IMPORTANT POINT
Exporter to foreign importer and its Bank repose expectation and faith on the importer’s Bank opening L/C to be diligent so that shipping documents are not misused by the importer.

JUDGMENT

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 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 on the death of the sole proprietor, been struck off from the array of parties. In any event, since claims are posited on a Letter of Credit furnished by the Appellant, albeit, on the instructions of its now non-existent constituent, namely, M/s. Sarumeah & Sons, (hereinafter nomenclatured as the ‘Importer’) the latter is really a proforma or at best, a proper party, to the extent that the claim pertains to the subject Letter of Credit (L.C). The decreetal amount stands satisfied and the Plaintiff/Exporter should be pragmatic enough not to expect any further recovery owing to the legal dissolution of the sole proprietorship concern, i.e. the Importer. In essence, therefore, the question raised by the Appellant is reduced to an academic one, which Courts normally abjure from answering. However, since Leave has been granted, we feel curially compelled to briefly delve into the factual matrix of the dispute.

2. On 20th April, 1999, on the request of the Importer, the Appellant had opened a Letter of Credit for the aforementioned sum of USD 352,250 on Bank of India, Calcutta (Negotiating Bank) in favour of the Plaintiff-Exporter; the American Express Bank Ltd. Calcutta, is Defendant No. 4 in the said civil suit bearing CS No. 678 of 1999, as the advising Bank of the Appellant. The contract was placed on the Plaintiff/Exporter for a consignment of non-basmati rice to be exported from India to the Importer in Bangladesh by railroad. One of the terms of the Letter of Credit was that one set of non-negotiable shipping documents would be couriered after the consignment was despatched to the opener of the LC, namely, the Appellant before us. This was done on 11th May, 1999 and thereupon the Bill of Exchange drawn by the Exporter was discounted by its banker, namely, Bank of India, which thereupon drew another Bill of Exchange upon the Importer. It is alleged that the Appellant received the documentation on 19th May, 1999, and on that very day pointed out the existence of certain discrepancies therein to the Negotiating Bank. The Appellant's case is that it received a letter from the Importer on 1st June, 1999, stating that the documents were not acceptable and that the goods were damaged, and there were also shortages therein. In its telex dated 24th June, 1999, the Appellant suppressed the stand of the Importer and stated as follows:-

“RE YR TLX MSG NO. 2288

DTD 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 o