly, the banker of the appellant by a Letter dated 11^th September, 2006, intimated the aforesaid fact to the appellant and sought advice whether the appellant was willing to waive the discrepancies indicated in the Letter dated 11^th September, 2006. In response to this query of the banker, the appellant waived the discrepancies and accepted the documents by a letter dated 3^rd October, 2006 and also agreed to make the payments in the following manner:

With reference to the above and further to your swift message dated 3/10/2006. We are accepting the documents with discrepancy and the payment will be made after 180 days from today. We accept to make the following payments.

(Emphasis supplied)

5. Before accepting the documents and agreeing to make payments, by a communication dated 28^th September, 2006, the respondent had given the appellant two options:- (i) either to negotiate the document and resolve the quality issue; or (ii) reject the shipment document.

6. Thereafter, correspondence was exchanged between the appellant and the respondent and the Letter of Credit was amended and payment 'at sight' was substituted by the words '230 days from the shipment date'. On the basis of the amended Letter of Credit, the payment was, thereafter, payable on or before 10^th April, 2007. The amendment of the terms of Letter of Credit was informed to the bankers of the respondent whi........