X (BD) Ltd. -Versus- Z Co. Ltd.

& Others

IN THE COURT OF ASSISTANT JUDGE, 3RD COURT, DHAKA

TITLE SUIT NO. 245 OF 2006

X (BD) Ltd.

PLAINTIFF-PETITIONER

-Versus-

Z Co. Ltd. & Others

DEFENDANTS – OPPOSITE PARTIES

WRITTEN OBJECTION ON BEHALF OF DEFENDANTS/OPPOSITE PARTIES NOS. 2 & 3 AGAINST THE

01. That the plaintiffs-petitioner have filed this application seeking relief of temporary injunction
restraining the defendant No. 2 from making payment against the confirmed Letter of Credit No. 3035-
05-02-0036 dated 03.12.2006 (the “Letter of Credit”) to the Proforma defendant No. 4. It has been
decided by the Higher Courts of Bangladesh in many cases that there can be no injunction on a bank
prohibiting it to make payment under an Irrevocable Letter of Credit and as such this application is liable
to be rejected.

02. That it is submitted that the Letter of Credit incorporated the terms and conditions of the Uniform
Customs and Practice for Documentary Credits (1993 Revision, ICC Publication No. 500) (hereafter
“UCPDC”). According to the provisions contained in UCPDC, the Letter of Credit transaction creates a
contract between the Opening or Issuing Bank (in this instance the defendant No. 2) and the Advising or
Negotiating Bank which is completely autonomous and separate from the underlying contract of supply
of goods. The Issuing Bank of a Letter of Credit is completely unconcerned with the performance of the
underlying contract. As soon as the documents tendered by the Beneficiary of the Letter of Credit are in
conformity with the mandate of the Letter of Credit, the Issuing Bank is under an absolute obligation to
reimburse the Bank that has negotiated and/or made payment against such documents. Therefore, no
injunction can lie in law to restrain the Issuing Bank from making payment in such circumstances where
the relevant allegation lies solely with regard to short delivery/inferior quality of the goods. There is no
law which states that because of short delivery/inferior quality of the goods, payment under Letter of
Credit can be cancelled. As such, the application of the plaintiffs is not maintainable in law.

03. That Article 3(a) of the UCPDC 500 reads as follows:

“Credits, by their nature, are separate transactions from the sales or other contract(s) on which they may
be based and banks are in no way concerned with or bound by such contract(s), even if any reference
whatsoever to such contract(s) is included in the credit”.

Article 4 of UCPDC 500 provides as follows:

“In Credit operations all parties concerned deal with documents, and not in goods, services and or other
performances to which the documents may relate.”
Therefore, at all stages of the relevant transaction, the defendant/opposite parties Nos. 2 and 3
(hereinafter referred to as “these defendants/opposite parties) were concerned only with documents
and can in no way be held responsible for the goods for which the L/C was opened. There was no
contract between these defendants/opposite parties and the plaintiff-petitioner stipulating that if goods
delivered under L/C would appears to short or inferior quality, these defendants/opposite parties would
not make payment of the L/C amount. These defendants/opposite parties were unable to stop payment
under the L/C despite the subsistence of the injunction order as the defendant No. 4 has debited the L/C
amount from the Nostro Account of these defendants/opposite parties maintained with them.
Therefore, the plaintiff is under the obligation to reimburse these defendants/opposite parties for the
L/C amount which has already been paid to the defendant No. 4. Instead of paying the L/C amount, the
plaintiff has filed this suit and application to harass these defendants/opposite parties and to make
illegal gain from it.

04. That there is series of decision of the High Court Division as well as Appellate Division of the Supreme
Court of Bangladesh that no injunction shall be granted in letter of credit transaction restraining the
letter of credit opening Bank from making payment under the letter of credit, namely:

(i) Unimarine SA Panama Vs. Bangladesh 31 DLR (AD) 112

(ii) Uttara Bank Vs. Macneil and Kilburn and others 33 DLR (AD) 298

(iii) Sarhind Garments Vs. Glory Truth 49 DLR 260

(iv) Zyta Garments Ltd. Vs. Union Bank Limited and another 55 DLR (AD) (2003) (May issue)

(v) M/S. Tanni Knit Wear Limited Vs. Deputy General Manager, Sonali Bank and others 2 MLR (1997) (AD)
396

05. That the suit filed by the plaintiff-petitioner is not maintainable in its present form and nature and
hence the application for injunction is liable to be rejected in limine.

06. That there is no cause of action to file the suit and as such the suit as well as the application for
injunction is liable to be rejected.

07. That the suit has been filed with mala fide intention to make illegal gain from these
defendants/opposite parties. Since the suit has been filed with malafide motive, the suit and application
for injunction both are liable to be rejected.

08. That no injunction can be granted prohibiting a bank to disburse any sum under a Irrevocable Letter
of Credit and thereby compel the bank to violate its obligation under the said credit.

09. That the statements made in the paragraphs of the application for temporary injunction that are not
hereinafter admitted shall be deemed to have been denied by these defendants/opposite parties.

10. That the statements made in paragraphs 1 to 7 of the application are mostly matters of record. The
burden of proving the statements lies strictly upon the petitioner and therefore, these
defendants/opposite parties refrains from making any comments.

11. That the statements made in paragraph 9 of the application are matters related to quality and
quantity of goods. As per Article 4 of UCPDC 500 in Credit operations all parties concerned deal with
documents, and not in goods, services and or other performances to which the documents may relate.
Therefore, at all stages of the relevant transaction, these defendants/opposite parties were concerned
only with documents and can in no way be held responsible for the goods for which the L/C was opened.
There was no contract between these defendants/opposite parties and the plaintiff-petitioner stipulating
that if goods delivered under L/C would appears to short delivery/inferior quality, these
defendants/opposite parties would not make payment of the L/C amount.

12. That the statements made in paragraph No. 10 to 12 of the application are matters not related to
these defendants/opposite parties the proof of which lies strictly on the plaintiffs/petitioner and as such
require no comments.

13. That the statements made in paragraph No. 13 to 16 of the application are incorrect, misleading and
misconstrued. It is submitted that as per terms and conditions of the L/C, these defendants/opposite
parties are bound to make payment the L/C amount upon receipt of the documents. It may be
mentioned in this regard that since “Add Confirmation” was given to the letter of credit by the defendant
No. 4 at the request of the plaintiff, it had a duty to pay to the supplier if the documents were in order. It
is necessary to mention here that as per terms of UCPDC Banks in credit transaction deal with
documents only. They are not concerned with the goods. Since the documents were found in order, the
said defendant made payment to the supplier. After making payment by the defendant No. 4 to the
supplier, the defendant No. 4 got reimbursement of the L/C amount on 08.02.2007 by way of debiting
these defendants/opposite parties’ Nostro Account maintained with Standard Chartered Bank, New
York, U.S.A.

14. That it is submitted that as the issuing bank of a letter of credit governed by the provisions of the
Uniform Customs and Practice for Documentary Credit (UCPDC), these defendants/opposite parties are
only concerned with documents and are not involved in any way with the underlying contract or L/C to
supply the goods and its performance. The defendant No. 4 debited the L/C amount from the Nostro
Account of these defendants/opposite parties and therefore the plaintiffs/petitioners are under the
obligation to reimburse these defendants/opposite parties. So the suit and the petition for temporary
injunction filed by the plaintiff/petitioner is liable to be rejected.

In the circumstances, the order of ad interim temporary injunction granted may be vacated and the
application for temporary injunction filed by the plaintiffs/petitioners may be dismissed with costs in
favour of the defendants/opposite parties Nos. 2 & 3.

And for this act of kindness these defendants as in duty bound shall ever pray.

AFFIDAVIT

I, __________________________, son of ___________________, aged about ______________ years, by

1) That I am an officer of the defendants/opposite parties Nos. 2 and 3 and fully acquainted with the
facts and circumstances of the case and competent to swear this Affidavit.

2) That the statements made above are true to my knowledge and belief and the rest are submission
before the Hon’ble Court.
DEPONENT

The deponent is known to me and identified by me.

ADVOCATE