Legal Opinion on non-payment of Accepted Bill No. ………… for US$ 40,000.00 by The BANK 1 A/C. COMPANY 1.

Mr. Z

Address….

Re:      Legal Opinion on non-payment of Accepted Bill No. ………… for US$ 40,000.00 by The BANK 1 A/C. COMPANY 1.

Dear Sir,

We refer to your letter No. ………………. dated 01.03.2004 on the above subject.

We understand that BANK 2 negotiated Bill No. ………………. for US$ 40,000.00 drawn under Back to Back Letter of Credit issued by BANK 1 Limited, Principal Office, Dhaka. BANK 2 negotiated the Bill keeping the Acceptance Letter issued by BANK 1 Limited under lien and made payment of the Bill to the beneficiary. However, on maturity, BANK 1 Limited did not settle the bill amount.

Instead of making payment of the accepted Bill, BANK 1 Limited filed Title Suit No. 90 of 2002 in the 1st Court of Joint District Judge, Dhaka against Velvet Textile Mills Ltd. and others (BANK 2 being defendant No. 5) praying for declaration inter alia that the plaintiff i.e. The BANK 1 Limited is not bound to make payment under the Bill to BANK 2 Limited. The said suit was subsequently transferred to the 5th Court of Joint District Judge, Dhaka and was re-numbered as Title Suit No. ……….. by administrative order. The next date of the suit has been fixed on 10.04.2004 for return of summons.

In such a situation, you have sought our opinion on whether Bangladesh Bank can intervene in the issue since there is no injunction/order from the learned Court in the suit. You have also sought our opinion as to whether it will be possible for BANK 2 to take legal action against BANK 1 to compel them for making payment with up to date interest.

Our opinion is as follows:

Since the Bill has been accepted by The BANK 1 Limited, they are legally obliged to make payment of the Bill amount to BANK 2 Limited on maturity. This is the legal position in so far as the Uniform Customs and Practice for Documentary Credits and the Bangladesh Bank directives are concerned.

Although BANK 1 has filed Title Suit No. …………. in the 1st Court of Joint District Judge, Dhaka (now Title Suit No. ……. the 5th Court of Joint District Judge, Dhaka) against COMPANY 2. and others (BANK 2 being defendant No. 5), there is no order/direction in the said suit restraining BANK 1 from making payment to BANK 2. In the absence of any such order/direction of the Court, BANK 2 is legally entitled to claim the Bill amount in question from City Bank. If BANK 1 continues to refuse to make payment of the amount, the matter may be taken up with Bangladesh Bank so that Bangladesh Bank can exert its influence on BANK 1and compel them to make payment of the amount.

With regard to your query regarding filing of suit, please note that BANK 2can file money suit against BANK 1 claiming the Bill amount along with up to date interest. Such suit should be filed as early as possible so that it does not become barred by limitation.

If you have any further query, please do not hesitate to contact the undersigned.

Thanking you.

Yours faithfully,

………………….

For: “The Lawyers & Jurists”

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