The judgment established that minor discrepancies in important documents under a letter of credit do not entitle the issuing bank to refuse payment, as per UCP 600 Article 14(d) and (f). It also clarified that the return of goods and the act of representation after correcting discrepancies do not absolve the issuing bank of its obligations.

VALMIKI J. MEHTA, J.

1. This is an application under Order XXXVII Rule 5 of the Code of Civil Procedure, 1908 (CPC) filed on behalf of the defendant seeking leave to defend in the subject Order XXXVII suit.

2. The facts of the case as stated in the plaint are that the plaintiff is the seller of goods. The buyer of the goods originally was Closed Joint-Stock Company, Cars and Engines of Ural (CJSC Amur) and which buyer was subsequently changed to “Trade House Amur”. Plaintiff pleads that it sold 32 units of truck chasis to the Trade House Amur and which was covered by the subject Letter of Credit dated 11.10.2008 for US$ 406,400. The further case in the plaint is that the defendant is the issuing bank, and when the plaintiff as the beneficiary of the letter alongwith the Letter dated 21.10.2008 presented documents to the defendant (through advising bank) for payment attaching therewith the documents as required under the letter of credit, defendant refused to make the payment on the ground of four discrepancies in the documents presented. The four discrepancies and its effect have been dealt with by the plaintiff in paras 23 to 26 of the plaint and these paras read as under:-

“23. The first alleged discrepancy stated by the Defendant in the letter dated 12.11.2008 was that the Port of Discharge mentioned in Bill of Lading did not correspond to with Clause 44F of the Letter of Credit, which says “Port of Discharge: St. Petersburg, Russia”. The Bill of Lading submitted by the Plaintiff stated “St. Petersburg, Ru”. It is stated that using a short form for the “Russia”, which is commonly written as “Ru” can in no way be considered a discrepancy. The Port of Discharge is the city or town and not the country. All the parties were aware that St. Petersburg is in Russia, and the entire transaction related to shipments to Russia; the Defendant bank and the buyer are also Russians. The shipping company also transported it to St. Petersburg, Russia. Therefore, it is stated that the Defendant was only looking for an excuse not to release the payment.

24. The second alleged discrepancy stated by the Defendant bank was that the seal numbers in commercial invoices/packing list do not correspond with the seal numbers in the Bill of Lading. The Packing List submitted by the Plaintiff had eight (8) seal numbers with a prefix “APL”, while in the Bill of Lading the prefix was not mentioned. However, there was no difference/discrepancy in the seven digit seal numbers. It is stated that “APL” is the name of the shipping company which shipped the goods and the prefix was written for easy reference. It is stated that there was no such requirement to mention seal numbers without a prefix in the Letter of Credit. Further, there was no doubt that the seal numbers did not match.

25. The third alleged discrepancy stated by the Defendant bank was that the certificate of origin had been issued by “Tata Motors Ltd.”, instead of “Tata Motors Limited, International Business”. It is submitted that undoubtedly the legal entity is Tata Motors Limited itself. The division in Tata Motors Limited was International Business, which is only a division and not a separate entity. It is stated that it was obvious that there was no discrepancy and the same was an excuse to avoid payments. The discrepancies raised by the Defendant Bank are untenable has been further fortified by the purported discrepancy raised by the Defendant Bank stating that the letter of credit provides that the certificate or origin uses the word Ltd. whereas the documents uses the word Limited. It is submitted that such discrepancies are untenable and ought to be dismissed at the outset.

26. That the fourth alleged discrepancy stated by the Defendant Bank was that the DHL receipt evidenced dispatch of one set of original invoice and 1/3 B/L to CJSC Amur instead of Trade House Amur. It is stated that the documents submitted i.e. the bill of lading and the original invoices were in the name o