JUDGMENT :

N.J. JAMADAR, J.

1. This is a suit for damages for negligence in making payment of money under the letter of credit and consequent loss of business, and interest thereon.

2. The material averments in the plaint can be summarized, in brief, as under:

(a) The plaintiff is a company incorporated under the Companies Act, 1956. It deals in the business of manufacture of pesticides. The plaintiff entered into a contract for purchase of 400 metric tonnes of Yellow Phosphorous for US$ 615200 with Hunan Leader International Trade General Corporation, Changsha, Peoples Republic of China (Hunan). Under the terms of the contract the payment to Hunan was to be made through irrevocable letter of credit.

(b) Defendant no. 1 is a body corporate incorporated under the Royal Charter of England, 1853. Defendant no. 1 carries on the business of banking in India. On 6th June, 1996, the plaintiff applied to the Mumbai branch of defendant no. 1 (defendant no. 2) for issue of letter of credit in favour of Hunan for US$ 615200 (the defendant-bank). On 10th June, 1996 the defendant-bank opened a l