Legal Question in Banking Law in India

accommodation letter of credit.

In an L/c fraud case cyprus based non-prime bank says that it opened LCs after applicant indenmified it with firm undertaking that its role is limited upto the stage of opening LCs only and all consequential risks and reimbursements in an eventuality were theirs and LCs opened by it were accommodation LCs. LCs nowhere states so. The result is a big fraud. Unfortunately LCs were not confirmed/advised by any other bank. Any action possible against opening bank which indulged in breach in trust?? Reimbursement of LC amounts possible from the opening bank?? Is it possible to cover the associates of LC applicant i.e. exporter of goods in third country somehow for forgery of valuable security and if so, legal authority for this???


Asked on 1/18/08, 1:47 am

5 Answers from Attorneys
J. Radhakrishnan independent Practice

Re: accommodation letter of credit.

You have to study the terms of L.C. If it does not state that its role is limited to only opening and is not to honour drafts drawn on it, you can have an action against the opening Bank. But no use in taking action in any country other than the country in which the Bank is situate. It will be a costly proposition to sue the opening Bank in Cyprus. The risk in accepting LCs. without confirmation of an international Bank is there. Only option is to sue the exporter and the opening Bank in Cyprus. No other remedy possible.

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Answered on 1/18/08, 8:15 pm
Pravin Vaidya Independent

Re: accommodation letter of credit.

since the L/c opening Bank is a non-prime Bank only remedy available is a civic action in seller's/Buyer's Country as per terms of sale-contract. However please email me copy of L/c and correspondence to give proper legal advice. Professional fee will be quoted on receipt of papers

Pravin Vaidya -Advocate Vadodara (Gujarat)

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Answered on 1/18/08, 8:36 pm
Aniruddha Pawse Aniruddha.P.Pawse Advocates

Re: accommodation letter of credit.

Your terms of lc will have to be peruse

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Answered on 1/20/08, 1:33 am

Re: accommodation letter of credit.

details of lcs is required to be examined.contact with details.professional charges are applicable.

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Answered on 1/20/08, 11:27 am
Homi Maratha N.N. Maratha & Co.-Advocates

Re: accommodation letter of credit.

Details of LC needs to be examined.

Please contact personally.

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Answered on 1/21/08, 12:15 am


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