A bank must honor a letter of credit unless there is a clear case of fraud to the knowledge of the bank.

( 1 ) THIS appeal arises out of an order passed and judgment delivered by Mrs. Justice Padma Khastgir on the 7th April, 1980. Before we refer to the judgment and points involved in the appeal, it would be necessary to refer to certain facts. On or about 1st December, 1978, there was a contract of sale, being contract No. BSA 297/-298/78 between the plaintiff, as the buyer and the defendant No. 1, the seller, which is the appellant. The suit was filed by the plaintiff, the buyer. There were four defendants in this suit. The defendant No. 1 is the seller, the defendant No. 2 is the United Commercial Bank, Calcutta, which is the paying Bank. The defendant No. 3 is the Insurance Company and defendant No. 4 is the European Asian Bank, which was the banker of the defendant No. 1, the seller. As mentioned hereinbefore, the contract was for sale. The clause of the contract gives requirements as to certificates. The date of delivery, from time to time, was extended and the final extended date of delivery was July/august, 1978. The contract was in respect of sale of certain refined bleached Deodorised Palm Oil. The terms and conditions of the sale are set out in para 6 of the plaint. Letters of Credit, being Nos. 162764 and 162765 were opened with the United Commercial Bank, Calcutta on the 24th August, 1978 and thereafter, the seller, the first defendant was advised of the same. At pages 28-29 of the Paper Book, there was a document, which was an internal correspondence being the telex between the United Commercial Bank, Calcutta and its branch at Singapore. We shall presently refer to the said document. It is the plaintiff's version of the letter of credit. It will be material, in view of the controversy raised between the parties, to set out the relevant portion of the said document. The said document contains, inter alia, the following statements : "please telex to telex TS 21682 A/b UCO Bank Singapore Message relayed on behalf of UCO Bank Calcutta we repeal our cable of date with same message and test please avoid duplication. . . . . . Refer to our Telex 22nd instant advising you opening credit 162764 and 162765 for U. S. Dollers 161449. 86 CIF Calcutta each wherein we advised air mailing details. AIR mail copy not despatched. Stop Full Text cable now being called. Please avoid duplication. Advice beneficiary B. S. Aujla Co. Pvt. Ltd. , 8 Lorong Malayu, Singapore 14 opened credits 162764 and 162765 U. S. $ 161449. 86 each available by drafts drawn on 90 days from B/lading date on Kaluram Mahadeo Prosad 1-A, Burman Street. Calcutta-7 without recourse to drawer for 100 % invoice value of Approx. 200 tonnes each of refined bleached Deodorised Palm Oil at the rate U. S. Dollar 825 per metric tonne per contract No. BSA/197/78 and BSA/298/78 both date 1-12-1978 in one or more shipment from Singapore to Calcutta import is being covered under import Licenses No. P/f2028484/c/xy and P/f/ 2028485/c/xx both dated 20-8-1979 shipment by Pakistani Flag vessel not allowed Stop Following documents are to be submitted to negotiating bank within 15 days from B/lading date 6 copies invoices certifying that goods are Singapore origin Stop Full Set of clean shipped on board bill of Lading signed by Master or S. S. Agent Market Freight prepaid unto order of United Commercial Bank 10, Brabourne Road, Calcutta-1, B/lading notify Kaluram Mahadeo Prosad, 1-A, Burman Street, Calcutta-7 Stop Forwarding Agent receipt not acceptable policies or certificate covering marine and war risks in the currency of the credit in negotiable form covering the full C. I. F. Invoice amount plus a margin of not less than 10% W. A. including customary institute warehouse to warehouse clause war risk to be covered in conformity with current institute clause claims payable at port of destination Stop Bill must be marked drawn under United Commercial Bank 10, Bra-bourne Road, Calcutta credits 162764 and 162765 and should be enforced payable at current sel