JUDGMENT

Cunliffe, J - This is a troublesome case which has been very well argued on both sides. The plaintiffs are Lloyds Bank. They claim a decree for Rs. 20,681-8-0 from the Administrator-General, Burma, and also a declaration that they are entitled to be paid their share of further dividends in full and without any deduction in respect of the estate of the late Hoosain Hamadanee. The deceased Hamadanee was a well-known figure in the commercial circles of. Rangoon. He was financed in his rice business by several banks. Appearing as a principal, he was in reality the nominee and agent of a German firm carrying on business at Bremen and Hamburg under the name of Rudolph Meyerkort & Co. As far as this case is concerned, the manner in which Hamadanee traded was as follows:

He purchased rice in Burma with the assistance of a German gentleman by the name of Huchting. Mr. Huchting was a partner in Meyerkort & Co. The rice was bought by means of finance supplied by Lloyds Bank. The bank provided Hamadanee with an over-draft account on which he drew cheques. As security for this overdraft he signed a promissory note. Collaterally, he also signed a continuation bond and from time to time documents known as packing credits or shipping liens giving the bank a charge over the stocks of rice as they were purchased. Meyerkort & Co., chartered vessels to carry the rice from Burma. They were the consignees of the rice. They also arranged for the insurance of the cargoes when shipped. Hamadanee himself loaded the rice and afterwards presented himself at the bank with the appropriate shipping documents in his possession. These included bills of lading, invoices and bills of exchange. Meyerkort & Co., as further security to the bank, opened confirmed on irrevocable covering credits with one of the large accepting houses in London. These credits were telegraphed out from time to time to the Bank in Rangoon. They were in Hamadanee's name and the bills of exchange were drawn by him against the credits in favour of Lloyds Bank or order. The various documents were then scrutinized by the Bank's agent, and on being satisfied that the documents were in order, he bought the bills of exchange from Hamadanee on the Bank's behalf. The bills were sterling drafts. They were usually at 90 days' sight. The Bank paid for them on a discount basis in rupees.

2. The manner in which the price was fixed had been previously arranged between Hamadanee and the Bank's agents by means of a forward exchange contract. When this had been done the Bank credited Hamadanee's overdraft account with the price thus paid. One of the curious features of the arrangement was that, for the convenience of Hamadanee and his principals in Germany, the invoice totals and the totals of the bills of exchange (which, of course tallied) were not drawn for the actual value of the rice, but included Hamadanee's f.o.b. charges, his commission at one per cent, his brokerage and his profit. One is familiar with the class of contracts which business men denominate c.i.f.c.i., but these contracts can be roughly described as f.o.b.c.i. The completion of the business by the presentation of the bills to the accepting house, the receipt of the rice in Germany, the crediting of Lloyds Bank, Rangoon's account on Lloyds Bank, London, with the proceeds of the bills, and the recrediting of Lloyds Bank, Rangoon, in Indian currency need not be discussed further. The confirmed credits with the London houses were, it is needless to say, never dishonoured and when Lloyds Bank, Rangoon, were in possession of the Rangoon bills of exchange, backed by these credits, they appeared to be in an absolutely safe position.

3. It will be further observed that once rice was actually bought, the Bank's-position, as far as their overdraft was concerned, should also have been secure, as their packing credit protected them from any conversion of stocks. Such then was the business between Lloyds Bank, Hamadanee and the Germans. On