MASTER FEEDS LTD,. V. PEOPLE?S BANK

MASTER FEEDS LTD,. V. PEOPLE'S BANK

SUPREME COURT
AMARATUNGE, J.
EKANAYAKE, J. AND
PRIYASATH DEP., PC. J.
S. C. (CHC) NO. 11/2002
H.C. CIVIL 150/98(1)
AUGUST 29, 2011

Letters of Credit - Questions of fact - Question of law - Prescription

The plaintiff, a banking corporation, at the request of the Defendant issued three irrevocable letters of credit to the defendant to facilitate its imports. The Defendant collected the documents related to the letters of credit sent by the exporter's bank (seller's bank) from the Plaintiff Bank and got the goods released from the shipper. The Defendant having obtained the release of goods, failed and neglected to pay monies due to the Plaintiff Bank contrary to the terms and conditions of the agreements relating to the issuing of the letters of credit.

As the Defendant failed to pay the amounts due under the three letters of credit, the Plaintiff Bank instituted this action against the Defendant.

The Defendant in its answer admitted inter alia that he was a customer of the Plaintiff-Bank and was granted banking facilities. The Defendant also averred that the plaint does not disclose a cause of action and that the Plaintiff's action is prescribed.

At the stage of argument the Defendant restricted the submissions to the following two grounds.

(1) Whether the Plaintiff - Respondent has proved that it paid and disbursed monies under the said letters of credit to the beneficiaries to recover the same from the Defendant - Appellant.

(2) Whether the Plaintiff - Respondent is entitled to recover interest at the rate of 34% per annum as claimed.

Held:

(1) It is settled law that when issues are raised the pleadings will recede to the background and the trial judge is required to decide on the issues.

(2) The Defendant's both grounds of appeal involve question of facts not raised as issues at the trial stage and for that reason it is precluded from raising at the appeal stage.

per Dep, P.C., J.-

"The questions of facts raised at the argument stage was not raised as issues at the trial stage. The Learned High Court judge correctly decided the case on the issues raised at the trial."

APPEAL from the judgment of the Commercial High Court of the Western Province.

Cases referred to:

(1) Candappa Bastian Vs. Ponnambalampilai - (1993) 1 Sri L.R. 185

(2) 'The Tasmania' (1890) 15 App. Case No. 233

(3) Setha V. Weerakoon - 49 NLR 225

K.M. Basheer Ahamed with U.M. Mawjooth for the Defendant - Appellant

S.A. Parathalingam, PC., with J.Bodhinagoda for the Plaintiff - Respondent.

Cur.adv.vult.

April 05, 2013

PRIYASATH DEP. PC, J.

This appeal was fled by the Defendant against the judgment of the Commercial High Court of Western Province dated 22-03-2002 which gave judgment in favour of the Plaintiff as prayed for.

The Plaintiff is a banking corporation established under the People's Bank Act No. 29 of 1961. The defendant is a registered company and a customer of the Bank and in the course of its business imports goods and raw material. The Defendant being unable to finance its imports applied and obtained finance facilities from the Plaintiff Bank.

The Plaintiff at the request of the Defendant issued three irrevocable letters of credit to the defendant to facilitate its imports.

The first Letter of Credit dated 27-10-95 was issued under Documentary Credit No. Corp/95/00969 for US $ 30,600/-. (equivalent is Rs. 1,648,395/62) This Letter of Credit was issued to the Bank of Tokyo in favour of the beneficiary Sumitomo Corporation which is the exporter (seller). A deferred payment facility of 120 days was granted from the date of the Bill of Lading to the Defendant which expired on 17-01-96. The application for the irrevocable letter of Credit was marked as P1A and the Letter of Credit was marked as P2.

The defendant collected the documents related to the Letter of Credit sent by the exporter's bank (seller's Bank) f

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