KARNATAKA BANK LTD Vs. INDIAN BANK MYLAPORE BRANCH

JUDGEMENT

(1.) THIS appeal is focussed as against the judgment and decree dated 30/4/1997 passed by the learned XVII Asst. City Civil Judge, Madras in OS No. 6845 of 1996. For convenience sake, the parties are referred to here under according to their litigative status before the trial Court.

(2.) HEARD both sides.

(3.) NIGGARD and bereft of details, the case of the plaintiff as stood exposited from the averments in the plaint would run thus: the plaintiff is the Bank which was approached by the third defendant for grant of certain loan facilities, including Bills purchase facilities. Consequently, the former sanctioned the same in favour of the latter who started availing the facilities. In respect of the bills drawn by the third defendant on second defendant, the first defendant Bank, viz. , M/s Karnataka Bank Ltd. had opened Letter of Credit in favour of the plaintiff Bank at the request of the second defendant agreeing to honour the bills drawn by the third defendant on the second defendant on presentation. The first defendant in fact was bound to honour the bills on due presentation to it by the plaintiff Bank, if the terms of Letter of Credit were complied with. It was also agreed that the amount utilized under the Letter of Credit would again be available for utilization on receipt by the negotiating Bank of the advice that the Bill already drawn by the beneficiary had been reimbursed. Accordingly, on receipt of such advice, the plaintiff had been purchasing further Bills within the Letter of Credit upto Rs. 2,00,000/ -. The Letter of Credit itself was renewed for a further period of six months i. e. upto 11/1/1988 by the first defendant, vide its letter dated 16. 07. 1987 and it was again extended upto 11/1/1989. While so, the bills to the value of Rs. 1,80,175/- were returned by the first defendant unpaid, as though reinstatement was required for negotiating the Bills under the Letter of Credit. In fact, the first defendant even paid upto Rs. 10,00,000/- without insisting for separate reinstatement advice from the first defendant There is no condition in the Letter of Credit that reimbursement of commitment was required to honour the Bill drawn under it after utilization of Rs. 2,00,000/ -. The details of the invoices relating to the sum of Rs. 1,80,175/- are furnished hereunder. <FRM>JUDGEMENT_2251_TLMAD0_2008Html1.htm</FRM>