City Bank Limited Vs. M/s. Oscar Fashionwear Ltd. and others, 2008


Supreme Court

Appellate Division



Mohammad Fazlul Karim J

Md. Tafazzul Islam J

Md. Joynul Abedin J

Md. Abdul Matin J

The City Bank Limited…………………………..Petitioner


M/s. Oscar Fashionwear Ltd. and others………………Respondents


July 20, 2008.

Lawyers Involved:

A.K.M. Mesbahuddin, Senior Advocate, instructed by Zahirul Islam, Advocate-on- Record-For the Petitioner.

Not represented-the Respondents.

Civil Petition for Leave to Appeal No. 444 of 2007.

(From the judgment   and order dated 24.8.2005 passed by the High Court Division in F.A. No.849 of 1991).


              Md. Tafazzul Islam J. – This petition for leave to appeal is directed against the judgment and order dated 24.8.2005 of the High Court Division passed in First Appeal No.849 of 1991 dismissing the said appeal which was filed against the judgment and decree dated 30.10.1991 of the learned Subordinate Judge (now Joint District) and 1st Commercial Court, Chittagong, in Money Suit No.78 of 1989 dismissing the suit.

2. The petitioner bank, as plaintiffs, filed the aforesaid Money Suit No.78 of 1989 for recovery of Tk.93,70,413.47 from the  defendant respondent Nos. 1-3 on the  averments that the plaintiff bank, during the period from 24.1.1984 up to 29.9.1985, opened 48 import L/Cs on behalf of the  defendant respondent No.1 for a total amount of US$ 8,96,459.95 for import of fabrics and accessories from abroad and also opened 21 export L/Cs for US$  14,73,350.70; in order to avail the import L/C facilities the defendant No.1 provided  defendant securities and the defendant Nos. 2 and 3, on 24.1.1984 also executed letters of continuing guarantee for repayment of any outstanding that may be found due; meanwhile in terms of the request of the defendant No. 1 the plaintiff, on 24.7.1985, issued a no objection certificate in favour of the defendant No.1 in order to enable them to avail loan facilities from American Express Bank Chittagong; the defendant No. 1 simultaneously contin­ued transaction with the plaintiff bank with a clear understanding that they would properly keep funded the CD Account No. 307 maintained with the plaintiff bank to meet the existing and future import L/C obligations; on receipt of the import bills against 40 import L/Cs the plaintiff bank paid foreign banks from the above CD Account and bills relating to remaining 8 import L/Cs could not be fully paid due to lack of funds in the above CD Account and as a result an amount of US$ 1,91,645.67 remained outstanding against those import 8 import L/Cs; the foreign banks presenting the bills pressed for pay­ment but the defendant No.1 in spite of request of the plaintiff bank did not pro­vide funds raising flimsy pleas and then the defendant No.1, by letter dated 20.4.1986, though assured to settle the outstanding bills but took no positive step; then the foreign banks through their lawyer served legal notice demanding payment from the plaintiff bank and ulti­mately the Bangladesh Bank also intervened and then on 27.11.1986, 2.12.1986 and 15.12.1986 the plaintiff made pay­ment of US$ 2,01,666.47 which is equiva­lent to Tk.62,59, 140.97 to the foreign banks on opening a loan account being C.C No. 42 in the name of defendant No.1 and demanded the aforesaid amount from the defendant No.1 whereupon they, by their letters dated 12.4.1999 and 3.5.1988, sought for clarification on five specific points and subsequently also asked for all vouchers of their accounts which the plaintiff complied as is evident from the letter of the defendant No.1 dated 29.10.1988 by which they informed the plaintiff that they have forwarded those vouchers to their auditor M/s. S.K. Das &  Co. for reconciliation and to arrive at a figure which is due to the plaintiff and that meanwhile they were preparing a repayment schedule to adjust that outstanding and also requested the plaintiff to open further import L/Cs on behalf of the defendant No.1 so as to enable them to  repay the outstanding from the export proceeds; then the plaintiff, for opening  import L/Cs, requested the defendant No.1 for additional security by way of creating second charge on the factory building and machinery on which there was a first charge in favour of Bangladesh Shilpa Bank, a objection certificate from American Express Bank and also repayment schedule of the existing outstanding  liability against the aforesaid 8 L/Cs but  since the defendant No.1 failed to provide additional security, further import L/Cs, as  requested, was not opened and that statement of account shows that a sum of  Tk.93,70,419.00 is due to the plaintiff from the defendant No.1 as on 31.3.1985.

3. The defendant respondent Nos.1-3 contested the suit and filed written statement  denying the material allegations and contending that the defendant No.1 received 21 Export L/Cs for U.S.$ 14.73,360.70 from different foreign buyers and as per circular of Bangladesh, Government was entitled to open import L/C to the tune of  75%   of  the  same that is for US$ 11,05,013.00 including USUANCE interests and the defendant No.1 opened 48 import L/C for US$ 8,96,459.95 including USUANCE interests on payment of the requisites commission of the plaintiff as debited against C.D. Account No.307 of the defendant No.1 and exported ready-made garments against those import L/Cs against corresponding export L/C’s worth U.S.$ 10,36,012.17 and the said amount being in excess to the tune of US$ 1,39,552.20 of the permissible amount, the claims of the plaintiff against the import L/Cs could be met; it is usual prac­tice that after receipt of the export bill from the foreign corresponding bank the L/C opening bank adjusts the claim against import L/C and deposits the bal­ance in the C.D account of the concerned beneficiary and in the instant case, the balance after the adjustment of the L/C claim of the plaintiff was credited to the C.D. account No.307 of the defendant No. Land the remaining 8 import L/Cs became matured for payment on 30.11.1985, 22.01.1988, 25.03.1986, 01.03.1986, 02.01.1986, 26,02.1986, 23.05.1986 and 30.06.1986 and the defendant No.1 made many exports during this period and so the plaintiff received enough export bills of the defendant No.1 for adjustment of the claim against import L.Cs claim and besides the defendant No.1 had sufficient find in the aforesaid C.D Account No.307 and defendant No.2 also had an F.D.R. of Tk.9,00,000.00 with the plaintiff bank and by his letter dated 20.8.1985 the defendant No.2 gave unfettered discretion to the plaintiff to encash the above FDR in order to adjust any outstanding of the defendant No.1 but not a single amount of the FDR was encashed by the plaintiff; the issuance of no objection certificate by the plaintiff in favour of the defendant No.1 also indi­cates that the claim of the plaintiff against the defendant No.1 was fully adjusted; further according to the plaintiff the last date of maturity of the import L/Cs was 30.06.1985 and so the limitation had also been running from that date; no letter of guarantee was also executed by the defen­dant Nos.2 and 3 on 24.11.1984; the Statement of Account of the C.D. Account No.307 filed by the plaintiff Bank will also show that each of the defendants has got no liability as alleged by the plaintiff; the plaintiff also had no authority to open C.C. Account No.42 in the name of the defendant No.1 and as such the defendants are not liable or bound by any entry in that account; the officers of the plaintiff opened the so called C.C. Account No.42 with a view to cover up their misdeeds and to avoid liability; the defendant No.1 by letter dated 29.5.1985 approached the plaintiff for advance limit of Tk. 10,00,000.00 and also L/C facility but the plaintiff declined to grant the same and as such the defendant had to quit the plain­tiff bank and start business with the American Express Bank Limited; the Statement of Account of the C.D. A/C No.307 which was supplied by the plain­tiff will show that though Tk. 1,50,000.00 was shown thereon in the credit side but the above amount has not been added/aggregated with the total figure on 24.11.1984 and in another case on 14.07.1984 a sum of Tk. 3,05,002.00 was shown debited in the said Account but the same has not been credited in the C.D Account and there are other defects in the said Statement of Account and so the plaintiff is not entitled to get any money from the defendants.

4. The trial Court after hearing, dismissed the suit. On appeal the High Court Division, after hearing, dismissed the appeal.

5. We have heard the learned counsel and perused the impugned judgment and order of the High Court Division and other con­nected papers.

6. As it appears the High Court Division dismissed the appeal holding that the plaintiff admitted that the defendant No. 1 imported fabrics and accessories of the value below the prescribed limit of 75% of the total value of the export L/C’s and the plaintiff made payment against the liabili­ties of the defendant No.1 arising out of the said 48 import L/Cs out of the pro­ceeds of 21 export L/Cs. and the plaintiff returned to the defendant No.1 only the amount which remained balance in the export precedes after adjusting the import liability and the plaintiff received the export proceeds from the foreign countries within time and the P.W. 1, in his deposi­tion, admitted that the plaintiff Bank received US$ 10,36,612.17 from 21 export L/Cs. and thus admittedly there was no latches or lacuna on the part of the defendant No.1 in accomplishing its export performance and further the value of 48 import L/Cs amounted to US$ 8,96,459.95 whereas the value of the 21 export L/Cs amounted to US$ 14,73,350.70 and thus there remained suf­ficient balance of export proceeds even after deduction of import liabilities of all the 48 import L/Cs and so there could remain any outstanding liabilities in respect of the said 8 import L/Cs or any import L/Cs, further the plaintiff issued no objection certificate in favour of the defendant No.1 on 24.7.1985 to open the accounts with American express Bank Ltd which indicates that the defendant No.1 had no outstanding due with the plaintiff as on 24.7.1985 because if there would have been any such liability, in the normal course, no objection certificate would have been issued by the plaintiff; further the Statement of Accounts, Ext.4, shows that there is no balance of outstanding in the C.D. Account No.307 as on 23.7.85 and the above no objection certificate was issued on the following day i.e. 24.7.85 so the same also indicates there was no liabil­ity to the defendant No. 1 with the plaintiff Bank; moreover the defendant No.2 deposited a FDR worth Tk.9,00,000.00 with the plaintiff and by its letter dated 22.8.85 empowered them to encash the entire amount of F.D.R. against any of the liabilities of the defendant No.1 but the plaintiff released the said F.D.R. immediately after issuing the no objection certifi­cate. The plaintiff also could not show how in the C.D. Account No.307 the fund fell short and moreover, it has not been explained by the plaintiff as to what amount of the balance was supposed to received by the defendant No.1 and what amount they actually received and what amount was paid by the plaintiff against the import bills and how much money, in excess of the balance of export proceeds, the defendant No. 1 had received and even at the time of hearing of the appeal, the Court asked the learned Advocate of the plaintiff to show or file documents to clar­ify the same but he could not clarify same and also did not produce any document to explain the same.

7. We are of the view that the High Court Division on proper consideration of the materials on record arrived at a correct decision and there is no illegality or infir­mity in the above decision so as to call for any interference.

The petition is dismissed.


Source : VI ADC (2009) 366