Judgment :-

R.M. Lodha, J.

This civil appeal, by special leave, is from the judgment and decree of the Madhya Pradesh High Court whereby the Division Bench of that Court allowed the first appeal of the present 1st respondent--M/s. Emmsons International Ltd.--and set aside the judgment and decree of the trial court (First Additional District Judge, Bhopal) and decreed the 1st respondent's monetary claim.

2. Unialkem Fertilizers Limited--2nd respondent in this appeal (hereinafter referred to as `the buyer') placed a purchase order on M/s. Emmsons International Limited (hereinafter referred to as `the seller') for supply of 2000 MT of Syrian Rock Phosphate at the rate of Rs. 2100/- per metric ton for an aggregate amount of Rs. 43,86,411/-. The payment terms provided `against 180 days issuance of letter of credit'. On June 18, 1997, at the request of the buyer, a letter of credit for Rs. 43,86,411/- was established by the appellant No. 1 -- State Bank of India, Industrial Finance Branch, Bhopal (hereinafter referred to as `the issuing bank') in favour of the seller; the appellant No. 2 - State Bank of India, New Delhi Main Branch, New Delhi being the advising Bank. The seller supplied the material vide sale invoice, high seas delivery, bills of lading, etc. and the buyer is said to have accepted the documents.

3. The letter of credit established by the issuing bank, inter alia, made the following stipulations:

“. . . . . . . . THIS DOCUMENTARY CREDIT WHICH IS AVAILABLE BY NEGOTIATION OF YOUR DRAFT AT 180 DAYS FROM DESPATCH DRAWN FOR 100.00% OF INVOICE VALUE ON UNIALKEM FERTILIZERS LTD., E-5 PLOT NO. 4, RAVI SHANKAR NAGAR, BHOPAL, 462 016 BEARING THE CLAUSE “DRAWN UNDER DOCUMENTARY CREDIT NO. 0192097 LC000087 OF STATE BANK OF INDIA, INDUSTRIAL FINANCE BRANCH, GR. FLOOR, L.H.O. PREMISES, HOSHANGABAD ROAD, BHOPAL - 462 011 (INDIA).” ACCOMPANIED BY DOCUMENTS LISTED IN ATTACHED SHEET (S) EVIDENCING DISPATCH OF GOODS AS PER THE ATTACHED SHEETS.

FOR LIST OF REQUIRED DOCUMENTS, MERCHANDISE DESCRIPTION AND OTHER INSTRUCTIONS PLEASE SEE THE ATTACHED CONTINUATION SHEETS WHICH FORM AN INTEGRAL PART OF THIS CREDIT.

SHIPMENT FROM : SYRIA TO KANDLA, INDIA SHIPMENT TERMS : CIF PARTIAL SHIPMENT : ALLOWED TRANSSHIPMENT : NOT ALLOWED INSTRUCTION TO THE ADVISING BANK: - ALL BANK CHARGES (OTHER THAN ISSUING BANK CHARGES) ARE FOR ACCOUNT OF BENEFICIARY.

- DISCREPANT DOCUMENTS TO BE SENT STRICTLY ON COLLECTION BASIS.

- ALL DOCUMENTS TO INDICATE L/C NO. 0192097 LC 000087 AND DATE 18/06/97.

- NEGOTIATIONS UNDER THIS CREDIT ARE RESTRICTED TO STATE BANK OF INDIA, NEW DELHI, MAIN BRANCH, 11, SANSAD MARG, POST BOX NO. 430, NEW DELHI - 110 001. -EXCEPT IN SO FAR AS OTHERWISE EXPRESSELY STATED THIS DOCUMENTARY CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDITS (UCP) (1993 REVISION) OF THE INTERNATIONAL CHAMBERS OF COMMERCE (PUBLICATION NO. 500) WE HEREBY ENGAGE WITH DRAWERS AND/OR BONAFIDE HOLDERS THAT DRAFT DRAWN AND NEGOTIATED IN CONFORMITY WITH THE TERMS OF THIS CREDIT WILL BE DULY HONOURED ON PRESENTATION AND THAT DRAFTS ACCEPTED WITHIN THE TERMS OF THIS CREDIT WILL BE DULY HONOURED AT MATURITY. THE AMOUNT OF EACH DRAFT MUST BE ENDORSED ON THE REVERSE OF THIS CREDIT BY THE NEGOTIATION BANK...........”

(Emphasis supplied by us)

4. The terms of Letter of Credit were amended on June 23, 1997 to the following effect :

“AT THE REQUEST OF THE APPLICANT UNIALKEM FERTILIZERS LTD., E-5 PLOT NO. 4, RAVI SHANKAR NAGAR, BHOPAL - 462 016. WE HAVE TODAY AMENDED OUR CAPTIONED LETTER OF CREDIT AS UNDER : FIRST PAGE OF LETTER OF CREDIT LINE SECOND TO READ AS : NEGOTIATION OF YOUR DRAFT AT 180 DAYS FROM THE DATE OF DELIVERY ORDER DATED 18/06/97 INSTEAD OF EXISTING PLEASE MAKE THE FOLLOWING AMENDMENTS TO ATTACHED SHEET NO. 1 OF L/C POINT NO. 01 TO BE DELETED POINT NO. 02 TO BE DELETED POINT NO. 04 TO READ AS COPY OF CERTIFICATE OF SYRIAN ORIGIN ISSUED BY CHAMBER OF COMMERCE INSTEAD OF EXISTING. POINT NO. 05 TO READ AS COPY OF CERTIFICATE OF QUALITY