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The above passage was quoted with approval by Lord Denning M.R. in Edward Owen vs. Barclays Bank International [1978 (1) All ER 976 (CA) (at 982)].

It is to be noted that the above passage from the judgment of Browne, LJ speaks of 'forged' or 'fraudulent' documents. If the documents presented by the seller before the Bank were forged or were fraudulent to the knowledge of the seller, surely the Bank would have an independent cause of action against the seller for it was an act of the seller which was responsible for inducing the Bank to release the funds. But here, in the case before us, there is no question of the appellant having presented any presented any forged documents or fraudulent documents.

We may, illustrate this aspect - relating to fraudulent documents' - by referring to the well- known case of UCM (Investments) vs. Royal Bank of Canada [1982 (2) All ER 720 (HL) decided by the House of Lords which has been referred to by this Court in the U.P.Cooperative Federation case (supra). In that case the date 15th December, 1976 was falsely and fraudulently entered on the Bill of Loading as the date on which the goods were shipped even though the goos were actually shipped on 16th December, 1976 and the Bank which came to know about this fact refused to pay. The House of Lords held that the bank could have justifiably refused to pay because the Bill of Loading, which was one of the documents to be presented before the Bank, was there a fraudulent document. Having laid down the principle as stated above, the House of Lords however held on facts that the said false statement on the bill of loading was not made by the seller but was made by the shipping agent and inasmuch as the sellers were not responsible, the Bank could not refuse payment. We are referring to this case only to illustrate what could be a 'fraudulent document' presented before the Bank by the sellers. We shall also refer a little later to another case in Sztejn vs. H.Henry Schroder Banking Corporation [(1941) 31 NYS (2d) 631] which is also a case of presentation of 'fraudulent documents'.

Learned counsel for the respondent Bank contended that the case before us which is concerned with an application under Order 7 Rule 11(a) CPC for rejecting a plaint on the basis of "absence of cause of action from a reading of the plaint" was identical with the Sztejn case and hence what Megarry, J. stated Discount Records Ltd. directly applies.

It is true, we are also dealing with a question whether the plaint disclosed a cause of action. But here the allegation in the plaint is only one relating to absence of movement of goods by the seller. As pointed in the decided cases and in particular in the U.P. Cooperative Federation Case and other cases decided by this Court and also Courts elsewhere, mere absence of movement has never been, in this branch of law, treated as amounting to fraud, Such non- movement, event if the allegation is to be treated as true, could be for goods reasons or for reasons which were not good. But that is not 'fraud'. In Sztejn (See law relating to commercial credit by A.G. Davis (2nd Ed, 1954) (p160-61 for facts of this case) the position was different. There the complaint was that the sellers who were to ship complaint was that the sellers who were to ship 'bristles' deliberately placed 50 cases of material on board a steamship, procured a bill of loading from a steamship company and obtained customary invoices. The documents described the goods as bristles as per the letter of credit. In fact, the Indian sellers had filled the 50 crates with 'Cowhair' and other worthless material and rubbish with intent to simulate genuine merchandise and so 'defraud' the plaintiff, the buyers - who has instructed the defendants to issue the letter of credit. The sellers then drew a draft under the letter of credit to the order of the Chartered bank of India, Australia and China and delivered the draft and the 'fraudulent documents' to the chartered Bank at Cawnpore for collection on account of the sellers. The buyer brought the action which succeeded, to restrain the defendants from paying the draft. The Learned Judge said (p.634):

It will be noticed that Sztejn was a case where 'fraudulent documents' were presented which simulated shipping of goods which were not only not shipped but on the other hand the seller shipped some rubbish deliberately. Therefore the allegations in the complaint filed by the buyers in that case were based upon the above facts - which as per the legal position in this branch of law - i.e. presentation of 'fraudulent document's where goods were deliberately not shipped and an attempt was made to pass off 'rubbish' as the goods ordered for - amounted to 'fraud'.