DISTRICT: DHAKA
IN THE SUPREME COURT OF BANGLADESH
HIGH COURT DIVISION
(CIVIL REVISIONAL JURISDICTION)
CIVIL REVISION NO. _________OF __________
Standard Bank Limited
Petitioner
Versus
X Knitting & Dying and others
Opposite Parties
COUNTER AFFIDAVIT ON BEHALF OF THE OPPOSITE PARTY NO. 8
I, A, son of Late B, Executive Officer of The Premier Bank Limited, Gulshan Branch, 140 Gulshan Avenue, P.S. Gulshan, Dhaka-1212, by faith Muslim, by birth Bangladeshi, profession __________, aged about _______ years, do hereby solemnly affirm and say as follows:
1. That I am Executive Officer of The Premier Bank Limited and Tadbirkar of this case and conversant with the facts and circumstances of the case and competent and authorised to swear this affidavit.
2. That I have gone through the revisional petition (hereinafter referred to as “the petition”) whereupon the instant Rule has been issued and order of stay has been passed. Having understood the contents of the said petition, I have been advised by my learned lawyer to controvert those statements which are necessary for disposal of the instant Rule and those statements which I do not hereinafter specifically admit shall be deemed to have been denied by the opposite party No. 8.
3. That the statements made in paragraph No. 1 of the petition are matters of record. As such, no comments are made.
4. That the statements made in paragraph 2 of the petition are mostly matters of record. However, with regard to the statements made in the said paragraph in so far as it relates to the opposite party No. 8, it is submitted that at the request of X Knitting & Dying (“X”), the petitioner i.e. Standard Bank Limited (“SBL”) opened, inter alia, the following Back to Back Letters of Credit (“L/Cs”) in favour of Modern Textile Mills (“Modern”) i.e. the opposite party No. 2:
| L/C No. and Date | L/C Amount
(in US$) |
Advising/Negotiating Bank |
| SBL/PB/BBLC/LOCAL/029/2001 dated 30.04.2001 | 27,990.00 | The Premier Bank Limited |
| SBL/PB/BBLC/LOCAL/030/2001 dated 30.04.2001 | 27,450.00 | Do |
| SBL/PB/BBLC/LOCAL/034/2001 dated 07.05.2001 | 12,006.00 | Do |
| SBL/PB/BBLC/LOCAL/035/2001 dated 07.05.2001 | 12,546.00 | Do |
| SBL/PB/BBLC/LOCAL/036/2001 dated 21.05.2001 | 78,007.50 | Do |
| SBL/PB/BBLC/LOCAL/037/2001 dated 22.05.2001 | 25,000.00 | Do |
| SBL/PB/BBLC/LOCAL/043/2001 dated 13.06.2001 | 32,400.00 | Do |
The L/Cs were opened for purchase of 100% cotton 30/S carded yarn auto cone spliced electronically cleaned in cone (raw material/yarn) for readymade knit garments industry. The opposite party No. 8 was the Advising Bank of Modern. X received the yarn under the L/Cs in question.
Modern tendered shipping documents under the L/Cs to the petitioner through the opposite party No. 8. Upon receipt of the documents under the L/Cs on different dates, the documents were duly accepted by X and X authorised the petitioner to issue acceptances. The petitioner then communicated acceptance of bills to the opposite party No. 8 with confirmation that payment of the bills will be made on maturity as per terms of the L/Cs.
Upon acceptance of the bills under the L/Cs in question, the opposite party No. 8 effected payment to the beneficiary i.e. Modern. As such, the petitioner is obliged to make payment to the opposite party No. 8 in accordance to the terms of the L/Cs. The petitioner can in no way avoid its liability and responsibility with regard to payment under the L/Cs. It has been decided in many cases by the Hon’ble Appellate Division of the Supreme Court of Bangladesh that there can be no injunction on a bank prohibiting it from making payment under an Irrevocable Letter of Credit.
With a view to avoid its obligation to make payment of the accepted bills under the L/Cs in question to the opposite party No. 8, the petitioner has filed the instant revisional application. With an ulterior motive and in collusion with the opposite party No. 1 i.e. X, the petitioner has filed the instant revisional application.
5. That it is reiterated that as per request of X, the petitioner opened the L/Cs in favour of Modern and the opposite party No. 8 is the advising and negotiating bank of the L/Cs in question. The petitioner being the Issuing Bank received the shipping documents from the opposite party No. 8 under the L/Cs in question and duly accepted the documents without any objection and confirmed payment on maturity date. The opposite party No. 8 upon receipt of confirmation of maturity dates of the bills in question has effected payment to Modern and Modern has received the same in full. Now, the opposite party No. 8 being the Negotiating Bank is legally entitled to the payment from the petitioner. The petitioner is legally obliged to pay the opposite party No. 8 as per terms and conditions of the L/Cs. The petitioner cannot raise any objection and it has no right or authority to abstain from making payment of the amount of the bills to which the opposite party No. 8 is legally entitled. The petitioner is only concerned with documents and is not involved in any way with the underlying contract or Master Letters of Credit in connection with the supply of goods and its performance.
6. That it is submitted that the L/Cs in question incorporated the terms and conditions of Uniform Customs and Practice for Documentary Credits (1993 Revision, ICC Publication No. 500) (hereinafter referred to as “UCPDC”). According to the provisions contained in UCPDC, a Letter of Credit transaction creates a contract between the Opening or Issuing Bank and the Advising or Negotiating Bank which is completely autonomous and separate from the underlying contract of supply of goods. The Issuing Bank of a Letter of Credit, whether Back to Back or otherwise, is completely unconcerned with the performance of the underlying contract. As soon as the documents tendered by the beneficiary of the Letter of Credit are in conformity with the mandate of the Letter of Credit, the Issuing Bank is under an absolute obligation to make payment against such documents. The shipping documents/bills were accepted by the Issuing Bank i.e. the petitioner and no objection was raised with regard to the said documents. Therefore, no injunction or order of stay can lie under law to restrain the Issuing Bank from making payment and in such circumstances. The order of stay passed by this Hon’ble Court is therefore liable to be vacated. Under the provision of law, payment against the Letter of Credit cannot be stopped on the allegations relating to quality of goods supplied under the Letter of Credit.
Article 3(a) of UCPDC reads as follows:
“Credits, by their nature, are separate transactions from the sales or other contract(s) on which they may be based and banks are in no way concerned with or bound by such contract(s), even if any reference whatsoever to such contract(s) is included in the credit.”
Article 4 of UCPDC provides as follows:
“In credit operations all parties concerned deal with documents, and not with goods, services and/or other performances to which the documents may relate.”
Therefore, at all stages of the relevant transaction, the petitioner was concerned only with documents. The petitioner has accepted the bills and confirmed that payment will be made on maturity and hence the petitioner can in no way abstain from making payment of the bill amounts to the Negotiating Bank i.e. The Premier Bank Limited under the L/Cs in question. The petitioner has filed the instant revisional application only to deprive the opposite party No. 8 from its legal dues.
7. That because of the instant revisional application and the order of stay passed by this Hon’ble Court, the opposite party No. 8 is now suffering irreparable loss and damage. Unless and until the rule issued in the instant revisional application is discharged and the order of stay passed by this Hon’ble Court is vacated, the opposite party No. 8 will continue to suffer loss and injury. Since the documents were accepted by the petitioner and payment was confirmed on maturity, the petitioner is legally bound to make payment to the opposite party No. 8. The petitioner cannot raise any objection regarding payment to be made by it to the Premier Bank Limited.
8. That the statements made in paragraph 3 of the petition are matters of record and as such no comments are made.
9. That with regard to the statements made in paragraph 4 of the petition, it is denied that the documents tendered by Modern and the opposite party No. 8 are all forged, false and fraudulent and that at the time of tender of documents and at the time of issuing the acceptances, the petitioner was unaware of the falsity of the shipping documents. It is submitted that with a view to defraud and deprive the opposite party No. 8 from its legal dues, the petitioner has fabricated this story. The documents under the L/Cs were tendered to the petitioner in accordance with the terms of the L/Cs in question and the petitioner and its client, X upon being satisfied that the documents are in conformity with the terms of the L/Cs, have accepted the same and notified maturity dates of the bills to the opposite party No. 8. The petitioner is therefore legally bound to make payment of the L/Cs in question to the opposite party No. 8 and the rule issued by this Hon’ble Court is liable to be discharged.
10. That the statements made in paragraph 5 of the petition are matters of record. However, it is denied that there were any discrepancies in the documents under the L/Cs in question.
11. That the statements made in paragraph 6 of the petition relate to matters with which the opposite party No. 8 is not at all concerned. As such, no comments are offered.
12. That with regard to the statements made in paragraph 7 of the petition, it is denied that the Accepted Bills for Payment (“ABPs”) being issued as back to back L/Cs would have been paid out of the export proceeds under the export L/Cs. It is also denied that the petitioner inquired and found out that there has been illegal and fraudulent activities in respect of the L/Cs and the ABPs and that the petitioner was totally unaware of the alleged illegal and fraudulent activities at the time of opening of the local back to back L/Cs or at the time when the ABPs were issued.
It is submitted that payments under the L/Cs in question were not subject to receipt of export proceeds. Since the documents have been accepted by the applicant i.e. X and the petitioner i.e. Standard Bank Limited, they are legally bound to make payment of the bills under the L/Cs. The petitioner has made up a fabricated story only to deprive the opposite party No. 8 from its legal dues.
13. That with regard to the statements made in paragraph 8, it is denied that Premier and National holding the ABPs have been involved in fraudulent and money laundering activities in the context of the relevant L/Cs. It is also denied that the alleged illegal activities of Premier and Pubali is the alleged aiding and abetting advising and tendering documents under the L/Cs fraudulently opened by X, procuring the acceptances from the petitioner, discounting them and attempting to obtain payment thereunder.
It is submitted that Premier i.e. the opposite party No. 8 has no connection whatsoever with National with regard to the ABPs in question or in any other manner. Premier is the Advising and Negotiating Bank of Modern regarding the L/Cs in question and as such has tendered the documents to the petitioner. The petitioner and its client, X has accepted the documents and confirmed payment of the ABPs on maturity. Upon receipt of acceptance of the ABPs from the petitioner, the opposite party No. 8 has effected payment of the bill amounts and is therefore legally entitled to receive the bill amounts from the petitioner. But the petitioner in collusion with its client, X has illegally and fraudulently withheld payment of the bill amounts and has filed the instant revisional application. The order of stay passed by this Hon’ble Court is therefore liable to be vacated.
14. That with regard to the statements made in paragraph 9 of the petition, it is denied that Premier tendered false documents under the L/Cs purportedly from Modern and obtained the ABPs after providing false and dishonest status reports on them to the effect that the beneficiary holds account with them.
It is submitted that upon being requested by the petitioner, the opposite party No. 8 provided credit report of Modern to the petitioner. The credit report provided is correct as of that date and was given without any responsibility on the part of the opposite party No. 8. The contents of the credit report are as follows:
“The subject client maintains a satisfactory current account with our branch since 16-03-2001. We have handled some of their local export bills.
The information provided in this regard will be treated as confidential without any responsibility on our part.”
It may further be noted that the credit report was sought after the concerned L/Cs in question were opened in favour of Modern. If the petitioner or its client had any confusion about the credit report, it could have made further enquiries.
15. That with regard to the statements made in paragraph 10 of the petition, it is submitted that as far as the opposite party No. 8 is concerned, Modern exists as a firm and carries on business. Had there been no existence of Modern, Modern could not have supplied the yarn to X. X in paragraphs 7 of the plaint in Title Suit No. 338 of 2001 has expressly stated that it received the yarn under the L/Cs in question from Modern and used it to manufacture fabrics for supply of readymade garments. Also, in paragraph 12 of the plaint, X stated that it had long business relationship with Modern.
16. That with regard to the statements made in paragraph 11, it is denied that since the issuance of the ABPs it has transpired that Modern does not exist at all or if they exist and that they are the chosen vehicle of fraudsters to deprive the petitioner of the proceeds of the L/Cs. It is submitted that the burden lies on the petitioner to prove that Modern does not exist at all. As mentioned in the earlier paragraph, Modern exists as a firm and carries on business.
It is further submitted that as the Issuing Bank of the L/Cs in question, the duty of the petitioner relates only to the documents under the L/Cs in question. If the documents are in order and the maturity dates for payment are confirmed, the Issuing Bank is legally bound to make payment of the bills on maturity. The Issuing Bank cannot go beyond the mandate of the Letter of Credit and the provisions contained in the Uniform Customs and Practice for Documentary Credits. As such, the rule issued in the instant revisional application is liable to be discharged.
17. That with regard to the statements made in paragraph 12, it is correct that the ABPs were discounted by Premier and the money has been paid to Modern after the bills were accepted and maturity dates were confirmed by the petitioner. However, it is denied that Premier was involved in any fraud and that there is no existence of Modern and the documents tendered under the L/Cs are not genuine documents.
It is submitted that as the Advising/Negotiating Bank of Modern, the documents under the L/Cs were submitted to the petitioner and upon acceptance of all the bills under the L/Cs in question by the petitioner, the opposite party No. 8 effected payment to Modern. Hence, the petitioner is obliged to make payment of the accepted bill to the opposite party No. 8. With an ulterior motive to avoid their liability and responsibility with regard to payment under the L/Cs, the petitioner is making unfounded and fabricated allegations against the opposite party No. 8. In fact, it is the petitioner who, in collusion with its client X, has filed the instant revisional application to defraud the opposite party No. 8 from its legal dues.
18. That with regard to the statements made in paragraph 13, it is denied that X has conspired with Premier and perpetrated frauds upon SBL for illegal gains and by its demands for payment of the ABPs, continues in its effort to defraud SBL. It is submitted that X is the petitioner’s client, not Premier’s client. If there is any collusion or fraud, it has been committed by X and SBL. The petitioner in paragraph 5 of his petition states as follows:
“…… upon receipt of documents under the L/Cs on different dates they were duly accepted by X…., and X authorised SBL to issue acceptances. SBL then communicated acceptance of bills to them on good faith with disclosure to arrange payment on maturity as per L/C terms.”
Thus, upon acceptance of the documents by X, the bills were accepted and maturity was confirmed by the petitioner. The petitioner instead of making payment of the legal dues of the opposite party No. 8, has made up a fabricated story of alleged fraud etc. In this connection, it is re-iterated that payment under the L/Cs in question has no relation with the shipment of goods under the Master L/C. Under the L/Cs in question, the petitioner is liable to remit the proceeds of the bills on due date as per instruction of the Negotiating Bank i.e. the opposite party No. 8.
19. That with regard to the statements made in paragraph 14 it is submitted that the opposite party No. 8 is not aware of any investigation by Bangladesh Bank regarding the L/Cs negotiated by the opposite party No. 8. The burden lies on the petitioner to prove that there has been any such investigation. In this connection, it is submitted that the opposite party No. 8 by various letters requested Bangladesh Bank to take steps regarding non-payment of the amount of the accepted bills by the petitioner and Bangladesh Bank in turn advised the petitioner to make payment of the amount. Even then, the petitioner did not make full payment of the legal dues of the opposite party No. 8.
20. That with regard to the statements made in paragraph 15 of the petition, it is submitted that in numerous cases it has been decided by the Higher Courts of Bangladesh that a letter of credit has an autonomy of its own and it need be negotiated without reference to the very contract out of which the credit arises. The letter of credit is independent and never qualified by the original contract of sale or by any underlying transaction or dispute between the buyer and seller. It has also been decided that no prohibitive order can be passed by a Court to interfere with the normal banking transaction and also the contractual obligation of the Bank when the only dispute is as to the performance of contract and when dispute can be resolved by bringing an appropriate action for damages.
The exception to the strict rule is of very limited scope. In order to come within the exception, it has to be shown (i) the documents were being presented by the beneficiary himself and (ii) the bank knows when the documents are presented that they are forged or fraudulent. In a number of decisions of our sub-continent as well as the Courts of England, it has been held that it is not enough to allege fraud but the applicant/buyer must clearly establish that the documents that were presented by the beneficiary were forged or fraudulent.
In the instant case, in order to come within the exception of fraud, the petitioner has to prove that it knew that the documents were forged or fraudulent when the documents were presented. If that were the case, then the petitioner and its client X would not have accepted the documents and confirmed maturity of the bills. The fact is that the documents under the L/Cs are not forged or fraudulent, the petitioner in collusion with its client have made up a story to deprive the opposite party No. 8 from its legal dues.
21. That the statements made in paragraph 16 of the petition relate to the decision of the Queen’s Bench of England and as such no comments are offered.
22. That the statements made in paragraph 17 of the petition are false, fraudulent, malafide and denied by the opposite party No. 8. It is submitted that there is no evidence of fraud committed by the opposite party No. 8 or anyone else. The petitioner has accepted the bills in question and confirmed maturity thereof to the opposite party No. 8. Therefore, they are legally and contractually bound to make payment of the bills on maturity. They can, under no circumstances, refuse payment of the ABPs.
23. That the statements made in paragraph 18 of the petition are based on misunderstanding and misinterpretation of the Money Laundering Prevention Act, 2002. The transactions in question were made long before the Money Laundering Prevention Act, 2002 came into force. Hence, the provisions of the Money Laundering Prevention Act, 2002 is not applicable to the transactions in question. As stated earlier, the petitioner has accepted the ABPs in question and confirmed maturity thereof to the opposite party No. 8. As such, the petitioner is legally and contractually bound to make payment of the bills on maturity to the opposite party No. 8. The provisions of the Money Laundering Prevention Act, 2002 is in no way attracted in the payment of the bills to the opposite party No. 8. In fact, the withholding of the legal dues of the opposite party No. 8 is illegal, unlawful and contrary to the provisions of UCPDC for which the petitioner is liable. With regard to the statements relating to findings of Bangladesh Bank, it is submitted that the opposite party No. 8 is not aware of any such findings.
24. That the statements made in paragraph 19 of the petition are matters of record and as such no comments are offered.
25. That the statements made in paragraph 20 of the petition are partially matters of record. However, it is categorically denied that the opposite party No. 8 i.e. Premier failed to make full and frank disclosure to the Court and committed fraud upon the Court and obtained the Impugned Order and that it was involved and implicated in frauds. In fact, it was X i.e. the client of the petitioner, who in collusion with the petitioner, practised fraud upon the Court and obtained the temporary injunction. When attention of the learned Court below was brought to the decisions of the Higher Courts of this country, the learned Court upon consideration of the said decisions and the facts and circumstances of the instant case, was pleased to vacate the temporary injunction passed earlier. The vacating of the temporary injunction by the learned Court below is in consonance with the decisions of the Higher Courts of Bangladesh and the provisions of the Uniform Customs and Practice for Documentary Credits and no error of law has been committed by the said Court. As such, the order of stay passed by this Hon’ble Court is liable to be set aside.
26. That the statements made in paragraph 21 of the petition that soon after the interim injunction was vacated by the Impugned Order dated 28.01.2003, Premier again started illegally pressurising the petitioner to make payments against the ABPs or that Premier sought the assistance of Bangladesh Bank in the matter and somehow persuaded Bangladesh Bank to issue a letter dated 25.02.2003, inter alia, ordering the petitioner to make payments under the ABPs due to Premier on the basis that the injunction earlier granted by the Court was vacated by the Impugned Order are false, fabricated, motivated and denied by the opposite party No. 8. It is also denied that the petitioner made payment of the sum of Tk. 2,00,30,202.00 to Premier under protest.
It is submitted that despite repeated requests and reminders when the petitioner did not come forward to make payment of the ABPs in question, the opposite party No. 8 i.e. Premier had no other option but to refer the matter to Bangladesh Bank. Bangladesh Bank, in its turn, intervened in the matter and directed the petitioner to make payment of the legal dues of the petitioner. Upon several requests and directions of Bangladesh Bank, the petitioner was compelled to make payment of partial amount of the ABPs.
27. That the statements made in paragraph 22 of the petition are matters of record, the burden of proving which lies upon the petitioner. In this connection, it is submitted that the legal notice was issued by the lawyer for the petitioner on 10.03.2003 and the Money Suit No. 16 of 2003 was filed on the next day i.e. 11.03.2003. Hence, no time was given to the opposite party No. 8 to reply to the legal notice of the petitioner.
28. That the statements made in paragraph 23 of the petition are matters of record the burden of proving which lies on the petitioner. As such, no comments are made.
29. That the statements made in paragraph 24 of the petition are partially matters of record. However, it is denied that the amounts are not due to Premier and that the demands for payment by Premier are illegal. It is submitted that Premier being legally entitled to the amount of the ABPs is fully entitled to claim the amounts from the petitioner on the basis of the acceptance of the bills and conformation of maturity dates by the petitioner. As such, the rule issued in this revisional application by this Hon’ble Court is liable to be discharged.
30. That with regard to the statements made in paragraph 25 of the petition, it is denied that if the Impugned Order is not set aside, SBL shall be seriously aggrieved and the demands by Premier to make payment of the ABPs would continue. It is submitted that because of the instant revisional application and the order of stay of the Impugned Order passed by this Hon’ble Court, the opposite party No. 8 is suffering irreparable damage. Unless and until the rule issued in this revisional application is discharged and the order of stay passed by this Hon’ble Court is vacated, the opposite party No. 8 will continue to suffer irreparable loss and injury.
31. That the statements made in paragraph 26 of the petition that the parties connected with frauds and illegality are X, Premier, National and Pubali are totally false, fabricated and unfounded and hence denied by the opposite party No. 8. In fact, it the petitioner and its client X who are involved in fraudulent activities. The opposite party No. 8 has no comments on the rest of the statements in the said paragraph.
32. That it is submitted that the Impugned Order has been passed by the learned Court below on the basis of Judgement passed in numerous cases by the Higher Courts of this country. It is an established law there can be no prohibitive order by a Court to interfere with the normal banking transaction and also the contractual obligation of the Banks under letters of credit. The only exception is where there is fraud with regard to documents and the Issuing Bank has knowledge about the frauds when the documents are presented. The petitioner failed to show any fraud in the documents under the L/Cs in question. As such, the rule issued in the instant revisional application is liable to be discharged.
33. That this revisional application has been filed with an ulterior motive to deprive the opposite party No. 8 from its legal dues. As such, the rule issued in the instant revisional application is liable to be discharged.
34. That it is further submitted that it is settled law that payment of amounts under letters of credit cannot be stayed. As such, the learned Court below has committed no error of law in vacating the ad interim injunction that was passed earlier and there has been no failure of justice.
35. That the petitioner with an intention to delay the realisation process of the opposite-party No. 8 has filed this revisional application and the said petitioner has partially succeeded by obtaining an order of stay from this Hon’ble Court.
36. That the order of stay passed by the Hon’ble Court is adversely affecting the interest of the opposite party No. 8. It is submitted that because of the order of stay the said opposite party No. 8 is being deprived of realising its legitimate dues, which is in fact depositors’ money.
37. That under the above circumstances, your Lordships may be pleased to discharge the Rule and/or pass such further order or orders as the Court may deem fit and proper.
38. That the statements of facts made above are true to the best of my knowledge and belief and the rest are submissions before this Hon’ble Court.
| Prepared in my office : | DEPONENT |
| Advocate | The deponent is known to
me and identified by me. |
| Solemnly affirmed before me by the aforesaid deponent on this the ____ day of _______________ | ADVOCATE |
| Commissioner of Affidavits
Supreme Court of Bangladesh High Court Division |