| Citation(s) |
|---|
| 2021 SLG 227 2021 SLD 227 2021 CLD 157 |
Supreme Court of Pakistan
Civil Appeals Nos. 870 and 871 of 2012, decided on 19th October, 2020, Date of hearing: 19th October, 2020. (On appeal against the judgment Dated 17.01.2011 of the Peshawar High Court, Peshawar in F.A.B. Nos. 50 and 51 of 2009)
UMAR ATA BANDIAL, JUSTICE SAJJAD ALI SHAH, JUSTICE YAHYA AFRIDI, JUSTICE
Sahzib Masud, Advocate Supreme Court for Appellant (in both cases). Iqbal Javed, Advocate Supreme Court for
Respondent (in both cases).
Civil Appeals Nos. 870 and 871 of 2012, decided on 19th October, 2020, Date of hearing: 19th October, 2020. (On appeal against the judgment Dated 17.01.2011 of the Peshawar High Court, Peshawar in F.A.B. Nos. 50 and 51 of 2009)
UMAR ATA BANDIAL, JUSTICE SAJJAD ALI SHAH, JUSTICE YAHYA AFRIDI, JUSTICE
Sahzib Masud, Advocate Supreme Court for Appellant (in both cases). Iqbal Javed, Advocate Supreme Court for
Respondent (in both cases).
M/S SAZCO (PVT.) LTD.
VS
ASKARI COMMERCIAL BANK LIMITED
Law:
Section:
(a) Uniform Customs and Practice for Documentary Credits 500 (1993 Revision)*--- ----Art. 2---Letter of credit---Meaning and scope. Modern documentary credits, in particular Letters of credit, were essentially a mode of prompt payment to a contracting supplier of goods in another country. The payment under the said facility was assured to the party selling the goods, even before the consignment reached the agreed destination under the underlying contract. The opening of a letter of credit constituted a contract, inter alia, between the Bank and the seller of the goods and imposed upon the Bank an absolute obligation to pay the seller. Hamzeh Malas and Sons v. British Imex Industries Ltd. 1958 (2) Q.B. 127; Abdul Kadir Jangda v. My Bank Ltd. 2007 CLD 349; Bank Solvency and Guaranty Letters of Credit, Stanford Law Review V. 25 (1972 at p. 719); R D Harbottle Limited v. National Westminster Bank (1977) 2 All ER 862 and Halsburys Laws of England Vol. 34, Paragraph 319 at page 185 ref. (b) Uniform Customs and Practice for Documentary Credits 500 (1993 Revision)--- ----Arts. 2, 3, 4, 13 14(b)---Letter of credit---Salient features---Independence-autonomy principle and strict performance principle---Meaning and scope. Documentary credit was separate and independent from the underlying sales contract or other transaction between the commercially contracting parties. This autonomy of the credit had been expressly addressed in various provisions of Uniform Customs and Practice for Documentary Credits 500 (1993 Revision) [UCP 500], and in particular in Articles 3 and 4 of the UCP 500. Hamzeh Malas v. British Imex Industries Limited (1958) 2QB 127; Ward Petroleum Corp. v. Federal Deposit Ins. Corp. 903 F.2d 1297 and OGDCL v. Excel Techno Solutions FZE, U.A.E. 2017 CLD 1274 ref. Reading of Articles 3 and 4 of UCP 500 highlighted the intent of its drafters; to insulate the compliance of the terms of credit by the paying Bank from any provision of the underlying contract between the applicant/buyer and beneficiary/seller. The paying Bank was only to deal with the documents alone. More importantly, the paying Bank was to ensure that as long as the documents tendered by…
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