LexNATIONAL BANK LIMITED versus GHANSHYAM DAS AGARWAL & ORS.
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[2015) 1 S.C.R. 937 NATIONAL BANK LIMITED v. GHANSHYAM DAS AGARWAL & ORS. (Civil Appeal No. 7513 of 2009) JANUARY 14, 2015 [VIKRAMAJIT SEN AND ARUN MISHRA, JJ.] International trade - Letter of credit (LC) - Responsibility A 8 of the opening bank - Held: In trans-borcier or international transactions, trade depends almost entirely on the faith C reposed in banking institutions to secure the price of the exporled goods, commodities etc - Exporler can legally and reliably expect that the Bankers will watch its interests by ensuring that the exporled consignment shall be released to the buyer only on the transmission of the price of the D shipment as secured through LC - Thus, heavy and fiduciary responsibility rests on the Opening Bank which furnishes LC to ensure that payment is secured unless the documentation is defective and/or the invocation of LC is discrepant - Opening Bank cannot disregard, delay or dilute its E responsibility to make payment strictly and promptly as obligated by the terms of LC - Law assures the Exporler and its Bank to repose in the expectation, nay, cerlainty, that the consignment, which is the subject-matter of LC is not usurped by the lmporler/Consignee or its agents, without remitting F payment to the consignor's Bank - On facts, Indian exporler exporling rice to Bangladesh firm-imporler - Appellant had opened LC for sum of USD 352,250 on Bank of India, Calcutta in favour of Exporter - Appellant Bank evaded mentioning that without the permission of or information to G either the Exporler or the Bank of India, it had provided its cerlification to photocopies of the documentation which, in the event, and as any prudent banker would anticipate were misused by the Importer to have the rice consignment released to him - Appellant admitted its liability in the Dhaka 937 H 938 SUPREME COURT REPORTS [2015) 1 S.C.R. A Suit filed by importer praying for injunction against the appellant that it was under obligation to reimburse the payments to the supplier's corresponding bank - Thus, in view of the said admission by the appellant, money decree for the sum secured by the subject LC by exporter against the B appellant Bank in favour of the Bank of India was rightly decreed by High Court - Banking/banks - Uniform Customs and Practice for Documentary Credits 500. Tarapore and Co. vs. V. 0. Tractors Export 1969 (2) SCR 920 :AIR 1970 SC 891; United Commercial Bank vs. Bank C of India 1981 (2) SCC 766; U.P. Coop. Federation Ltd. vs. Singh Consultants & Engineers (P) Ltd. 1988 (1) SCR 1124 :1988 (1) SCC 174; Federal Bank Ltd. vs. V.M. Jog Engineering Ltd. 2001 (1) SCC 663; Himadri Chemicals Industries Ltd. vs. Coal Tar Refining Co. 2007 (8) D SCR 869:2007 (8) SCC 110 - referred to. E F Case Law Reference: 1969 (2) SCR 920 Referred to Para 4 1981 (2) sec 766 Referred to Para 4 1988 (1) SCR 1124 Referred to Para 4 2001 (1 > sec 663 Referred to · Para 4 2007 (8) SCR 869 Referred to Para 4 CIVIL APPELLATE JURISDICTION: Civil Appeal No.7513 of 2009. From the Judgment and Order dated 06.11.2006 of the G High Court of Calcutta at Calcutta in APOT No. 472 of 2006. Debajyoti Basu, Sudhir Kumar Gupta, Naseeb Khan, Abhinav Gupta, Manish Gupta, Satish Kumar for the Appellant. Dhruv Mehta, Sagar Bandopadhyay, Hiren Dasan, Avinash H Singh, Pranab Kumar Mullick for the Respondents. NATIONAL BANK LIMITED v. GHANSHYAM DAS 939 AGARWAL & ORS. The Judgment of the Court was delivered by A VIKRAMAJIT SEN, J. 1. Notice was ordered in the Special Leave Petition (now Appeal) 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 B 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 CourU Single Judge) in favour of the Bank of India, which is the C 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 D January, 2000 shall also stand vacated.
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