A bank might be named as consignee in the letter of credit but is, nevertheless, not responsible for collecting the goods and arranging for its safekeeping unless it has expressly agreed to do so beforehand in terms of the standard terms and conditions applicable to LCs-ICC522 and agreed to the role of consignee.

In Madan Kukreja Vs. Banquet Scalbert Dupont S.A. & Anr before the Delhi High Court, the petitioner-exporter was only tangentially connected with the respondent and that proved to be his undoing as far as the ultimate outcome of the case was concerned. For, the respondent had not issued him any letter of credit.

Instead, the respondent had issued the LC to the middleman in the deal, Li and Fung, Hong Kong through its agent Li and Fung India (P) Ltd which in turn had got issued in favour of the petitioner-exporter a LC from HSBC Hong Kong.

Possession without bill

The export was to be made to Pramod SA, France, which somehow got possession of the goods with the respondent bank having no clue as to how it got it.

The Delhi High Court held out that the petitioner-exporter had weakened his case by not impleading the Hong Kong Company and HSBC Bank, with whom alone it enjoyed the contractual rights. It could have proceeded against the French importer and its Respondent-banker only through the Hong Kong company and its banker.

The Court also absolved the respondent of the charge of conversion inasmuch as it had never undertaken to take possession of the goods and ensure its safekeeping. It was only responsible for not handing over the document of title to the goods, the airway bill, in the instant case, to the importer till the goods were paid for. As noted earlier, the wily importer had somehow taken possession of the goods from the airline even without airway bill.

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