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In the present case, no doubt, the Bank has given credit to the Complainant. But, that credit was given against the packing credit facility given to the Complainant by the Bank. That too, after an undertaking given by the Complainant to the effect that the Complainant would indemnify the bank (SBI) for negotiation of the documents under the LC. As such, the LC was not transferred or endorsed in favour of the SBI.

 

Similarly, In Federal Bank Ltd. Vs. V.M.Jog Engineering Ltd. & Anr. (2001) 1 SCC 663 the Court discussed various aspects and held that transaction between the Collecting Bank, and the Complinant may partake of a duel nature, i.e. either Collecting Bank or Agent for collecting the amount and that of holder in due course. The Court held as under:

 
The highlighted portion makes it clear that the Complainant did not question the right of the Bank to make the debit and only requested the Bank to give it a favour by continuing credit facility.
 
Secondly, it was for the Complainant to file a suit or proceedings against the HSBC if the LC was dishonoured wrongly by the HSBC, because the LC was not transferred in favour of the SBI. In any set of circumstances, the Complainant has not chosen to make the HSBC as party before this Commission nor has he taken any action against the consignee.