Bhojwani and Another v Chung Khiaw Bank Ltd

JurisdictionSingapore
JudgeSinnathuray J
Judgment Date12 September 1990
Neutral Citation[1990] SGCA 12
Date12 September 1990
Subject MatterStrict compliance,Civil Procedure,Letters of credit,Banking,0 14 Rules of the Supreme Court 1970,Summary judgment,Triable issue,Applicable principle,Bills of lading not original,Documentary credits,Insurance policy not in conformance with credit
Docket NumberCivil Appeal No 12 of 1987
Published date19 September 2003
Defendant CounselSarjit Singh Gill (Shook Lin & Bok)
CourtCourt of Appeal (Singapore)
Plaintiff CounselYR Jumabhoy and VKS Narayanan (Swami & Narayanan)

Cur Adv Vult

The respondents are bankers carrying on business in Singapore and elsewhere. The appellants were at all material times carrying on business as partners under the name and style of T Kishen & Co in Singapore and were at all material times customers of the respondents.

On 8 January 1985 the appellants were indebted to the respondents in the sum of $1,040,777.48 in respect of banking facilities extended by the respondents to T Kishen & Co at the request of the appellants.
These facilities comprised trust receipts, import bills and overdraft facilities, and interest would continue to accrue on the amounts owing on each of these facilities at agreed rates. After giving notice, the respondents issued a writ on 17 January 1985 claiming against the appellants the sum of $1,040,777.48 together with interest to be calculated on each facility from 9 January 1985 to the date of payment or judgment, and for costs on a solicitor and client basis.

On 9 July 1985 the respondents obtained summary judgment under O 14 in the sum claimed, together with costs.
The appellants appealed to the judge-in-chambers to set aside the summary judgment, and on 15 January 1987 judgment was given dismissing the appellants` appeal. [See [1990] 2 MLJ 146 .] The appellants thereafter appealed to the Court of Appeal praying that the learned judge`s decision be reversed and that the appellants be granted leave to defend the action. Although the total sum claimed by the respondents was $1,040,777.48 and judgment was entered for this sum, the only issue which appellants raised before the judge-in-chambers was in respect of the payments which had been made under two letters of credit which accounted for $257,630.40 of the total sum, and this was the amount which was involved in the appeal before us.

The appellants proceeded on four grounds of appeal:

(1) that there had been no strict compliance with the special terms of the letters of credit in each case;

(2) that the bills of lading were not originals but were copies and had not been properly signed;

(3) that the insurance policy provided for cover from `warehouse West Germany to warehouse Singapore` instead of `shipper`s warehouse to buyer`s warehouse` as indicated in the documentary credit;

(4) that the required certificate of shipment did not specify `new` motor vehicles, whereas the documentary credit had specified that the shipment would be of new vehicles.



It was the appellants` contention that all these were discrepancies which raised triable issues and, instead of finding that they were ` really trivial in nature and were not sufficient to make the documents non-conforming `, the learned judge should have set aside the summary judgment and given the appellants unconditional leave to defend.
In support of this, appellants` counsel referred to a statement by Lawton LJ in Rafidain Bank v Agom Universal Sugar Trading Co Ltd & Anor [1987] 1 WLR 1606; [1987] 3 All ER 859 that ` however improbable a story was, unless it was so improbable that it was beyond belief, it must be tried `.

There were two letters of credit, and they were in identical terms.
The material part of each letter of credit was in the following words:

We hereby issue in your favour this documentary credit which is available by negotiation of your draft(s) at sight drawn on applicant bearing the issuing bank`s name, number and date of this credit for full invoice value accompanied by the following documents (in duplicate unless otherwise specified) signed commercial invoice to indicate: (a) chassis/engine no, (b) colour and upholstery, (c) optional equipment, and (d) freight and insurance charges. Insurance policy blank endorsed for 120% CIF invoice value covering marine, war risks, and all risks including shippers` warehouse to buyer`s warehouse with claims payable at Singapore full set `clean on board` ocean bills of lading made out to the order of Chung Khiaw Bank Ltd notify applicant and marked freight prepaid evidencing shipment of

3 units Mercedes Benz new motor cars model 280SE @ L15,600-00/unit

1 unit Mercedes Benz new motor car Model 280 SEL @ L16,400-00

Shipment from Hamburg to Singapore

Latest shipment date 10 September 1984

Partial shipments permitted

Transhipment permitted



There were special conditions which were set out in the letter of credit which are material and included the following:

On deck cargo not acceptable. Third party documents not acceptable. Beneficiary`s signed certificate certifying that they have telexed buyer full shipment details including EDA of vessel in Singapore and name and address of agent is required. B/Ls issued by Meridien Ltd acceptable provided accompanied by certificate issued by ships owner certifying the shipment of goods on board the same vessel. Drafts and documents must be presented to United Overseas Bank Ltd, London for negotiation/payment. Negotiating bank to telex us upon negotiation for L25,000 and above. Charges for telex advice of negotiation are for beneficiary`s account.



On the first ground of appeal, that there had been no strict compliance with the special terms of the letter of credit, the appellants referred to one of the special terms:

B/Ls issued by MERIDIEN LTD acceptable provided accompanied by certificate issued by ship owners certifying the shipment of goods on board the same vessel.



A fundamental principle under documentary credits is that the documents must conform
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3 cases
  • Lambias (Importers & Exporters) Co Pte Ltd v Hongkong & Shanghai Banking Corporation
    • Singapore
    • High Court (Singapore)
    • May 8, 1993
    ... ... and the balance was to be remitted to a certain bank account in Hong Kong. Simon Ng objected to this on the ... The plaintiffs` solicitors further issued another notice for the defendants to pay the proceeds of the letter ... The plaintiffs went on to refer to Bhojwani & Anor v Chung Khiaw Bank [1990] 3 MLJ 260 where Yong ... ...
  • Lau Hwee Beng and Another v Ong Teck Ghee
    • Singapore
    • High Court (Singapore)
    • May 30, 2007
    ...Maybank Finance (Singapore) Ltd v Yap Thiam Sen and Anor [1990] SLR 501 at [5], 504; and Bhojwani and Anor v Chung Khiaw Bank Ltd [1990] SLR 128 (whether “triable issues” are raised); Stone Forest Consulting v Wee Poh Holdings [2004] 3 SLR 216 at [18] (whether the defendant has a “fairly ar......
  • Mizuho Corporate Bank Limited v Woori Bank
    • Singapore
    • High Court (Singapore)
    • April 9, 2000
    ...see the grounds of the Court of Appeal as delivered by Yong Pung How J (as His Honour then was) in Bhojwani v Chung Khiaw Bank Ltd [1990] SLR 128. There is a simple reason for this. Business cannot proceed securely on any other line: see Equitable Trust Co of New York v Dawson Partners [192......

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