Letter of credit (LC) case remanded to banking Court.
 |
| Letter of credit (LC) case remanded to banking Court. |
لاہور ہائی کورٹ نے حبیب بینک اور ایم ایل ٹریڈرز کے تنازعے میں پچھلے فیصلے کو مسترد کر دیا اور کیس دوبارہ سماعت کے لیے واپس بھیج دیا، کیونکہ اہم مسائل اور دستاویزات کو درست طریقے سے نہیں جانچا گیا تھا۔
لاہور ہائی کورٹ کے فیصلے میں ایم ایل ٹریڈرز اور حبیب بینک لمیٹڈ کے درمیان ایک مالی تنازعہ پر بات ہوئی۔ ایم ایل ٹریڈرز نے الزام لگایا کہ بینک نے ان کے لیٹر آف کریڈٹ کی شرائط کی خلاف ورزی کی اور سامان کی ٹرانشپمنٹ کی اجازت دی، جو کہ ممنوع تھی۔
عدالت نے دیکھا کہ بینکنگ کورٹ نے اہم مسائل جیسے بل آف لیڈنگ کی شرائط اور UCP 500 کے آرٹیکل 23 کو پوری طرح سے نہیں جانچا۔ بینکنگ کورٹ نے ضروری دستاویزات کی عدم موجودگی اور اہم تاریخوں کو نظرانداز کیا۔
فیصلے میں عدالت نے پچھلا حکم مسترد کر دیا اور کیس کو دوبارہ سماعت کے لیے بھیج دیا، تاکہ تمام مسائل پر دوبارہ غور کیا جا سکے اور نئے شواہد کے ساتھ فیصلہ کیا جا سکے۔
بینکنگ کورٹ اور لیٹر آف کریڈٹ: M.L. Traders بمقابلہ Habib Bank Ltd کا تجزیہ
پس منظر
یہ مقدمہ مالیاتی تنازعہ اور لیٹر آف کریڈٹ (Letter of Credit – L/C) سے متعلق ہے، جس میں درخواست گزار M.L. Traders اور مدعا علیہ Habib Bank Ltd شامل ہیں۔ مقدمہ بنیادی طور پر بینک کی ادائیگی اور درخواست گزار کے نقصان کے دعوے سے متعلق ہے۔
L/C نمبر: 800371/0813
تاریخ: 13 ستمبر 1997
مالیاتی ادارہ: Habib Bank Ltd
قانونی حوالہ: UCP 500 (Uniform Customs and Practice for Documentary Credits)
اہم قانونی مسائل
1. کیا بینک کو ادائیگی کی قانونی ذمہ داری تھی، حالانکہ L/C کی شرط، جو transshipment (سامان کا راستہ بدلنا) کی ممانعت کرتی تھی، کی خلاف ورزی ہوئی؟
2. درخواست گزار نے دعویٰ کیا کہ سامان کے راستے میں تبدیلی اور نقصان کی وجہ سے ان کے مالی نقصان ہوا۔
3. بینک کا مؤقف تھا کہ وہ صرف دستاویزات کے ذمہ دار ہیں، سامان کے نقصان یا transshipment کے باوجود ادائیگی کر سکتے ہیں۔
دلائل
درخواست گزار کی طرف سے:
بینک نے L/C کی خلاف ورزی میں ادائیگی کی، جس سے سامان نقصان پہنچا۔
تیسری پارٹی کے ساتھ وعدے پورے نہ ہو سکے، جس سے مالی نقصان ہوا۔
عدالت کے سامنے متعلقہ فیصلوں کا حوالہ دیا گیا، جیسے Master Muhammad Bashir vs. Moinuddin (1990 CLC 703) وغیرہ۔
بینک کی طرف سے:
بینک صرف دستاویزات کی بنیاد پر کام کرتا ہے، نہ کہ سامان کے نقصان کی ذمہ داری۔
L/C کی دستاویزات درست تھیں اور درخواست گزار نے کوئی اعتراض نہیں کیا۔
قانونی حوالہ جات: Sazco Pvt Ltd vs. Askari Commercial Bank Ltd (2021 SCMR 558) وغیرہ۔
عدالتی تجزیہ
عدالت نے کہا کہ بینک transshipment کی خلاف ورزی کی بنیاد پر ادائیگی نہ کرنے سے انکار کر سکتا ہے، مگر صرف وہ استثناءات جو Article 23 of UCP 500 میں دی گئی ہیں، کی روشنی میں۔
Bill of Lading کی مکمل شرائط اور L/C کے prohibitions کا تفصیلی جائزہ لینا ضروری ہے۔
ریکارڈ میں Bill of Lading کے پیچھے کی شرائط موجود نہیں تھیں، اور اس پر بینکنگ کورٹ نے فیصلہ نہیں دیا۔
اس لیے مالیاتی ادارے کی ذمہ داری یا عدم ذمہ داری کا تعین نہیں ہو سکا۔
اہم قانونی نکات
1. بینک صرف دستاویزات کے ساتھ لین دین کرتا ہے، نہ کہ سامان کے ساتھ۔
2. L/C میں transshipment prohibition کے باوجود، UCP 500 کی استثناءات میں بینک کی ادائیگی کی ذمہ داری برقرار رہ سکتی ہے۔
3. Bill of Lading کی مکمل شرائط کا موجود نہ ہونا کیس کے فیصلے پر اثر ڈال سکتا ہے۔
4. عدالت نے فریقین سے مکمل دستاویزات اور واضح تاریخیں طلب کیں، مگر وہ فراہم نہ ہو سکیں۔
نتیجہ
عدالت نے مقدمہ کی مزید تحقیق اور Bill of Lading کی شرائط کے جائزے کی ضرورت پر زور دیا۔
ابھی تک یہ واضح نہیں کہ بینک نے قانونی طور پر درست عمل کیا یا نہیں۔
کیس مالیاتی اور تجارتی قانون میں بینک کے دائرہ اختیار اور L/C کے قانونی اثرات کی اہم مثال ہے۔
---
قاری کے لیے اہم سبق
اگر آپ بینکنگ یا تجارتی لین دین میں ہیں، تو L/C کی تمام شرائط اور Bill of Lading کی مکمل تفصیل جاننا ضروری ہے۔
بینک صرف دستاویزات پر عمل کرتا ہے، سامان کے نقصان یا transshipment کے باوجود۔
قانونی اختلافات کی صورت میں، Article 23 UCP 500 اور Bill of Lading کی استثناءات اہم کردار ادا کرتی ہیں۔
---
Stereo. HCJDA 38.
Judgment Sheet
IN THE LAHORE HIGH COURT,
LAHORE.
(JUDICIAL DEPARTMENT)
………………..
R.F.A No. 1583/2015
M.L. Traders, etc.
Versus
Habib Bank Ltd, etc.
JUDGMENT
Date of hearing:
06.06.2024.
Appellants by:
Mr.
Muhammad Imran Malik,
Advocate.
Respondents by:
Mr. Moeez Tariq, Advocate.
ASIM HAFEEZ, J.
This and connected appeals, bearing R.F.A No.
1584/2015 and RFA No.1443/2015 [latter preferred by respondent No.1 for
seeking modification of the judgment and decree under reference], are directed
against consolidated judgment and decree dated 28.07.2015, in terms whereof
Banking Court decreed the recovery suit, instituted by respondent No.1
[hereinafter referred as the „financial institution‟], for Rs.7,268,401 with costs
[against claimed amount of Rs.10,306,894/-]. And action for claiming damages
of Rs.32,817,314/-, sought by the appellants, was dismissed.
2.
Brief facts, relevant for the adjudication of subject matter appeals, are
that on the request of the appellants, the financial institution extended finance
by way of allowing opening of letter of credit [at sight] bearing L/C
No.800371/0813 dated 13.09.1997. Letter of Credit (hereinafter referred to as
„Credit‟) was subjected to the terms of Uniform Practice for Documentary
R.F.A No. 1583/2015.
2
Credits (1993 Revision), International Chamber of Commerce, Publication
No.500 [UCP 500]. Financial institution brought action on 19.09.1999 under
jurisdiction conferred by the Banking Companies (Recovery of Loans,
Advances, Credits and Finances) Act, 1997, latter repealed through the
Financial Institutions (Recovery of Finances) Ordinance 2001.
It is the case of the financial institution that the documents, inclusive of
proforma invoice, bill of lading and letter of credit, were duly presented and
accordingly honored by the financial institution by making payment to the
confirming / negotiating Bank of the beneficiary, after failure of the appellants
to make payments in terms of their obligations, despite persistent demands.
Financial institution claimed that forced Payment against Documents (PAD),
after lapse of stipulated time, stood converted into Finance against Imported
Merchandize [FIM]. On the converse, appellants brought action for claiming
financial damages on the premise that payment made by the financial
institution was contrary to the terms of Credit, which prohibited option of
transshipment. Appellants alleged that despite knowledge and intimation that
carrier birthed at the port of Singapore, where goods were de-stuffed and
shifted to another container and then transported to port of destination through
another carrier financial institution acted contrary to the obligations. Both suits
were consolidated, and evidence was recorded. Upon conclusion of the trial the
suit for recovery was decreed and suit for damages dismissed.
3.
Learned counsel for the appellants pleaded that payments made by
financial institution were contrary to the terms of Credit, hence no enforceable
obligation could be placed on the appellants to repay the wrongly disbursed
R.F.A No. 1583/2015.
3
amounts. Adds that transshipment was specifically prohibited, whereby goods
in question were required to be shipped directly from the port of shipment to
the port of discharge. And such material condition was conspicuously breached.
Further submits that factum of violation of condition of Credit was discussed
with the officials of the Bank, which despite awareness proceeded to make
payment. Submits that interception with the goods during transshipment and
change of carrier caused damage to the goods, which resulted in appellants‟
failure to honour third party commitments and damages ensued. Submits that
documentary evidence produced proved factum of breach of terms of the
Credit. Learned counsel cited following decisions “Master Muhammad Bashir Vs.
Moinuddin” (1990 CLC 703), “Muhammad Arshad Khan Vs. Chairman, M.D.A and 6
others” (1997 MLD 3066), “Bashir Ahmad Vs. Abdul Wahid” (PLD 1995 Lahore 98),
“Habib Bank Limited Vs. Judge Banking Court and others” (2015 CLD 1875),
“Crescent Leasing Corporation Limited through Constituted Attorney Vs. Messrs
Sarhad Goods Transport Company and 3 others” (2013 CLD 854), “Rehmatullah
Khan and another Vs. Ghulam Farid and others” (2009 SCMR 371), “Administration
Municipal Corporation, Multan through T.M.O and 2 others Vs. Haider Zaman
Qureshi” (2012 MLD 948), “Shah Nawaz and another Vs. Nawab Khan” (PLD 1976
S.C 767), “MCB Bank Limited Vs. Sunshine Cloth Limited” (C.O.S No. 152/2010),
“United Bank Limited Vs. Messrs Ilyas Enterprises through Proprietor Mr. Ilyas Malik
and 2 others” (2004 CLD 1338).
4.
Learned counsel for the financial institution submits that jurisprudence
regarding the scope and extent of liability under the Credit facility is well
settled, evolving the principle that “bank(s) deal in the documents and not
concerned with the goods underlying Credit”. And albeit any damage caused,
if any actually occasioned as alleged, would neither discharge the bank from
R.F.A No. 1583/2015.
4
fulfilling its contractual obligations under the Credit and nor shall it absolve
appellants from fulfilling their obligation to repay the amounts paid to the
beneficiary of the Credit. Adds that documents, including bill of lading and
letter of credit, were accepted by the appellants and no discrepancy was
pointed or raised before the liability to pay triggered. Submits that sufficient
evidence was led to prove default of obligation under the terms of irrevocable
letter of credit. Financial institution seeks modification of the amount subject
of decree. Following decisions are cited to support contentions, reported as
“Messrs Sazco (Pvt) Ltd Vs. Askari Commercial Bank Limited” (2021 SCMR 558),
“S.A. Hameed and others Vs. Allied Bank of Pakistan Limited and others” (2004 CLD
1620) and “Habib Bank Limited Vs. Tauqeer Ahmed Siddiqui and another” (2009 CLD
312).
5.
Heard. Record perused.
6.
During course of hearing, we asked learned counsel for financial
institution to inform about the date when payment was made to the beneficiary
under the terms of letter of Credit, and date, when allegedly facility of PAD
[payment against documents], was created. Learned counsel could not provide
specific dates for the payment and creation of PAD, who elaborated that PAD
facility was converted in FIM facility, factum whereof was recorded on
16.02.1998 in the Statement of Account [Exh.P-13] and overdue amount of Rs.
8,594,691/- was debited for adjustment of PAD.
7.
Notwithstanding, non-availability of critical dates and requisite details,
we proceed to deal with the elephant in the room; that whether the financial
institution was under any legal obligation to make payment to the beneficiary
under the Credit arrangement, when one of the core conditions therein was
R.F.A No. 1583/2015.
5
allegedly violated during the course of shipment – violation being clause
prohibiting transshipment. There is no cavil that Banks may decline request for
payment to the beneficiary under the Credit, upon receiving the documents, on
the premise that terms of Credit, regarding the prohibition qua transshipment,
were violated provided such recusal is legally and contractually justified,
drawing support from the conditions encapsulated in the bill of lading. On the
contrary, Banks cannot justify denial of payment obligation, simplicitor on the
ground of alleged violation of provision of transshipment in Credit, provided
incidence of violation comes within one of the exceptions provided under
Article 23 of UCP 500 – relevant and applicable to the Credit under reference.
Whether the terms of bill of lading were examined and considered by the
Banking Court for the purposes of deciding the option with the financial
institution, either to make payment or opt recusal, as the case may be in terms
of the conditions in bill of lading. Both learned counsel extensively argued
regarding the scope and effect of condition of prohibition of transshipment in
the Credit, but none had either referred to any specific corroborating clause in
the bill of lading nor highlighted the exclusion or inapplicability of the
exceptions provided under Article 23, ibid. – that obligates the Bank to make
payment under Credit despite prohibition qua transshipment. Notably, no such
condition is found appearing at the front page of bill of lading, sued and relied
upon, or on the reverse page of bill of lading [incidentally terms of the bill of
lading on the reverse page were not provided with the record and we strongly
believe that said terms were not discussed before the Banking Court, since
evidently, Banking Court had not recorded any finding with reference to any
R.F.A No. 1583/2015.
6
such condition, reiterating prohibition qua transshipment in the bill of lading
vis-à-vis corresponding condition of the Credit].
Needless to mention that for the purposes of determining the
enforceability of obligation of the financial institution, notwithstanding
induction of condition of prohibition of transshipment in the Credit, analysis of
the terms of bill of lading and evaluation of exceptions in Article 23 of the
UCP 500, [inter alia the conditions discussed in clause (d) thereof], must be
undertaken and necessarily be adjudicated upon, without which determination
neither the conclusiveness of the obligation of the financial institution would
be ascertained nor corresponding obligation of the applicant of the Credit is
determinable.
Article 23 of UCP 500 is reproduced for ease of reference,
“Article 23. Marine/Ocean Bill of Lading
a.If a Credit calls for a bill of lading covering a port-to-port
shipment, banks will, unless otherwise stipulated in the
Credit, accept a document, however named, which:
i) appears on its face to indicate the name of the carrier and
to have been signed or otherwise authenticated by:
- the carrier or a named agent for or on behalf of the carrier,
or
- the master or a named agent for or on behalf of the master.
Any signature or authentication of the carrier or master
must be identified as carrier or master, as the case may be.
An agent signing or authenticating for the carrier or master
must also indicate the name and the capacity of the party,
i.e. carrier or master, on whose behalf that agent is acting,
and
ii) indicates that the goods have been loaded on board, or
shipped on a named vessel. Loading on board or shipment
on a named vessel may be indicated by pre-printed wording
on the bill of lading that the goods have been loaded on
board a named vessel or shipped on a named vessel, in
which case the date of issuance of the bill of lading will be
deemed to be the date of loading on board and the date of
shipment. In all other cases loading on board a named
vessel must be evidenced by a notation on the bill of lading
R.F.A No. 1583/2015.
7
which gives the date on which the goods have been loaded
on board, in which case the date of the on board notation
will be deemed to be the date of shipment. If the bill of
lading contains the indication "intended vessel," or similar
qualification in relation to the vessel, loading on board a
named vessel must be evidenced by an on board notation on
the bill of lading which, in addition to the date on which the
goods have been loaded on board, also includes the name of
the vessel on which the goods have been loaded, even if they
have been loaded on the vessel named as the "intended
vessel". If the bill of lading indicates a place of receipt or
taking in charge different from the port of loading, the on
board notation must also include the port of loading
stipulated in the Credit and the name of the vessel on which
the goods have been loaded, even if they have been loaded
on the vessel named in the bill of lading. This provision also
applies whenever loading on board the vessel is indicated
by pre-printed wording on the bill of lading, and
iii) indicates the port of loading and the port of discharge
stipulated in the credit, notwithstanding that it:
(a) indicates a place of taking in charge different from the port
of loading, and/or a place of final destination different from
the port of discharge, and/or
(b) contains the indication "intended" or similar qualification
in relation to the port of loading and/or port of discharge,
as long as the document also states the ports of loading
and/or discharge stipulated in the Credit, and
iv) consists of a sole original bill of lading, or if issued in
more than one original, the full set as so issued, and
v)appears to contain all of the terms and conditions of
carriage, or some of such terms and conditions by reference
to a source or document other than the bill of lading(short
form/blank back bill of lading), banks will not examine the
contents of such terms and conditions, and
vi) contains no indication that it is subject to a charter party
and/or no indication that the carrying vessel is propelled by
sail only, and
vii) in all other respects meets the stipulations of the Credit.
b.For the purpose of this Article, transhipment means
unloading and reloading from one vessel to another vessel
during the course of ocean carriage from the port of
loading to the port of discharge stipulated in the Credit.
c. Unless transhipment is prohibited by the terms of the Credit,
banks will accept a bill of lading which indicates that the
goods will be transhipped, provided that the entire ocean
carriage is covered by one and the same bill of lading.
d.Even if the Credit prohibits transhipment, banks will accept
a bill of lading which:
R.F.A No. 1583/2015.
8
i) indicates that transhipment will take place as long as the
relevant cargo is shipped in Container (s) , Trailer(s)
and/or "LASH" barge (s) as evidenced by the bill of lading,
provided that the entire ocean carriage is covered by one
and the same bill of lading, and/or
ii) incorporates clauses stating that the carrier reserves the
right to tranship.”
[Emphasis supplied]
We observed that Banking Court failed to undertake such crucial inquiry into
material facts and conspicuously ignored determination of critical questions,
touching the exceptions appearing in Article 23 of UCP 500, for instance,
firstly, whether bill of lading had provided „continuous cover to the goods –
[covering voyage from Sydney Australia to Karachi, Pakistan] from the port of
shipment to port of discharge – and secondly whether bill of lading contained
any condition regarding specific disclaimer of liability on the part of the ship
owner carrier in event of transshipment – both questions had material affect
qua the obligations of the parties, the appellants and financial institution, and
assist in determining the context of prohibition of transshipment in the Credit.
8.
We examined various clauses of APPLICATION AND AGREEMENT
FOR IRREVOCABLE DOCUMENTARY CREDIT FREELY NEGOTIABLE
IN BENEFICIARY‟S COUNTRY, which are found relevant for the purposes
of determining the controversy under reference – in particular clause 17
thereof – “Irrespective of the port to which shipment are affected we shall
purchase the documents o lodgment under clause 1 above” - but evidently not
considered and appreciated by the Banking Court. It is evident that Banking
Court adjudged claims erroneously without indicating or considering the terms
and conditions of bill of lading in the context of the scope and effect of Article
R.F.A No. 1583/2015.
9
23 of UCP 500. In wake of these lapses judgment under reference is found not
sustainable in law.
9.
During hearing of the appeals, we inquired from learned counsel for the
financial institution that whether bill of exchange – referred in the evidence in
chief of PW-1 – is produced and available on record, who stated that no such
bill of exchange is available. Non-availability of bill of exchange or failure to
produce have had its own consequences qua the claims. We observed that one
of the conditions of letter of credit reads as,
“Your manually signed drafts in duplicate drawn on the
importers at sight for full invoice value of shipment(s) and
marked “Drawn under the Habib Bank Limited Credit
No.800371/0813 must accompany the documents”
10. Likewise, the recitals of APPLICATION AND AGREEMENT FOR
IRREVOCABLE DOCUMENTARY CREDIT FREELY NEGOTIABLE IN
BENEFICIARY‟S COUNTRY referred to negotiation of manually signed
drafts drawn on the applicant of the Credit. Notably bill of exchange was
referred in the affidavit in evidence but not produced on record. What would
be the effect of non-presentation of the drafts with the documents? Does it
indicate compliance or otherwise? Banking Court was required to examine and
decide regarding the effect of non-production or non-availability of the drafts,
whatever may be the case. This another lapse on the part of the Banking Court
further weakens the judgment under challenge.
11. Additionally, there are few other aspects / issues, which were not
considered by the Banking Court, for instance what was the fate of the goods
in question – since the title of the goods, constructive or otherwise, vests in the
holder of bill of lading. As per terms of bill of lading, freight was prepaid and
R.F.A No. 1583/2015.
10
effect thereof needs to be considered while determining factum of obligations
of the parties. Appellants claimed that goods were damaged as a consequence
of alleged transshipment. It appears that goods in question were insured. What
was the role and responsibility of the Insurance company, in the facts and
circumstances encountered. This aspect was not considered by the Banking
Court. Furthermore, financial institution alleged that Credit facility, upon
payment being transformed into PAD facility, and eventually converted into
FIM facility. Whether cause of action was rested on the Credit arrangement or
FIM facility, which triggers another moot question that whether doctrine of
novation is attracted and what was the cause and effect of novation, if it
actually happened. In the context of an incomplete, bald and inconclusive
adjudication the judgment impugned need not to be examined in the context of
ratio settled in the case-law cited.
12. In view of the aforesaid we arrived at a conclusion that judgment and
decree assailed does not constitute a valid, fair and proper adjudication of allinclusive issues / questions, which judgment even dealt with the partial issues
superficially. Questions raised and left unattended had jettisoned the lawful
existence of the judgment, which needs to be declared ineffective and illegal.
13. We, hereby, set-aside the impugned judgment and decree dated
28.07.2015 and allow instant and connected appeal bearing R.F.A
No.1584/2015 and decide to remand the matter, in terms of the directions infra,
to the Banking Court in wake of numerous unattended issues / questions. We
direct / observe that the suits, preferred by the appellants and respondent No.1,
shall be deemed pending and the Banking Court will proceed to frame
R.F.A No. 1583/2015.
11
additional issues, in the context of the observations recorded regarding
unattended issues / questions, and call upon the parties to lead evidence on
additional issues and thereafter decide the suits afresh on merits without being
influenced by any observation recorded supra, since aforesaid observations are
solely for the purpose of deciding appeals and not intended to prejudice any of
the parties or influence determination of the lis on merits.
14. Once judgment in question is set-aside appeal of the financial institution,
RFA No.1443/2015 becomes infructuous. No order as to the costs.
(Muhammad Sajid Mehmood Sethi)
(Asim Hafeez)
Judge
Judge
M. Nadeem/*
Approved for reporting.
Judge