JUDGMENT 1. The appellant bank before this Court was the defendant before the trial court against whom both the courts below have decreed the suit filed by the plaintiff/respondent herein for a sum of Rs.1,26,650.65/-with interest at the rate of 6% along with costs on the ground that the irrevocable letter of credit was opened in his favour by the Bank of Baroda, London only after negotiating the documents called for in the credit with the defendant State Bank of India and the defendant bank also accepted the documents and thereupon credited the value of bill of exchange to their current account with a sum of Rs.80,664.40 on 27.11.1980. This was also on yet another basis that once the negotiation was completed the matter comes to an end so far as the plaintiff is concerned. 2. Brief facts leading to the filing of the present Second Appeal are given as under: (i) The plaintiff/respondent is an export firm engaged in the export of Handloom Textiles and other General Merchandise for several years. Whileso, the plaintiff entered into an agreement for supply of certain quantity of Real Madras Hand Kerchiefs to M/s Optimistic International Company in Catonou Republic of Benin through the confirming House-M/s Hari Om Impex Ltd., London. On the basis of the above agreement, the confirming house, namely, Hari Om Impex Limited, London opened an irrevocable letter of credit No.61922 dated 16.10.1980 "without recourse" in favour of the plaintiff through the Bank of Baroda, London. The above irrevocable letter of credit dated 16.10.1980 mentioned that the drafts are to be accompanied with commercial invoice, certificate of origin, full set signed clean on-board Oceal Bills of Lading and order of Bank of Baroda, etc., evidencing current shipment of merchandise and packing list and it further stipulated that the Bills of Lading must be dated not later than 25.11.1980 but not prior to the date of this Credit and the Bill of Exchange must be dated and negotiated not later than 02.12.1980 and it also specifically prohibited transhipment. When the letter of credit advised by the opening bank, namely, Bank of Baroda, London also contained certain additional conditions stating that the negotiating bank-defendant/appellant herein should forward drafts and all documents negotiated directly to them with the certificate from the negotiating bank that the terms of the credit have been complied with, because on receipt of the documents they shall reimburse the negotiating bank for the draft amount in terms of Letter of Credit. Only after the receipt of the above letter of credit, the plaintiff/respondent started processing the goods as per the agreement. In the meanwhile, the plaintiff also received a cable dated 21.11.1980 from the Opening Bank-Bank of Baroda, London through the Bank of Baroda, Madras carrying amendment to the original letter of credit dated 16.10.1980 stating that the clause regarding Bills of Lading to be substituted by goods to be despatched by Air Flight and Air Way Bill evidencing despatch day and flight number to be made out, again making one more clause, that the negotiations restricted to Bank of Baroda is deleted. In view of that the plaintiff/respondent prepared Invoice Bill No.9041 dated 24.11.1980 in the name of Hari Om Impex Ltd., complying with all the other necessary formalities as per the letter of credit dated 16.10.1980, and the amended cable dated 21.11.1980 and finally handed over the goods to let Air Transportation (P) Ltd., through Leuimir Air Express for the purpose of transporting the consignment view Air Way Bill No.057-9884 5003 dated 25.11.1980. (ii) Since the plaintiff had several transactions with the defendant bank and it also got negotiated documents through them prior to the suit transaction, the defendant bank also sanctioned Export Packing Credit to the limit of 1.50 lakhs and Foreign Documents Bill Credit under letters of Credit to the limit of Rs.3 lakhs for the purpose of export of Real Madras Hand-Kerchiefs, Sandalwood and other handicrafts items. It was pleaded that these facts would show that the plaintiff and the defendant are in close business association for a long time. However, after accepting the documents from the plaintiff, the defendant bank fully satisfied with the documents, sent advise notice dated 01.12.1980 to the plaintiff advising that the plaintiff's account has been credited with the Bill amount of Rs.80,864.40 for Account No.FSBH.5/2231 Rs.80,904.40 etc. However, after accepting the documents from the plaintiff, the defendant bank fully satisfied with the documents, sent advise notice dated 01.12.1980 to the plaintiff advising that the plaintiff's account has been credited with the Bill amount of Rs.80,864.40 for Account No.FSBH.5/2231 Rs.80,904.40 etc. This again shows, he pleaded that the documents were accepted by the defendant Bank as "clean" and only after due satisfaction, their account was credited with the Bill amount and that with this, the transaction came to an end as far as the plaintiff was concerned. (iii) It was also the case of the plaintiff/respondent that no discrepancies whatsoever were noted or pointed out by the defendant bank at the time of negotiation of the documents and further when the defendant bank had accepted all the documents without any reserve and without any recourse to the drawer, the transaction amounted to purchase of the bill and after completion of the negotiations, when the bill amount was credited to the plaintiff account, the plaintiff became ceased of the matter. After all these things, the plaintiff received a communication dated 2.1.1981 referring to a cable dated 29.12.1980 said to have been received from the Bank of Baroda, London regarding the suit transaction informing the plaintiff that the documents are not acceptable to openers because of certain discrepancies, namely, transhipment and late arrival of documents and further stating that if the documents are not acceptable, the goods will be returned to the supplier and that in the meanwhile, the documents will remain at the risk of the negotiating bank. Immediately, thereafter, the plaintiff sent a reply to the above communication. Subsequently, the plaintiff also received a letter dated 23.12.1980 from Hari Om Impex Ltd., addressed to the Bank of Baroda, London stating that they did not accept the documents after examination because of certain discrepancies. One another letter dated 22.12.1980 was also received by the plaintiff from Hari Om Impex Ltd., informing the plaintiff that their customer had sent a telex dated 19.12.1980 to them that the goods sent under letter of credit by Air arrival in Cotonou on 18.12.1980, could not be cleared since the documents had not been arrived. One another letter dated 22.12.1980 was also received by the plaintiff from Hari Om Impex Ltd., informing the plaintiff that their customer had sent a telex dated 19.12.1980 to them that the goods sent under letter of credit by Air arrival in Cotonou on 18.12.1980, could not be cleared since the documents had not been arrived. Immediately, the plaintiff also informed by its letter dated 5.1.1981 to M/s Hari Om Impex Ltd., that as per the letter of credit dated 16.10.1980, amended by the cable date 16.11.1980, goods were already handed over to the Air France, Madras on 25.11.1980. Therefore, the plaintiff ceased of all responsibilities regarding the goods. Further, when the plaintiff was given to understand that the documents were rejected by the opening bank, the defendant sent a cable dated 19.2.1981 to Bank of Baroda, London the opener of letter of credit requesting the opening bank to honour their letter of credit opened by them. The defendant also by their letter dated 25.2.1981 addressed to the plaintiff stating that in spite of their best efforts the bill has been returned unpaid by the foreign correspondence, hence requested for certain particulars to enable them to proceed further in the matter, in particular, regarding disposal of the consignment and repatriation of funds into India. However, the plaintiff by its letter dated 03.03.1981 requested the defendant to resubmit the documents to the drawee's bank with a request to honour the commitment. In the meanwhile, all of a sudden, the plaintiff was served with two debit Advice Notes dated 3.3.1981 by the defendant, one debiting the plaintiff's account with the Bill amount for Rs.79,880.30 and another debiting the plaintiff's account with the overdraft interest at Rs.3,008.34 presumably treating the bill amount already credited to the plaintiff's account as an over draft as a consequence of refusal of the document by the issuing bank. When no previous notice by the defendant bank regarding the above debit advice was given, the plaintiff issued a legal notice on 5.9.1983 calling upon them to credit the plaintiff's current account with the amount debited by them towards the bill transaction and further compensate the plaintiff for all the loss suffered by them. The defendant sent a reply denying their liability by letter dated 1.10.1983. The defendant sent a reply denying their liability by letter dated 1.10.1983. Only in the above notice, the defendant for the first time stated that the negotiation of the bill by them was not in the letter of credit but was pursuant to the credit facility offered to the plaintiff subject to the terms and conditions of the agreement executed by them. Under this background it was also the case of the plaintiff that once the documents tendered by the plaintiff were accepted by the intermediary bank without recourse that amounted to implied release of the responsibility of the plaintiff from the transaction. (iv) Finally, it was averred that the defendant by freezing the plaintiff's account has caused great hardship and made him to suffer great loss. Such an action of the defendant is in breach of uniform customs and practices for documentary credit. On this basis, the plaintiff filed a suit for recovery of a sum of Rs.1,26,650.65 with interest at the rate of 18% per annum. 3. The defendant/appellant State Bank of India filed a detailed counter affidavit taking a plea that the defendant bank never accepted the documents without any reserve or without recourse to the drawee. It was further stated that since the negotiations were over and the bill amount was credited to the plaintiff's account that does not mean that the plaintiff's responsibility ceases to be over. The reason being that the defendant bank will always have the right of recourse to the plaintiff for the simple reason that the assistance rendered by the plaintiff to the Bank of Baroda, will not defeat the right of recourse inasmuch as when there was an intimation of dishonour to the plaintiff, the plaintiff requested the defendant to resubmit the documents to Bank of Baroda, London issuing bank. This would clearly assure the fact that the matter never came to an end as far as the plaintiff was concerned. This would clearly assure the fact that the matter never came to an end as far as the plaintiff was concerned. On this basis, the defendant having asserted the right of recourse against the plaintiff upon the dishonour of the bill again restated his case that in case of non-payment by the issuing bank, namely, Bank of Baroda London, the negotiating bank has recourse to goods for the simple reason, when the recourse is available the right of recourse to debit the value of the goods is inherent and as such it was further stated that there was no need to give notice before debiting plaintiff when the plaintiff's funds were already available in their account inasmuch as the set-off was a special right of the defendant given under section 171 of the Contract Act. 4. In view of the abovesaid documents, the trial court decreed the suit as prayed for disagreeing with the defendant that the indemnity bond sought to be relied upon by the defendant was incomplete and above all, the original was not produced and the reason for non-production of the original was also not explained. Secondly, the trial court was of the view that the documents produced by the plaintiff including the letter of credit were perfectly in order. Further, the credit facility was extended to the plaintiff based upon the letter of credit hence it concluded that the negotiations having been made without obtaining an indemnity cannot be specifically brought into the transaction. 5. Aggrieved by the same when the defendant/appellant preferred the first appeal, the learned first appellate court has held that the appellant bank has no legs to stand to debit the account as they have got right to initiate appropriate steps against the erring foreign bank. 6. Under this background, the Second Appeal was preferred by the defendant bank. This Court while admitting the Second Appeal has framed the following substantial questions of law: (i) Whether the bank which negotiated the bill under reserve against the Letter of Credit opened in the name of the exporter in India will be liable for any defect in the bill/document submitted by the respondent exporter? (ii) Whether the banker acts as agent while accepting the negotiated bill for collection of proceeds from the foreign buyer/LC opening bank. (ii) Whether the banker acts as agent while accepting the negotiated bill for collection of proceeds from the foreign buyer/LC opening bank. (iii) Whether the liability and responsibility of the exporter ceases once the materials are exported and bill negotiated against LC received in his name from the foreign buyer? (iv) Whether the technical words like no recourse which apply to the parties to the contract, namely, foreign buyer and Indian exporter will bind the banker which negotiates the bill tendered by the letter against Letter of Credit." 7. (i) Mr.K.Sankaran, learned counsel appearing for the defendant/appellant emphatically contended that the defendant bank as negotiating bank has got right of recourse for the assistance rendered by taking up the matter with the Bank of Baroda, London. It was further pleaded that the concurrent error committed by both the courts below holding that the defendant negotiating bank under the letter of credit has got no right of recourse will defeat in law the legal right of the plaintiff when section 35 of the Negotiable Instruments Act 1881 also gives such right to the defendant to compensate the holder of the bill in the event of any loss. (ii) By again bringing to the notice of this court Article 9 of UCP500 which deals with the right of the issuing and confirming banks, the learned counsel contended that the negotiating bank, namely, the defendant/appellant bank herein has recourse against the plaintiff, if for any reason the payment is not received. This right is based on the law relating to the negotiable instruments. On the other hand, if recourse to the negotiating bank is to be excluded, then there should be an express contract to that effect. In the present case when the recourse to the goods is available, then the right of recourse to debit the value of the goods is also inherent. On this basis, the learned counsel appearing for the appellant submitted that the defendant/appellant bank which negotiated the bill under reserve against the Letter of Credit opened in the name of the exporter in India will be liable for any defect in the bill/document submitted by the respondent exporter, but vital aspect was repeatedly overlooked by both Courts below. (iii) Adding further he contended that when the defendant/appellant bank accepted the documents in terms of indemnity, the appellant bank will have recourse to the drawer of the bill. (iii) Adding further he contended that when the defendant/appellant bank accepted the documents in terms of indemnity, the appellant bank will have recourse to the drawer of the bill. 8.(i) At the outset it may be mentioned that this argument does not carry any merits, for, the negotiation took place between the plaintiff and the defendant was never made subject to the letter of indemnity. The letter of indemnity was not an integral part of the credit facility sanctioned by the defendant bank. Moreover, the defendant has not successfully produced a copy of the letter of indemnity. Therefore, both the courts below have held that the transaction took place between the plaintiff and the defendant was not with reference to the letter of indemnity. The bill as well as the forwarding note made a specific reference to the letter of credit alone and when the letter of indemnity has not been found place at the time of accepting the letter of credit, the defendant having accepted the letter of credit and after crediting the amount in the plaintiff's account, cannot issue two debit advice notes. Therefore, the findings of both the courts below cannot be found fault with. Accordingly, the first substantial question of law is answered against the appellant bank. (ii) While considering another contention whether the banker acts as agent while accepting the negotiated bill for collection of proceeds, this Court finds that this argument that the banker does not act as agent, carries no merit for the admitted reason that when the plaintiff submitted all the documents regarding the transaction for the purpose of negotiation on 27.11.1980, the defendant has accepted the documents from the plaintiff and sent the advice note dated 01.12.1980 to the plaintiff advising that the plaintiff's account has been credited with the bill amount of Rs.80864.40 for Account No.FSBH.5/2231 Rs.80,904.40 etc., which goes to show that the document was accepted by the defendant as clean. Because only after being satisfied by the defendant, the plaintiff's account was credited with the bill amount. This also further shows that there was no discrepancy at the time of negotiation of the documents and the defendant bank accepted all the documents without any reserve and without recourse to the drawer, hence, the said transaction would amount to purchase of the bill. This also further shows that there was no discrepancy at the time of negotiation of the documents and the defendant bank accepted all the documents without any reserve and without recourse to the drawer, hence, the said transaction would amount to purchase of the bill. It is also relevant to refer to Articles 7 and 8 of the Law of Banker's Commercial Credits as they justify payment in certain circumstances even if it should turn out that the documents tendered are not those called for by the credit. Article 7 requires that "Banks must examine all documents with reasonable care to ascertain that they appear on their face to be in accordance with the terms and conditions of the credit. Documents which appear on their face to be inconsistent with one another will be considered as not appearing on their face to be in accordance with the terms and conditions of the credit. Article 8 provides that (b) Payment, acceptance or negotiation against documents which appear on their face to be in accordance with the terms and conditions of a credit by a bank authorised to do so, binds the party giving the authorisation to take up the documents and reimburse the bank which has effected the payment, acceptance or negotiation. By reading the above Articles 7 and 8 of Uniform Customs two things are made clear. When the plaintiff presented all the documents regarding his suit transaction, the defendant bank after scrutinising all the documents accepted the same, fully satisfying with the documents furnished by the plaintiff and subsequently the plaintiff's account has been credited this amount to the purchase of the bill. Further, it is not the case of the plaintiff or the defendant that the documents were found false or seller has himself deliberately committed any discrepancy in presenting any bogus document. Therefore, no mistake whatsoever can be attributed against the plaintiff. (iii) While dealing with the third substantial question of law whether the liability and responsibility of the exporter ceases once the materials are exported and bill negotiated against LC received in his name from the foreign buyer, it must be answered in the affirmative for two reasons. The defendant/appellant herein has miserably failed to establish two things. (iii) While dealing with the third substantial question of law whether the liability and responsibility of the exporter ceases once the materials are exported and bill negotiated against LC received in his name from the foreign buyer, it must be answered in the affirmative for two reasons. The defendant/appellant herein has miserably failed to establish two things. Firstly, it was not proved by the defendant/appellant either before the courts below or before this Court that the negotiation was subject to the letter of indemnity and that the letter of indemnity was an integral part of the credit facility sanctioned by the letter dated 05.12.1979. Moreover, the letter of indemnity filed by the defendant/appellant is only a xerox copy and the same does not even bear the year of execution. This could be seen that the said document cannot be construed to be a part of the suit transaction. Therefore, the third substantial question of law is also answered against the appellant. (iv) While dealing with the last substantial question of law-whether the technical words like "no recourse" which apply to the parties to the contract, namely, foreign buyer and Indian exporter will bind the banker which negotiates the bill tendered by the latter against Letter of Credit, it must be answered against the appellant for the reason that being an exporter, the plaintiff supplied a consignment of Handkerchiefs to a foreign buyer who also had opened an irrevocable Letter of Credit No.61922 dated 16.10.1980 'without recourse' in favour of the plaintiff through the Bank of Baroda, London/opening Bank which had also stipulated that the negotiating Bank should forward all the documents directly to them. The plaintiff/respondent herein after receipt of the letter of credit processed the goods, however, in the meanwhile, received a cable on 21.11.1980 from the opening Bank amending the original letter of credit substituting despatch by Air-flight and Air-way instead of shipment by deleting the clause restricting negotiation only through the Bank of Baroda. The plaintiff complying with all the formalities, handed over the goods to Jet-Air vide Air-way Bill on 25.11.1980. In view of compliance of all the formalities, the defendant/appellant also accepted the document and after being satisfied, sent an advice note dated 01.12.1980 to the plaintiff crediting their amount with the bill amount of Rs.80,864.40ps. The plaintiff complying with all the formalities, handed over the goods to Jet-Air vide Air-way Bill on 25.11.1980. In view of compliance of all the formalities, the defendant/appellant also accepted the document and after being satisfied, sent an advice note dated 01.12.1980 to the plaintiff crediting their amount with the bill amount of Rs.80,864.40ps. Only thereafter, the plaintiff received a communication dated 02.01.1981 from the defendant referring to a cable dated 31.12.1980 from the opening bank informing that the documents are not acceptable because of certain discrepancies, namely, transhipment and later arrival of documents. Although the defendant-appellant complained that the documents were not acceptable because of transhipment and later arrival, nowhere before the trial court as well as the appellate court, the defendant had established what the discrepancy was in respect of transhipment and how much was the delay in arrival of the document, therefore, when the opening bank from London has simply refused to accept the document that was already confirmed by the defendant-bank, the remedy lies to the defendant-bank to proceed only against the opening bank. While so, the defendant-appellant, for finding no discrepancy against the plaintiff, cannot have a right to recourse by issuing two debit advice notice dated 03.03.1981, one for the bill amount and the other for over-draft interest treating the bill amount already credited as over-draft, that too, without any prior notice to the plaintiff. 9. For all these reasons, Second Appeal No.207 of 2005 fails and the same is dismissed, accordingly, the concurrent judgments and decrees of both the Courts below are confirmed. No costs.