SAZCO (PVT.) LTD. vs ASKARI COMMERCIAL BANK LIMITED "Bill of lading" — 2021 CLD 157 SUPREME-COURT

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SAZCO (PVT.) LTD. VS ASKARI COMMERCIAL BANK LIMITED "Bill of lading"---Meaning. Citation Name: 2021 CLD 157 SUPREME-COURTBookmark this Case SAZCO (PVT.) LTD. VS ASKARI COMMERCIAL BANK LIMITED arts. 2, 3, 4, 13 & 14(b)---"Letter of credit"---Bills of Lading---allegation of forgery---Dispute between appellant-company and respondent-Bank over irrevocable Letters of Credit ("L.Cs.") availed by the former from the latter to finance a transaction with an international supplier---Both appellant-company and respondent-Bank filed recovery suits against each other---Banking Court decreed suit of respondent-Bank and dismissed that of the appellant-company---Plea of appellant-company that courts below had not appreciated the fraud committed by the supplier which tendered forged Bills of Lading to the nominated Bank in the foreign country; that the Bills of Lading presented by the supplier were discrepant to the terms of the L.Cs. and thus violated the Uniform Customs and Practice for Documentary Credits 500 (1993 Revision) ("UCP 500"); and thus the respondent-Bank was not entitled to any payment from the appellant-company under the L.Cs. and the amount so received from the appellant-company was to be reimbursed to it---Held, that perusal of the Bills of Lading showed that the goods described therein were in accord with the terms of the L.Cs.---also, there were express markings thereon, stating: "Third-Party Bills of Lading"; the freight of the consignments had been "Prepaid"; and that the goods "shipped"---Bills of Lading provided complete particulars relating to the transportation of the goods: name of the shipper, the assignee (the respondent-Bank) and the applicant (appellant-company), the date on which the goods were shipped, the period of loading and its destination---Thus, the Bills of Lading were "clean", as all the terms of the transportation were stated therein, and it did not refer to the same by reference to another document---Bills of Lading mentioned the shipping and forwarding services company, which was marked as the agent of the carrier---Such fact was also brought to the notice of the issuing Bank (respondent-Bank) by the nominated Bank---Respondent Bank had to set up a prima facie case based on what appeared on the face of the documents tendered to be in accord with the underlying credit before making payment to the seller, which it had before the Banking Court---appellant-company had to establish fraud by the seller relating to the documents so presented, and that too, before the payment was made to the seller, which it failed to do before the Banking Court---Mere bald unsubstantiated allegation would not legally suffice for the paying Bank to deny the payment to the seller under the credit---Essential legal requirements required to assert fraud had not been met by the appellant-company, as in the plaint of the appellant-company, neither had the fraudster been named in the memo, nor had he been impleaded as a party to the suit---appellant-company failed to discharge its onus under the law to prove its claim regarding the tendered Bills of Lading being forged, or that the documents so produced were discrepant to the terms of the L.Cs., and thus violated the provisions of UCP 500---appeals were dismissed, in circumstances. Citation Name: 2021 CLD 157 SUPREME-COURTBookmark this Case SAZCO (PVT.) LTD. VS ASKARI COMMERCIAL BANK LIMITED arts. 2, 3, 4, 13 & 14(b)---Contract act (IX of 1872), S. 182---International sale transaction---"Letter of credit"---Principal-agent relationship between Bank issuing credit (issuing Bank) and nominated Bank---Claim against issuing Bank on grounds of fraud---Jurisdictional maintainability---Contractual relationship existed between the applicant of a credit with the Bank issuing the credit (issuing Bank), and also with the nominated Bank, which was to make the payment under the credit on presentation of the documents---Nominated Bank, which was to make the payment under the credit, acted as an agent of the issuing Bank---Issuing Bank would be bound and responsible for the actions or inactions of its agent carried out under the said agency---Thus, an applicant of credit registered in Pakistan would have a valid cause of action against an issuing Bank in Pakistan on two counts; first as a principal, for the actions or inactions of its agent/nominated-Bank in a foreign country; and secondly, as an issuing Bank, on receipt of (fraudulent) documents transmitted by the nominated Bank---Rationale behind the recognition of these legal relationships, which were established with the opening of documentary credit, was to bring certainty in the performance of obligations and payment of consideration of international sales transactions across the globe. Citation Name: 2021 CLD 157 SUPREME-COURTBookmark this Case SAZCO (PVT.) LTD. VS ASKARI COMMERCIAL BANK LIMITED Proof and scope---Fraud vitiated the most solemn of transactions, but proving fraud required strict proof---Onus to prove fraud remained on the asserter---Moreover, not only was the fraudster to be named and impleaded as a party to the suit, but the particulars of the fraud were also to be pleaded with clarity and certainty. Citation Name: 2021 CLD 157 SUPREME-COURTBookmark this Case SAZCO (PVT.) LTD. VS ASKARI COMMERCIAL BANK LIMITED art. 2---Letter of credit---Meaning and scope. Citation Name: 2021 CLD 157 SUPREME-COURTBookmark this Case SAZCO (PVT.) LTD. VS ASKARI COMMERCIAL BANK LIMITED arts. 2, 3, 4, 13 & 14(b)---"Letter of credit"---Salient features---"Independence-autonomy principle" and "strict performance principle"---Meaning and scope. Citation Name: 2021 CLD 157 SUPREME-COURTBookmark this Case SAZCO (PVT.) LTD. VS ASKARI COMMERCIAL BANK LIMITED arts. 2, 3, 4, 13 & 14(b)---"Letter of credit"---Principles---Scope of 'independence-autonomy principle', 'strict performance principle' and other general principles in relation to documentary credits, stated.

SAZCO (PVT.) LTD. vs ASKARI COMMERCIAL BANK LIMITED "Bill of lading" — 2021 CLD 157 SUPREME-COURT

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