Suit filed in the High Court of Calcutta by COMPANY 1.

Mr. Z

Address….

Dear Sir,

Re:      Suit filed in the High Court of Calcutta by COMPANY 1.

Please refer to your letter dated 21.05.2001 on the captioned subject.

We have perused the papers/documents referred to us.

The Facts

At the request of COMPANY 2…………, BANK 1, ……………..opened an irrevocable Letter of Credit No. …………………… (“L/C”) for US$ 13,500.00 in favour of COMPANY 1., …………….., India. The validity of the L/C was up to 06.10.99 and the shipment validity was up to 21.09.99.

The documents were negotiated on 05.10.99 and the Bank 1 received the documents under the L/C on 10.10.99. By telex Message No. 1440 dated 12.10.99, Bank 1 informed the Bank of India (the negotiating bank of Krishna Traders) as follows:

“WE ARE IN RECEIPT OF THE ABOVE MENTIONED DOCS AND ON SCRUTINY THE FLWG DISCREPANCY HAS BEEN FOUND.

(1)     LATE SHIPMENT

WE HAVE INTIMATED THE IMPORTER OF THE DISCREPANCY AND SOON REVERT YOU UPON RECEIVING INSTRUCTION FROM THEM. MEANTIME WE REQUIRE YOUR CONSENT REGARDING PROCESSING OF THE SUBJECT DOCS ON COLLECTION BASIS SUBJECT TO URC 522 OF ICC PUBLICATION THROUGH YOUR TELEX WITHIN TWO DAYS FROM TO DATE.

IF WE ARE IN NON-RECEIPT OF ANY INFORMATION WITHIN THE STIPULATED PERIOD WE WILL TREAT THE DOCS ON COLLECTION BASIS AS PER URC 522 OF ICC PUBLICATION DULY ACCEPTED BY YOU END.”

Subsequently, by telex Message No. 916 dated 05.06.2000, BANK 1 informed the  Bank of India as follows:

“…….…..WE ARE STILL HOLDING ALL ORIGINAL DOCUMENTS AND SIMULTANEOUSLY, WE HAVE BEEN PURSUING THE IMPORTER VIGOROUSLY FOR THE RETIREMENT OF THE BILLS. ON REALISATION OF THE PROCEEDS OF THE BILLS, WE SHALL ARRANGE REIMBURSEMENT AT THE EARLIEST.”

Now, BANK 1 has received a letter on 19.04.2001 from Mr. X, Advocate of the High Court of Calcutta that G.A. No. 1210 of 2001 and C.S. No. 156 of 2001 has been instituted in the High Court of Calcutta for injunction restraining BANK 1(the respondent No. 1 in the case) from withdrawing or transferring any money from the bank accounts of inter alia, the Bank of Tokyo Mitsubishi Ltd., 2 Brabourne Road, Calcutta – 700 001 without leaving a balance of US$ 18356 or equivalent sum in terms of Indian Rupees at the exchange rate prevailing on the date of the order. The petition was moved on 18.04.2001 before Mr. Justice D.K. Seth. On the application of Krishna Traders the Hon’ble Court was pleased to pass an order of injunction against BANK 1 to the effect as prayed for. From the papers/documents it appears that the interim order of injunction passed by the Hon’ble Court will continue until 15.06.2001.

Upon perusal of the documents/papers referred to us, it appears that the documents are prima facie discrepant with regard shipment of goods. It may be mentioned here that the date of Truck Receipt filed in the High Court of Calcutta and Truck Receipt sent to BANK 1along with L/C documents are different. So it is clear that since documents negotiated are not in compliance with the terms and conditions of the L/C, the Bank rightly refused to accept the documents. Article 14 of the Uniform Customs and Practice for Documentary Credits (UCPDC) stipulates that if the documents are discrepant the Bank is not obliged to accept the documents unless the discrepancy is waived by the applicant.

Please note that the copy of L/C which has been sent us is illegible. Please make sure whether the L/C incorporated the UCPDC.

Under the above circumstances, we are of the opinion that BANK 1should immediately take necessary steps to engage a lawyer in Calcutta High Court to protect the Bank’s interest and get the order of injunction passed by the Hon’ble Court vacated.

Should 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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