METRO EXPORTERS PVT. LTD. AND ANOTHER versus STATE BANK OF INDIA & ORS.

Citation: [2014] 9 S.C.R. 64 · Decided: 23-04-2014 · Supreme Court of India · Bench: K.S. RADHAKRISHNAN · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
[2014] 9 S.C.R. 64 
METRO EXPORTERS PVT. LTD. AND ANOTHER 
V. 
STATE BANK OF INDIA & ORS. 
(Civil Appeal No. 4807 of 2014) 
APRIL 23, 2014 
[K.S. RADHAKRISHNAN AND VIKRAMAJIT SEN, JJ.) 
Bank/Banking - International Banking - Transfer of funds 
relating to export-import transaction - Reversal of account 
C 
entry - Challenge to 1Appe/lant-exporter used to bank with 
State Bank of India's Overseas Branch - Appellant used to 
export the goods directly and submit documents to_Siate Bank 
of India and it was for the bank to claim payment - Credit entry 
made to appellant-exporter's EEFC account in 2006 - Two 
D and half years later, the State Bank of India, Overseas Branch, 
Mumbai debited amount from EEFC account of appel/ant-
exporter on ground that it was wrongly deposited in the account 
of appellant by mistake - Justification - Held: On facts, not 
justified - In view of s. 72 of the Contract Act, the Bank does 
E 
have a right to recover the money paid under a mistake - In 
the instant case, however, the importer had already made the 
payment and SB/, Foreign Department had received the 
amount in the Nostro account with remittance advice to Bank 
of India, instead of SB/, Overseas Branch, Mumbai -
F 
Appellant was also informed of the export collection advice 
by the SB/ and the appellant had received the amount - The 
Bank might have. committed a mistake, but now it would/be 
impossible tor the appellant to recover the amount from the · 
importer since, so far as the importer is concerned, it had 
already paid the amount - If SB/, Overseas Branch had not 
G 
given credit of the amount, then, appellant could have 
proceeded against the importer at the earliest opportunity -
For mistake committed by the Bank, the appellant should not 
be made to suffer - Contract Act, 1872 - s. 72. 
H 
64 
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 
65 
INDIA 
Bank/Banking ~ International Banking - Funds transfer A 
- Transfer of payment messages - SWIFT Message - Nostro 
and Vostro accounts - Discussed. 
The appellant-exporter had exported steel coils and 
received part payment against the invoice on the basis 
8 
of the credit advice raised by the State Bank of India, 
Overseas Branch, Mumbai. The appellant had been 
informed of the export collection payment advice by the 
State Bank of India for US $ 199, 959.74. Two and a half 
years later, the State Bank of India, Mumbai, sent a letter C 
to the appellant with reference to the aforesaid credit 
entry of US$ 199, 959.74 to appellant's EEFC account and 
advised that credit was erroneously passed on to the 
SBl's Nostro account by Bank of America and that the SBI 
had marked a lien on the appellant's EEFC account 
(pending 
rectification). 
After 
exchange 
of D 
correspondences, the bank lifted the lien and debited 
appellant's EEFC account, realizing an amount of 
Rs.94,56,0941-. 
In the instant appeal, the appellant contended that 
E 
the bank had no legal right to reverse a legal entry after 
having credited the same in the appellant's bank account 
and in any view, without obtaining the consent of the 
appellant, the entry should not have been reversed. 
F 
The respondent-Bank, on the other hand, submitted 
that the amount in question exclusively belonged to the 
Bank, which was deposited in the appellant's account by 
mistake and hence the same could be recovered by 
debiting the account of appellant which was a normal 
G 
banking practice done in good faith. 
The question for consideration before this Court was 
whether the State Bank of India was right in debiting the 
account of appellant, after a long lapse of time, on the 
H 
66 
SUPREME COURT REPORTS 
[2014] 9 S.C.R. 
-A ground that the amount was wrongly credited into the 
appellant's account. 
Allowing the appeal, the Court 
HELD:1.1. An international fund transfer occurs with 
8 either the payer's or the payee's bank, or both banks, 
located in a country other than that of the currency of the 
transfer. Most international funds transfers are credit 
transfers and they operate in a similar way to domestic 
. credit transfers, although international credit transfers 
C generally involve greater use of correspondent 
(intermediary) banks. Furthermore, unlike a domestic 
credit transfer, an international funds transfer may be 
subject to more than one law. Each account relationship 
in the ·transfer - for example, as between the payer and 
D his own bank, the payer's bank and a correspondent 
bank, the corresponde
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