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In order to pay for the purchase of PVC, Hira Lall & Sons & Ors. (Buyer/Applicant) obtained a commercial letter of credit in the amount of US$ 205,992.51 issued by Lakhsmi Commercial Bank (Issuer) in 1979 in favor of Palmex Enterprises of Singapore (Beneficiary). When Beneficiary presented documents through a negotiating bank, Issuer reimbursed the negotiating bank and demanded reimbursement from Applicant. Applicant refused to reimburse Issuer because the vessel carrying the goods sank.

Issuer then sued Applicant for reimbursement and obtained judgment from the High Court of Delhi. Pending appeal, the Recovery of Debts Due to Banks and Financial Institutions Act of 1993 transferred jurisdiction to the Debts Recovery Tribunal (Tribunal).

Claiming that this action for reimbursement was so linked to its claim for insurance proceeds against the insurer, Buyer/Applicant petitioned Tribunal for re-transfer of the case to the High Court. Tribunal, Rajendra, J., denied the petition.

The Judge noted that, "a suit based on insurance claim and a claim based on Letter of Credit arise out of different causes of action though it may be true that in the case pending before the High Court against the Insurance Company and in the application before the Tribunal certain issues may arise."

[JEB/ahg]

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