MSTC Ltd. v. Union Bank of India & Ors.

MSTC Ltd.

…Appellant

…Respondent

Case No: Appeal No. 67/2007

Date of Judgement: 05/09/2023

Judges:

Mr Justice Ashok Menon, Chairperson

For Respondent: Mr O.A. Das, Advocate.

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Facts:

Arguments by Union Bank of India (Respondent No. 1):

Arguments by Aditya Mills Ltd. (Respondent No. 2):

Aditya Mills Ltd. contended that they were never consulted before Union Bank paid the amount to SBI. The documents were never presented to Aditya Mills Ltd. till the second week of January 1982, by which time the consignment had deteriorated and attracted demurrage charges of over Rs. 2 lakhs. Hence, it was not worthwhile for Aditya Mills Ltd. to take delivery of the goods. Aditya Mills Ltd. refused to accept the documents, which were furnished beyond the period of the Letter of Credit.

Arguments by SBI (Respondent No. 3):

SBI raised the issue of territorial jurisdiction, contending that the cause of action took place in Calcutta, and hence the DRT in Mumbai had no jurisdiction. SBI argued that the documents were rectified and resubmitted to Union Bank well within the validity period of the Letter of Credit. SBI claimed that the delay in submitting the rectified documents by Union Bank to Aditya Mills Ltd. resulted in the loss, for which SBI was not liable.

Arguments by MSTC Ltd. (Appellant):

Cases Cited:

United Commercial Bank vs. Bank of India, AIR 1981 SC 1426

Govind Rubber Ltd. vs. Louis Dreyfus Commodities Asia Pvt. Ltd., (2015) 13 SCC 477

Sections and Laws Referred:

Section 19(1)(c) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (regarding territorial jurisdiction of Debts Recovery Tribunals)

Uniform Customs and Practice (UCP) for Documentary Credits (specific provisions not mentioned)