NATIONAL BANK LIMITED versus GHANSHYAM DAS AGARWAL & ORS.

NATIONAL BANK LIMITED versus GHANSHYAM DAS AGARWAL & ORS.

Heavy and fiduciary responsibility rests on the Opening Bank which furnishes the Letter of Credit to ensure payment unless the documentation is defective or invocation is discrepant. The Opening Bank's admission of liability to reimburse the supplier's corresponding bank in the Dhaka suit stands as an admission and is in consonance with the law pertaining to Letter of Credit. Money decree for the amount secured by the LC was rightly passed by the High Court.

Parties
Appellant: National Bank Limited; Respondent/exporter: Ghanshyam Das Agarwal; Respondent/exporter's Bank: Bank of India; Respondent/advising Bank: American Express Bank Ltd.; Respondent/importer: M/s. Sarumeah & Sons
Jurisdiction
India
Judgment Date
14 January 2015
Procedural Posture
Civil Appeal / Appeal Against Judgement and Order Dated 06.11.2006 of the High Court of Calcutta in APOT No. 472 of 2006
Outcome
Appeal dismissed with costs.
Legal Topics
Letter of Credit, Bank's Fiduciary Responsibility, Obligations Under Uniform Customs and Practice for Documentary Credits 500
Banking Law International Trade Letter of Credit Bank's Fiduciary Responsibility Obligations Under Uniform Customs and Practice for Documentary Credits 500

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Parties

National Bank Limited

Appellant

Ghanshyam Das Agarwal

Respondent/exporter

Bank of India

Respondent/exporter's Bank

American Express Bank Ltd.

Respondent/advising Bank

M/s. Sarumeah & Sons

Respondent/importer

Procedural Posture

Civil Appeal / Appeal Against Judgement and Order Dated 06.11.2006 of the High Court of Calcutta in APOT No. 472 of 2006

Legal Issues

  1. 1 Whether the Opening Bank can dilute its responsibility to make payment strictly under the terms of the Letter of Credit.
  2. 2 Whether the Opening Bank acted in violation of its fiduciary duty by certifying photocopies of shipping documents without informing the Exporter or Exporter's Bank.
  3. 3 Whether the Appellant Bank admitted liability to reimburse the payments to the supplier's corresponding bank.

Ratio Decidendi

Heavy and fiduciary responsibility rests on the Opening Bank which furnishes the Letter of Credit to ensure payment unless the documentation is defective or invocation is discrepant. The Opening Bank's admission of liability to reimburse the supplier's corresponding bank in the Dhaka suit stands as an admission and is in consonance with the law pertaining to Letter of Credit. Money decree for the amount secured by the LC was rightly passed by the High Court.

Court Disposition

Appeal dismissed with costs.

Orders

  • Money decree for USD 352,250 passed in favour of Bank of India.
  • Injunction orders vacated upon payment of decreetal dues.