European Asian Bank A.G. v Punjab & Sind Bank (No. 2)

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLORD JUSTICE ROBERT GOFF,LORD JUSTICE SLADE
Judgment Date08 March 1983
Judgment citation (vLex)[1983] EWCA Civ J0308-1
Docket Number83/0110
Date08 March 1983

[1983] EWCA Civ J0308-1

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (Civil Division)

(On appeal from Mr. Justice Staughton sitting in the Commercial Court)

Royal Courts of Justice

Before:

Lord Justice Slade

and

Lord Justice Robert Goff

83/0110

1981 E. No. 382

Between:
European Asian Bank A.G.
Plaintiffs/(Appellants)
and
Punjab & Sind Bank
Defendants/(Respondents)

Mr. A.S. GRABINER, QC, and Mr. R. DAVIES (instructed by Messrs. Coward Chance) appeared on behalf of the Appellants.

Mr. J.G. WILMERS, QC, and Miss H. HEILBRON (instructed by Messrs. Norton, Rose, Botterell & Roche) appeared on behalf of the Respondents.

LORD JUSTICE ROBERT GOFF
1

This is the judgment of the Court on an appeal by the Appellants, European Asian Bank A.G., against an order by Staughton J. under which, on an application by the Appellants for summary judgment under Order 14, he gave the Respondents, Punjab & Sind Bank, unconditional leave to defend The appeal is brought by leave of Staughton J.

2

Until recently, it was not possible for a plaintiff to appeal against such a decision. As a matter of history, such an appeal was possible until 1894, when it was abolished by statute; that abolition was subsequently incorporated in the Judicature Act 1925. However, when the new Supreme Court Act was enacted in 1981, the provision abolishing the right to appeal in such a case was not re-enacted with the effect that, under the ordinary rules of procedure relating to interlocutory matters, an appeal now lies to the Court of Appeal with leave either of the judge or of the Court of Appeal. We shall have more to say about appeals of this kind when we come to consider the substance of the present appeal.

3

The Appellants are a West German Bank, who conduct a substantial part of their business in the Far East, including Singapore. The Respondents are an Indian Bank, with a branch office in London. The Appellants' claim in the action is made under a letter of credit. They claim to be negotiating bankers, and say that the Respondents, as issuing bankers, are liable to them in the sum of $2,250,000, being the sum due under the letter of credit.

4

This is not the first time that the matter has been before the English Courts. In 1981, the Respondents applied to have the Appellants' action stayed on the ground that India or Singapore, and not England, was the natural forum for the action. Their application for a stay was dismissed; and its dismissal was, in 1982, affirmed by the Court of Appeal. At the time when the Respondents applied to have the action stayed, the Appellants had already issued a summons for judgment under Order 14. That matter was however stood over until after the application for a stay had been dealt with.

5

The facts underlying the present proceedings were summarised by the judge of first instance in the stay proceedings; and his summary was adopted by the Court of Appeal in the stay proceedings, and by Staughton J. For convenience, we too shall adopt that summary (in which the Respondents are referred to as "the Punjab Bank", and their customers, Jain Shudh Vanaspati Ltd., on whose behalf they opened the relevant letter of credit, are referred to as "Jain"). We quote from the judgment as reported in [1981] 2 Lloyd's Rep. 651 at pp. 653–4:

6

"On July 14, 1979, Jain, an Indian company based in New Delhi, contracted to buy 300 tons of Zanzibar quality cloves from a Singapore company called Bentrex & Co. The price payable for the goods was US $2,250,000.00 c. & f. Bombay, and the contract originally provided for payment 120 days from the date of bill of lading, by irrevocable letter of credit. On July 20, 1979, Jain asked the Punjab Bank in New Delhi to cause a letter of credit to be opened; the initial request was for payment 120 days after bill of lading, but this was later changed (for reasons which have not been explained) to payment 180 days after bill of lading. On the following day, July 21, the Punjab Bank telexed their correspondents in Singapore, the Allgemene Bank Nederland (whom I shall refer to as 'A.B.N.'), and instructed them to advise Bentrex, through the European Asian Bank, of the opening of the letter of credit; and the Singapore branch of A.B.N. duly advised Bentrex through the European Asian Bank. Subsequently, on August 4, A.B.N. confirmed the letter of credit. The text of the letter of credit before the Court was contained in a telex from the Punjab Bank to A.B.N. It reads as follows:

For USD 22,50,000/—DT 21.7.79 at the request of M/S. Jainshudh Vanaspati Limited, 101—Akash Deep Building, 26A Barakhawba Road, New Delhi-110001 we establish our irrevocable letter of credit No. IBD/118/8371/79 favouring M/S. Bentrex Company, 6 Lorong Malayu, Singapore-l4 STP

For USD 22,50,000/—(USD Two Million Two Hundred Fifty Thousand only) CNF Bombay available by their drafts at 180 days from bill of lading drawn on accountee for 100 percent invoice cost of 300m tonnes of clove Zanzibar quality from Singapore to Bombay STP

Drafts are to be accompanied by the following documents:-

1) Yr signed invoice in 6 quoting import licence no. item no.30.3 of Appendix 10 of OGL of Import Policy 79–80 dated—6 + certifying goods to be of Singapore origin STP (shipment must not be made prior to the date of licence)

2) Full set of clean 'On Board' ocean-shipping company's bills of lading to order blank endorsed or to order of the Punjab NSind Bank Ltd. IBD, 6-Scindia House New Delhi and the accountee dated not later than 31.8.79

3) Certificate to this effect that the copy of shipping documents along with the copies of bill of lading certificate of origin insurance policy, invoice, quality and weight certificate inspection certificate tol airmailed to buyer immediately after shipment

4) Description—300 metric tonnes cloves Zanzibar quality

5) Surveyors n certificate—weight and quality certificate to be issued by General Superintendence Co. or Lloyds at port of loading and their certificate to be final

6) Letter of credit should be advised through Europianasian Bank 50 Collyer Quay, Singapore n should be divisionable n unrestricted for negotiation

7) Partial shipments permitted transhipment not permitted this credi is irrevocable valid for negotiation at Singapore until 15th Sept 1979

8) Drafts must state 'Drawn under irrevocable letter of credit No. IBD/118/8371/79 of the Punjab NSind Bank Ltd. dt 21.7.79' and must bear the clause 'Payable at the Bank's current selling rate of exchange on New York with charges and interest at the current rate from the due date of this draft until the date of payment'

9) We hereby engage with the drawers, endorsers and bonafide holders of drafts drawn under and in compliance with the terms of this credit that such drafts shall be duly honoured on presentation and delivery of documents as specified above STP negotiations under this credit are restricted to Algemene Bank Nederland N V 2 Cecil Street Corner 'd Almeida Street, P.O. Box 493, Singapore-1

10) All charges are for beneficiary's account the negotiating bank should forward to us the drafts and original documents by airmail and duplicate documents by the following airmail STP documents must be presented for negotiation within 15 days from the date of shipment

11) In negotiations PLS claim reimbursement from Irving Trust Co. One Wall Street New York on due dates only this L/C is subject to UCP Brochure 290 of ICC 1974 Publication STP this is an operative instrument n no airmail confirmation to follow STP

7

"Certain amendments were made to the letter of credit by a telex dated July 27; these amendments, which are not material, were passed on to the European Asian Bank on or shortly after July 30, and by them to Bentrex on the following day.

8

"On Aug. 7, Bentrex presented to European Asian Bank a set of documents and a draft for $2,250,000 drawn on Jain and payable to the order of the European Asian Bank. That draft was endorsed by the European Asian Bank, and sent by them with the documents to the Punjab Bank in India; it was then accepted by Jain. In point of fact, the documents presented by Bentrex with the draft did not conform to the letter of credit in two respects—(1) the bills of lading were not the shipping company's bills of lading, but were signed by agents, and (2) the weight certificate was not issued by either of the two surveyors named in par. (5) of the letter of credit. On two occasions, on Aug. 8 and Aug. 11, the European Asian Bank attempted to telex the Punjab Bank, drawing attention to these discrepancies, and requesting authority to pay despit them. However these telexes were in error sent to the wrong telex address—to the telex address of the Punjab National Bank—and the telexes were not received by the Punjab Bank. Nevertheless, on Aug. 13 the European Asian Bank appears to have notified Bentrex and A.B.N. (the confirming bank) that they had negotiated the documents, and on Aug. 20 they credited Bentrex's account. Meanwhile, as I have said, the European Asian Bank had sent the documents and the draft to the Punjab Bank in New Delhi. (There was some debate as to whether this was done by airmail or by special messenger; but I can see no relevance in this point.) At all events, the draft and documents appear to have been received by the Punjab Bank on Aug. 16. They were sent to the Punjab Bank under cover of a document which stated that they, the European Asian Bank, had negotiated the documents under the letter of credit, and that at maturity they would reimburse themselves on Irving Trust of New York; and which concluded with the words 'please advise acceptance'. On the same day, Aug. 16, the documents were either sent or shown to Jain by the Punjab Bank, and the Punjab Bank appears to have...

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