TMI Blog2015 (3) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of the Letter of Credit. This Bank owes a duty to all concerned to ensure that any action taken by it would not enable or conduce the frustration of the obligations contained in a Letter of Credit, as recognised by International Banking norms or extant Uniform Customs and Practice for Documentary Credits (UCP) 500. Appellant before us, should not have certified the documentation, reasonably anticipating or being aware of the possibility that this certification could be abused. Law assures the Exporter and its Bank to repose in the expectation, nay, certainty, that the consignment, which is the subject-matter of the Letter of Credit, is not usurped by the Importer/Consignee or its agents, without remitting payment to the consignor’s Bank. This is a strict liability cast on the bank which opens the Letter of Credit, since otherwise International trade and commerce will virtually and indubitably come to a standstill. LC has the effect of creating a bargain between the banker and the vendor of goods, a deemed nexus between the Seller and the Issuing Bank, rendering the latter liable to the Seller to pay the purchase price or to accept a Bill of Exchange upon tender of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al) on 9th July, 2007, but while doing so, this Court had specifically clarified that: Pending further orders the impugned order passed by the High Court shall continue to operate . The impugned Order decreed the suit filed by Ghanshyam Das Agarwal, who is hereinafter referred to as the Exporter , for a sum of USD 352,250 against the Appellant Bank (Defendant No.3 before the Trial Court/Single Judge) in favour of the Bank of India, which is the Exporter s Bank. The remaining claim has been relegated for Trial. The impugned Order further clarifies that upon the payment of these decreetal dues the injunction granted by the Debt Recovery Tribunal by its Order dated April 10, 2002 shall stand vacated; and upon this payment the Orders of injunction passed by the Calcutta High Court on 22nd December, 1999 and 14th January, 2000 shall also stand vacated. The impugned Order goes further to state that the decreetal amount shall be satisfied from out of the funds lying with the American Express Bank Limited, Defendant No.2. To this extent the decreetal amount also stands satisfied. It also transpires that the Defendant No.4, M/s. Sarumeah Sons, a proprietorship concern, has, consequent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24/6/99 CONCERNING PAYMENT OF YR BILL UNDER OUR L/C NO. 02-133-99. PLS BE INFMD THAT THE DOCTS HV NOT BEEN ACCEPTED BY THE IMPORTER TILL DATE (.) MEANTIME WE HOLD YR DOCTS. AT YR ENTIRE RISK AND DISPOSAL (.) 3 The Negotiating Bank, viz., Bank of India, thereafter, raised a demand on the Appellant for the said sum of USD 352,250 by its telex dated 12th July, 1999 in response to which the Appellant again, as we see it, evasively and with mala fide intent, mentioned that the Importer was out of station and that they would revert to the subject upon his arrival. On 18th July, 1999, the Appellant addressed a telex to Bank of India informing it that the consignment was located at Darshana Land Custom and that the Importer and Exporter were in dialogue with each other. Eventually, by its telex dated 26th August, 1999, the Appellant informed Bank of India that the documents had not been accepted by the Importer. The Appellant has admitted in its Written Statement that the documentation was received by it on 19th May, 1999 and returned to the Bank of India as late as 10th October, 1999. It has also been admitted by the Appellant that in the interregnum, without prior information to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porter s Bank i.e., Appellant before us, should not have certified the documentation, reasonably anticipating or being aware of the possibility that this certification could be abused. Law assures the Exporter and its Bank to repose in the expectation, nay, certainty, that the consignment, which is the subject-matter of the Letter of Credit, is not usurped by the Importer/Consignee or its agents, without remitting payment to the consignor s Bank. This is a strict liability cast on the bank which opens the Letter of Credit, since otherwise International trade and commerce will virtually and indubitably come to a standstill. 4 It is only when irretrievable injury is bound to result and it is plainly evident that there is egregious fraud strictly ascribable to the beneficiary of the LC, that a reason to insulate a party before it against liability and that too, comes about only through the prompt intervention and interdiction of a Court of law. This Court has consistently adhered to this position of law even through the passage of several decades. The LC has the effect of creating a bargain between the banker and the vendor of goods, a deemed nexus between the Seller and the Issuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit is the springboard of the present Appeal. It also needs clarification that in the Dhaka Suit Defendants 1 and 2 correspond to the Appellant, Defendant No. 3 therein is American Express Bank Ltd., i.e., Respondent No.3 herein, Defendant No. 4, i.e., Bank of India, is Respondent No.2 herein, and Defendant No. 5 is Respondent No.1 in this Appeal, i.e., the Plaintiff in the Calcutta Suit. The following paragraphs from the said Written Statement if the Appellant in the Dhaka Suit are worthy of reproduction: 13. That the statements made in paragraph No. 7 of the plaint are matters of record and the matter of strict proof, the onus of which lies on the Plaintiff. Moreover, it is stated that the request of the Plaintiff, the Defendant No. 2 certified the photocopy of Non-negotiable copies of the shipping documents and handed over the same alongwith customs purpose copy of LCAF without NOC to the Plaintiff for customs assessment purpose. But the Plaintiff never returned the said documents to the Defendant No. 2 Bank. But the Plaintiff cleared the entire consignment from the Daranana railway Authority through its C F Agent M/s Anwar Hossian by producing forged NOC and endorsement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaving a sum of ₹ 1.54 crore equivalent to more or less US$ 3,52,250.00 in Nostro A/D No.412800566 maintained with them by the National Bank Limited. The Defendant No.1 of suit No. C.S. No.678 of 1999 i.e. Defendant No. 4 in this onus requested the National Bank Limited, to make immediate payment to the Plaintiff of Suit No.678 of 1999 i.e. Defendant No.5 in this suit i.e. supplier through its corresponding bank American Express Bank i.e. Defendant No.3. The Defendant No.1 of the suit No. C.S. No.678 of 1999 made such request to the Defendant No.1 of this suit on the ground that the goods against the shipping documents had already been delivered and consumed by the Defendant No.4 i.e. Plaintiff in this suit. Now the Defendant Nos. 1 and 2 are under deligation to reimburse the payments to the supplier s corresponding bank i.e. Defendant No.3. So the application filed by the Plaintiff for temporary injunction is liable to be dismissed. A perusal of paragraph 18 of the Written Statement filed by the Appellant in the Dhaka litigation discloses that its position was that it was under obligation to reimburse the payments to the supplier s corresponding bank i.e., Defendant No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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