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14. The trial judge by the impugned judgment held that the plaintiffs had a cause of action to maintain the suit against Swiss Bank. It was further held that the plaintiff-firm was duly registered. The trial judge also held that the documents were not presented to Swiss Bank on October 21, 1985, and which was a cut-off date and, consequently, the action of the Swiss Bank in accepting documents on a subsequent date was in violation of the terms of the letter of credit. It was further held that even assuming that the documents were presented on October 21, 1985, as Swiss Bank failed to scrutinise the documents and accept the draft before closing hours of the bank on October 21, 1985, subsequent acceptance was invalid. The learned judge further held that the documents tendered to Swiss Bank suffer from discrepancies and Swiss Bank acted negligently in not carrying out proper scrutiny while accepting the documents. On the issue of fraud, it was held that original defendant No. 4 had committed fraud by antedating the bill of lading, but this fraud was to the knowledge of the plaintiffs and, therefore, the plaintiffs cannot seek any relief oh that count. It was further held that Swiss Bank was aware of the fraud and had colluded with original defendant No. 4 in accepting the documents and issuing the draft and making payment. The trial judge held that though the evidence clearly indicated that the plaintiffs had waived discrepancies in the documents and their conduct indicates that they had accepted the documents by claiming to be the owners of the consignment, still the finding on waiver should be recorded against the defendants in view of the collusion between original defendant No. 4 and Swiss Bank and also on the ground of negligence of Canara Bank. On the strength of these findings, the trial judge decreed the plaintiffs' suit in terms of prayers (a)(i), (ii) and (iii) and (b)(i) and (ii) after deleting certain portions. The counter-claim filed by Canara Bank was dismissed. Canara Bank and Swiss Bank have filed separate appeals against the decree passed by the trial court and both appeals are now disposed of by this judgment.

Yes. (Para. 28/29/30)

16. The findings on these points would determine whether the plaintiffs are entitled to a decree. It is not in dispute that in case the plaintiffs are not entitled to a decree, then the counter-claim made by Canara Bank is required to be decreed. We will examine each of the points with reference to the evidence on record and the submissions urged at the hearing after setting out well-settled principles in respect of scope of an irrevocable document.

17. Letters of credit are the most frequent method of payment for goods in the export trade and have been described as the life blood of international commerce. Where payment under a letter of credit is arranged, four stages can normally be distinguished; (a) the exporter and the overseas buyer agree in the contract of sale that payment shall be made under a letter of credit ; (b) the overseas buyer instructs the bank at its place of business (known as the issuing bank) to open a letter of credit on the terms specified by the buyer in its instructions to the issuing bank; (c) the issuing bank arranges with the bank at the locality of the exporter to negotiate, accept or pay the exporters' draft upon delivery of the transport documents by the seller ; and (d) the advising bank informs the exporter that it will negotiate, accept or pay the draft upon delivery of transport documents. The advising bank may do so either without its own engagement or it may confirm the credit opened by the issuing bank. The two fundamental principles relating to letters of credit are :

26. The next point for consideration is whether the documents were presented by Credit Bank to Swiss Bank on October 21, 1985. It is not in dispute that if the documents were not presented on October 21, 1985, then Swiss Bank could not have entertained the documents, accepted the same and accepted the draft for payment in favour of original defendant No. 4. The presentation of documents on October 21, 1985 was mandatory in view of condition (c) of the letter of credit, which provided that the documents must be presented for negotiation within 21 days from the date of shipment. The last date of shipment under the letter of credit was September 30, 1985, and, therefore, it was incumbent to present the documents latest by October 20, 1985. The letter of credit was issued in accordance with Uniform Customs and Practice for Documentary Credit and Article 48(a), inter alia, provides that if the expiry date of the credit or the last date of the period of time after the date of issuance of the transport documents for presentation of documents stipulated by the credit falls on a day on which the bank, to which presentation has to be made, is closed, then the stipulated expiry date shall be extended to the first following business day on which such bank is open. It is not in dispute that October 20, 1985, was a Sunday, and, therefore, it was permissible to present the documents on October 21, 1985. Initially the plaintiffs did not dispute that the documents were presented on October 21, 1985. Indeed at the time of consideration of grant of interim relief the complaint of the plaintiffs was that the documents were presented on October 21, 1985, but were not accepted till October 23, 1985, and, therefore, the condition of the letter of credit was not satisfied. In the plaint the complaint was that the documents were presented/negotiated later than 21 days from the date of bill of lading and, therefore, Swiss Bank should have refused to accept the documents and the draft. Subsequently, the plaint was amended just prior to the commencement of the trial and then it was claimed that the documents were not presented until late in the afternoon on October 21, 1985, as alleged by defendant No. 2. Taking advantage of the expression "as alleged" in the amended plaint, at the trial, it was contended that the documents were not presented on October 21, 1985, and, consequently, Swiss Bank could not have touched the documents after October 21, 1985. Swiss Bank as well as Canara Bank on the other hand contended that the documents were presented to Swiss Bank on October 21, 1985, at 15.40 hours and were duly received. The defendants led the evidence of Franz Oehen, Assistant, Vice President of Swiss Bank, to establish the fact of presentation of documents on October 21, 1985. The trial judge declined to accept the oral testimony of Oehen on the ground that the uncorroborated word of Oehen could not be accepted. The trial judge also relied upon certain circumstances to warrant a conclusion that the claim of Swiss Bank need not be accepted.

40. The trial judge observed that the letter of credit was issued subject to the Uniform Customs and Practice, but specifically provided that "except as otherwise expressly stated". The trial judge felt that condition (f) was inconsistent with the Uniform Customs and Practice, and, therefore, the intention of the parties was to depart from the provisions of the Uniform Customs and Practice and the expression "negotiation" in Clause (f) was intended to mean that not only documents should be presented before the expiry date, but the documents should be scrutinised and accepted by the confirming bank before that date. To support the conclusion of the trial judge Shri Kapadia submitted that the oral evidence not only of the officers of the Canara Bank and the Swiss Bank but also of Mr. Modeira and Mr. Wheble, the experts examined to establish the banking practice and the understanding of different expressions, indicates that the expression "negotiation" can mean process of scrutiny and acceptance of documents and draft. Learned counsel also urged that even the Swiss Bank understood at the stage of consideration of grant of interim relief that the expression "negotiation" means acceptance after scrutiny, and, therefore, claimed that the presentation as well as acceptance was on October 21, 1985. Reference was also made to the grounds at paragraphs (c), (d) and (h) of the appeal memo filed by the Swiss Bank against grant of interim relief by the learned single judge, to urge that the Swiss Bank at an earlier stage was claiming that acceptance was also on October 21, 1985, because of the understanding that the expression "negotiation" includes acceptance. Reference was also made to the brochure issued by the Swiss Bank and which was marked as exhibit "AAW". The brochure sets out a "glossary of technical terms" and the expression "negotiation" has been defined as "action" by which the advising bank buys the documents. See pages 38/39. Turning to page 38/39, the brochure sets out what the bank does upon receipt of the documents, and sets out that it is open for the bank to make a provisional payment on the usual reserve and on condition that if the documents are not accepted the bank can demand repayment of the credit. Shri Kapadia also referred to exhibit "M-2", the telex dated November 18, 1985. The telex was sent by the Swiss Bank to the Canara Bank to reject the objection about the discrepancies of the documents with the letter of credit and the words used are "your objection not acceptable considering the long time lapsed since negotiation October 23, 1985". It was contended that the Swiss Bank also felt that negotiation means scrutiny and acceptance of documents and in that context the expression "negotiation" is referred to in the telex. From this material it was contended that the Swiss Bank all along understood that the expression "negotiation" means not only presentation but scrutiny and acceptance of documents. It is not possible to accede to the submission of learned counsel for the reasons indicated hereinabove. It would not be appropriate to refer to the expression used in the telex when the parties were not at issue as to what exactly is the connotation of the expression "negotiation". As mentioned hereinabove the expression "negotiation" is used in various senses and connotes several meanings. It is, therefore, safer to interpret the expression with reference to the object which was to be achieved by issuance of the letter of credit. The construction which would make the document workable and would advance the object the parties intended should always be preferred instead of the strict construction which would defeat not only the object but would raise several complications in reference to commercial transactions in which international banks are involved. It is not appropriate to interpret the word with reference to the facts of a particular case because the wording of conditions (c) and (f) is used by a large number of banks in every letter of credit and the interpretation canvassed by the plaintiffs and accepted by the trial judge would defeat the object of issuing the letter of credit and would put the beneficiary in jeopardy. We specifically enquired from Shri Kapadia as to how the interpretation suggested by the defendants would cause any prejudice to the plaintiffs, and learned counsel had no effective answer save and except claiming that whether prejudice or not the strict interpretation suggested by the plaintiffs must be accepted. In the present case, the beneficiary presented the documents on October 21, 1985, and the beneficiary had carried out his duties strictly in terms of the letter of credit. The issuing bank--the Canara Bank--had no objection whatsoever to the acceptance of the documents on October 23, 1985, and that acceptance does not suffer from any infirmity. Even the plaintiffs, at whose behest the letter of credit was issued, could not have complained in case the goods had reached the Bombay Port. The acceptance of the interpretation of the plaintiffs would destroy the entire transaction and for no fault of the seller and the buyer the transaction would fall through. This was not contemplated by any of the parties, and, therefore, it is impossible to accept the claim that the Swiss Bank ought to have rejected the documents as the process of scrutiny and acceptance was not completed on October 21, 1985. In our judgment, the trial judge was in error in holding that condition (f) of the letter of credit was a departure from the general rule provided under the Uniform Customs and Practice. Condition (f) was in accordance with Article 46(a) of the Uniform Customs and Practice. The finding, therefore, is that the Swiss Bank was not required to scrutinise and accept the documents on October 21, 1985, itself and the scrutiny and acceptance thereof on October 23, 1985, was perfectly in accordance with the terms of the letter of credit.