1 2025:CGHC:53563 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR FA No. 161 of 2011 1 - Punjab National Bank Aged About 18 Years Having Its Head Office At 7, Bhikhaji Cama Palace, New Delhi Inter Alia Br. Punjab National Bank, Br. Off. A Wing Pelikan Building, Gujarat Chamber Of Commerce Building Ashram, Ahmadabad, Gujrat ...Appellant/Defendant No.2 versus 1.M/s Godavari Power & Ispat Ltd. Registered Office Plot 482/2, Phase 1, Industrial Area, Siltara, Tahsil & District - Raipur (CG) ...Respondent No.1/Plaintiff 2.M/s Banyan & Berry Alloys Private Limited, A-2, 4th Floor, Newyark, A.S.G. Highway, Thanlej, Ahmadabad 3800006 (Gujarat). ... Respondent No.2/defendant No.1 For Appellant/defendant No.2 : Mr. Sudhanshu Upadhyay, Advocate holding the brief of Mr. Sharad Mishra,Adv. For respondent No.1/plaintiff : Ms. Harneet Kaur, Advocate holding the brief of Mr. Sourabh Sharma, Adv. For defendant No.1 : None appears though served Hon’ble Shri Justice Rakesh Mohan Pandey Judgment on Board 03.11.2025 1. Heard. 2. The appellant/defendant No.2 has challenged the judgment and decree passed by the learned Seventh Additional District Judge, Raipur (C.G.) in Civil Suit No.55-B/2009 dated 30.04.2011 whereby, the learned Trial Court partially decreed the suit and directed the defendants to pay Rs.2,81,192/- with interest @ 6% per annum from 06.10.2006 till the date of realization to the plaintiff. 3. The facts in brief are that the respondent No.1/plaintiff filed a suit against defendant No.1 and appellant/Bank for recovery of an amount of Rs.4,28,817/- with interest on the ground that defendant No.1 2 intended to purchase Hydrocarbon Ferro magnesium from plaintiff and placed purchase order on 18.07.2006 and in order to secure such value of goods/sale consideration sold, the appellant/Bank had issued an irrevocable letter of credit bearing No.4441 ILC 015906 dated 13.09.2006. As per letter of credit, the plaintiff was the beneficiary and as per condition mentioned in ILC, the validity of bank guarantee was for a period from 13.09.2006 to 10.10.2006. The plaintiff further pleaded that on the basis of letter of credit, the payment was to be made by the appellant/Bank through the State Bank of India, Commercial Branch, Bairan Bazar Civil Line, Raipur to the plaintiff. It is also pleaded that after delivery of goods, an amount of Rs.28,12,000/- was paid to the plaintiff but last instalment of value of goods worth Rs.2,81,192/- was not paid, therefore, the plaintiff approached the appellant/Bank according to the terms and conditions of the letter of credit. The appellant/Bank rejected the claim of the plaintiff on the ground that the claim was made by the plaintiff after expiry of extended validity period. 4. In the written statement, the appellant/Bank pleaded that the letter of credit was valid from 13.09.2006 to 10.10.2006 and subsequently, it was extended upto 15.11.2006. It is further pleaded that the claim was made by the plaintiff on 04.01.2007 after expiry of said period, therefore, it was not honoured and according to the condition No.6 of the letter of credit, the plaintiff was under an obligation to place his documents within period of 10 days from the date of transport and further within validity of credit. 5. Mr. Upadhyay, learned counsel appearing for the appellant/Bank would argue that the learned Trial Court failed to consider the fact that the 3 letter of credit was presented before the appellant/Bank after expiry of its validity on 04.01.2007. He would contend that the letter of credit was valid between 13.09.2006 upto 10.10.2006 and it was extended upto 15.11.2006 but the plaintiff failed to place his demand or claim within said period. He would further contend that a Bank official was examined, who categorically stated that the plaintiff failed to place his claim within prescribed period and therefore, it was rejected vide order dated 04.01.2007 itself. In support of his contentions, he placed reliance on the judgment passed by the Hon’ble Supreme Court in the matter of State Bank of India and another Vs. Emmsons International Limited and another, reported in 2011(12) SCC 174. 6. On the other hand, Ms. Kaur, learned counsel appearing for the plaintiff would oppose the submissions made by Mr. Upadhayay. She would submit that according to the condition No.6 of the letter of credit, the claim could have been raised within a period of validity of letter of credit. She would further submit that the letter of credit was valid from 13.09.2006 to 10.10.2006 and the documents were presented before the State Bank of India on 07.10.2006 which was negotiating bank between the plaintiff and defendant No.2. She would argue that in evidence, Kumar Shailendra (DW1) has admitted the fact that the bill was raised by the plaintiff before the State Bank of India and it was communicated to the appellant/Bank on 04.01.2007. In his cross- examination, this witness has admitted that there was no pleading in the written statement with regard to extension of validity period from 10.10.2006 to 15.11.2006. In the written statement, it is further admitted that the demand letter was issued to honour the letter of credit from the State Bank of India on 04.01.2007 but in turn, the State 4 Bank of India was never communicated and in this regard, documents have not been placed. She would contend that the learned Court below has rightly decreed the suit. 7. I have heard the learned counsel appearing for the parties and perused the record. 8. The question for determination would be whether the learned Court below justified in partially decreeing the suit ? The appellant has not disputed the fact that the order was placed by defendant No.1 to purchase Hydrocarbon Ferro magnesium on 18.07.2006; the plaintiff had supplied the goods according to the terms and conditions mentioned in order placed by defendant No.1; letter of credit issued by the appellant/Bank was valid up to 10.10.2006 and last instalment of Rs.2,81,192/- was not paid by the defendant No.2 to the plaintiff. 9. The contention made by Mr. Upadhyay, learned counsel appearing for the appellant/Bank is that the claim was made by the plaintiff after expiry of the validity period. 10. Learned Trial Court has held that the plaintiff was entitled to get cost of goods supplied through the letter of credit from Bank. The last date of validity of letter of credit was 10.10.2006 and document was presented on 07.10.2006. 11. Devanand Chouraghade (PW1) has stated that the bill was raised at State Bank of India, Commercial Branch, Raipur on 07.10.2006 and thus, it was submitted prior to expiry of the validity period i.e. 10.10.2006. 12. Kumar Shailendra (DW1) has admitted this fact that the validity of letter of credit was extended up to 15.11.2006.The document submitted by 5 the plaintiff was received by the appellant/Bank on 04.01.2007 and therefore, it was not honoured. 13. Admittedly, the State Bank of India, Commercial Branch, Raipur was negotiating Bank and letter of credit was presented before expiry of validity period. 14. According to the condition No.6 mentioned in the letter of credit, document to be presented for negotiation within 10 days from the date of transport, but within the validity of credit. Thus, it can safely be held that the document was presented before negotiating bank before expiry of validity period. Therefore, the contention made by Mr. Upadhyay cannot be accepted. The appellant/Bank could not adduce evidence to demonstrate the fact that the document was not presented before negotiating Bank before expiry of validity period. 15. Admittedly, it was last installment of Rs.2,81,192/- and earlier documents were submitted through the State Bank of India and all those letter of credits were honoured by the Appellant/Bank. Thus, it can be presumed that it was practiced to present document through the negotiating Bank and learned Trial Court has rightly recorded this finding against the appellant/Bank and in favour of the plaintiff. 16. In the matter of Emmsons International Ltd. (supra), it is held that a draft with accompanying documents must be in strict accord with the letter of credit. If the documents presented comply with the terms of the credit, the issuing Bank must honour its obligation in accordance with the terms of credit. Relevant paras 11, 12 & 13 are reproduced herein below. “11. The legal position appears to be fairly well settled that a draft with accompanying documents must be in strict accord with the letter of credit. If the documents presented comply with the 6 terms of the credit, the issuing Bank must honour its obligation in accordance with the terms of credit. 12. In United Commercial Bank v. Bank of India, reported in 1981(2) SCC 766, this Court referred to few decided cases of the English courts, Halsbury's Laws of England and also a couple of books on the subject by eminent authors-Davis' Law Relating to Commercial Letters of Credit, 2nd Edn. (at p. 76) and Paget's Law of Banking, 8th Edn. (at p. 648) and it was held that the documents tendered by the seller must comply with the terms of the letter of credit and that the banker owes a duty to the buyer to ensure that the buyer's instructions relative to the documents against which the letter of credit is to be honoured are complied with. It was stated that the description of the goods in the relative bill of lading must be the same as the description in the letter of credit, that is, the goods themselves must in each case be described in identical terms, even though the goods differently described in the two documents are, in fact, the same. The Court reiterated: (SCC p. 783, para 40) "40. a bank issuing or confirming a letter of credit is not concerned with the underlying contract between the buyer and seller. Duties of a bank under a letter of credit are created by the document itself, but in any case it has the power and is subject to the limitations which are given or imposed by it, in the absence of the appropriate provisions in the letter of credit." 13. Where the customer of a bank instructs the bank to open a credit, the bank acts at its peril if it departs from the precise terms of the mandate.” 17. In the case on hand, the letter of credit with accompanying documents were submitted before the negotiating Bank before expiry of validity period and thus, it was within the terms of the letter of credit. The judgment cited by Mr. Upadhayay supports the contention made by Ms. Kaur. 18. Taking into consideration the above-discussed facts and the law laid down by the Hon’ble Supreme Court in the matter of Emmsons International Ltd. (supra), I do not find any good ground to interfere with the decree passed by the learned Trial Court. Accordingly, this appeal fails and is hereby dismissed. 19. The question for determination is answered in affirmative. Sd/- (Rakesh Mohan Pandey) Judge Rekha