TIRUPATI TEXKNIT LIMITED Vs. HABIB BANK LIMITED

JUDGEMENT

(1.) IN this appeal, an unsuccessful plaintiff impugns the judgment and order of a learned Single judge of this Court, dismissing its suit for recovery of money from the first respondent (hereafter called "the defendant Bank").

(2.) THE Plaintiff is a public limited Company constituted under the Companies Act, 1956. It owns 100% export oriented spinning mills and carries on the business of manufacturing, trading, exporting hosiery, yarn, fabric and textiles. The respondent Bank is incorporated in Pakistan having its branches in Pakistan as well as Bangladesh. The second respondent (hereafter "the buyer"), on the other hand, is a company incorporated in Bangladesh and carries on the business of importing and exporting garments, yarn, etc. The third respondent was a sole proprietorship/partnership concern which was appointed as the Indenting agent, by the Plaintiff, for hosiery products in Bangladesh. The Plaintiff and the third Respondent had agreed that business procured by the latter would be on the basis of terms and conditions intimated by the Plaintiff from time to time.

(3.) THE bank resisted the suit, stating that firstly that the buyer wrote to it (the bank) along with a letter from the third Respondent stating that the Plaintiff had agreed to a discount(agreed to accept USD 21,400.00 instead of USD 33,340.00). It was further stated that the consignment which was received by the buyer from the Plaintiff had in turn been exported by it to Russia, but the proceeds had not been realized and that upon receipt of export proceeds, the bank would make the payment. The Bank also argued that with the amendment, that had been agreed to by the plaintiff and not objected to by the confirming bank, the terms of the letter of credit had been materially altered, in that payment became due only in the event of receipt of consideration from the purchaser of the goods (to whom the buyer had sold them). It was emphasized that this change in the terms of the credit, rendered it a contingent contract, in which payment depended upon the receipt of money pursuant to further export and sale of goods. Despite the banks best efforts, that consideration had not been received; the matter had to even be reported in accordance with Bangladesh law, to the Central Bank of that country, as there was some suspicion of collusion between the buyer and its purchaser. However, in the absence of any receipt of amounts from the buyers Russian purchaser, the plaintiff could not claim the benefit of credits, even if the documents presented by it conformed to the terms of the letter of credit.