The issuing bank is not bound or entitled to honor the bill of exchange drawn by the seller unless the documents are in exact compliance with the terms of the letter of credit. The issuing bank must scrutinize the documents with meticulous care.

( 1 ) THIS is an application of the plantiff U. K. Paints (India) Pvt. Ltd. New Delhi against defendant No. 1 Oriental Bank of Commerce (A Govt. of India Undertaking ). Nehru Place New Delhi under Order 39 Rules 1 and 2 of the Code of Civil Procedure seeking to restrain the letter from appropriating any of the present or future credit balances in any of the plaintiff s account with defendant No. 1 towards the retirement of the documents received against the latter of credit No. NP/urd/ilc/86/l62 dated 11-9-1986 opened by the plaintiff with defendant No. 1, as also restraining defendant no. 1 from appropriating/utlising or otherwise admsting the sum of Rs. 40 lacs deposited by the plaintiff with defendant no. 1 and held under Fixed Deposit Receipt No. 476/86 dated 11-9-1986.

( 2 ) DEFENDANT No. 2 Drechat Chemic B. v. Spuiweg 74. 3311 G. V. Dordrecht, Holland is the foreign seller havine defendant No. 4 Vijay Dyes and Chemicals, Bombay as its agent in India. Defendant No. 2 is a Dutch Trading Coinpany carrying on the business in the whole-sale export of chemicals including Titanium Dioxide, pharmaceuticals from Holland. Defendant No 3 is a Dutch Bank through whom defendant no. 2 had negotiated that Letter of Credit opened by the plaintiff With the bank-defendant no. 1.

( 3 ) VIDE telex dated 28-8-1986 defendant No. 2, through its agent defendant no. 4 offered to supply to the plaintiff "rl 68 Rutile Tilanium Dioxide at the rate of US $ 2060 per metric ton GIF Bombay, and the plaintiff confirmed the same vide its telex dated 29-8-1986. On 1-9-1986 the plaintiff received a telex message from defendant no. 4 (acting as agent of defendant no. 2) advising the plaintiff that defendant no 2 had confirmed the order for supply of 300 MT of the said goods, and requested that the letter of credit be opened by the plaintiff immediately in favour of defendant No. 2. The plaintiff also received from defendant no. 4 the Indent No. SLH/drecht/2501 dated 1-9-1986. The plaintiff accordingly opened an irrevocable letter of credit dated 11-9-1986 with the bank-defendant no. 1 for US $ 309. 000 GIF Bombay in favour of defendant no. 2 covering shipment of 150 MT of the said goods as per the aforesaid Indent dated 1-9-1986, available, by negotiation of drafts drawn on the plaintiff as applicant at sight for 100 per cent of the invoice value accompanied by a set of various documents and subject to various conditions and instructions therein contained. One of the conditions of this Letter of Credit was that the negotiating Dutch Bank defendant no. 3 could claim reimbursement from the Bank of California. International, New York, USA which had been authorised by the issuing bank defendant no I to honour the claims of Dutch Bank defendant no. 3 drawn under the said credit if the documents were as per the conditions incorporated in the said letter of credit.

( 4 ) ON 23-9-1986 the plaintiff received from defendant no. 2 directly a telex advice confirming that they had shipped 150,000 Kg. net weight of the said goods of the value of US $ 309. 000 by Weiho Career Rotterdom, Bombay on 23-9-1986 vide Bill of Landing No. 10.

( 5 ) DEFENDANT no. I received directly from Dutch Bank defendant no. 3 on 617 October 1986 by post a set of documents stated to have been negotiated by defendant no. 3 against the letter of credit and when the plaintiff saw those documents, the plaintiff found a number of discrepancies therein and pointed out the same to the officials of defendant no. 1 and further told that for reasons of discrepancy the documents were not acceptable to it (plaintiff ).

( 6 ) THEREAFTER, the plaintiff contacted defendant no. 4 agent of defendant no. 2 on 8-10-1986 and advised them that the documents received against the L. C. were not in order and were not being cleared from the bank-defendant no. I and this was further confirmed by the plaintiff by its telex dated 9-10-86 sent to defendant no. 2. Defendant no. 4, in turn, advised its princi