Legal Question in Banking Law in India

Hi,

Siddique here from India, my question is:

In an international trade between Chinese seller, Indian buyer and Indian dealer, the dealer asked buyer to make prepayment (actual amount plus dealer's commission) to seller's bank in USD through Foreign Demand draft. The amount was credited to seller's account and the sales transaction was completed successfully. Now, the seller is not giving dealer's commission saying that buyer's bank can reclaim the money (from his account) paid through Foreign Demand draft any time. Is it even possible?

Can Foreign Demand drafts be cancelled after crediting?

Your expert opinion would be highly appreciated.

Thanks,

Sididque


Asked on 6/22/16, 8:59 am

2 Answers from Attorneys

1) Whether the Indian dealer is a correspondent Bank or Institution in China is not clear.

2) It is possible the buyers bank may claim unless they are confirmed the dealers commission

is paid which must be evident from the documents of spot transaction.

3) The Foreign DD after credit cannot ordinarily be cancelled unless through court order but

with the consent of the beneficiary only.

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Answered on 6/22/16, 9:18 am
Fca Prashant Chavan Expert Edge LLP

24.06.2016

Dear Siddique,

No, it is not possible to credit the amount back to the buyer without the explicit consent and approval of the seller.

Regards,

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Answered on 6/22/16, 4:37 pm


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