AMERICAN EXPRESS BANK LIMITED Vs. CALCUTTA STEEL CO

JUDGEMENT

(1.) Special leave granted.

(2.) The solitary question is whether the first respondent M/s Calcutta Steel Co. Ltd. , plaintiff, for short "csc" is the drawee-acceptor of the impugned bills of exchange. The admitted facts are that the appellant/first defendant is the banker. The CSC, obtained licence No. OGL 6/86, dated 1/04/1986 to import steel billets. The government of India's import policy for 1985-88 was that iron and steel etc. should be imported through canalised agency i. e. M/s Minerals and Metals Trading Corpn. of India Ltd. , for short "mmtc", the 3rd defendant/3rd respondent. By letter dated 12/11/1986 CSC approached MMTC for letter of authority to import the goods and by letter dated 18/11/1986, copy addressed to M/s Harlow and Jones Ltd. , London, the supplier, the latter permitted CSC to draw draft on "mmtc A/c Calcutta Steel Co. Ltd. , 20, Hemanta Basu Sarani, Calcutta-700001 for a sum not exceeding US $ 1,456,000. 00 (US Dollars one million four hundred fifty-six thousand only) , payable to the beneficiary on presentation of a separate draft. . at 180 days from the date of bill of lading drawn for 100% of the invoice value and accompanied by. . " It was further stated that the material imported was as per the requirement of the end user and sold to them on high seas basis against back to back letter of credit established by end user. In order to reduce the financial burden of the end user it had been decided that the end user would open letter of credit directly in favour of the foreign suppliers with the condition that its name as opener of the letter of credit by the end user in favour of the foreign suppliers will be shown as MMTC. It had expressed no objection to open letter of credit by CSC (end user) in favour of M/s Harlow and Jones Ltd. strictly as per pro forma enclosed. The material part reads thus:

(3.) Pursuant thereto CSC opened an Irrevocable Letter of Credit No. 166/8 6/11/1986 for the said sum in favour of M/s Harlow andjones Ltd. /2nd defendant/2nd respondent. On 31/12/1986 about 7 tonnes of steel billets were shipped by the second respondent to CSC under invoice No. 710231 dated 31/12/1986 and the bill of lading no. 1 dated 31/12/1986. On 3/02/1987 the second respondent presented to the London Branch of the appellant, three bills of exchange dated 31/12/1986 for a sum of U. S. $ 1,498,694.56 with interest for 180 days at 7% per annum on the price of the goods. The bills of exchange were addressed to: