Grains and Industrial Products Trading Pte Ltd v Bank of India: Letter of Credit & Agency

Grains and Industrial Products Trading Pte Ltd (GRIPT) sued Bank of India and Indian Bank in the Court of Appeal of the Republic of Singapore, regarding a letter of credit issued by Indian Bank with Bank of India as the nominated bank. GRIPT sought payment for goods sold to Varun Industries Limited, but was unable to obtain payment. The court heard claims and counterclaims for indemnity and contribution. The court allowed GRIPT’s claim against Indian Bank, dismissed its claim against Bank of India, and dismissed Indian Bank’s counterclaim against Bank of India. Indian Bank's appeal was dismissed, but GRIPT was awarded pre-judgment interest. GRIPT's appeal against Bank of India was dismissed.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal allowed in part.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal case regarding letter of credit, agency duties, and liability for non-payment. Appeal against Indian Bank allowed.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Indian BankRespondent, AppellantCorporationAppeal DismissedLost
Grains and Industrial Products Trading Pte LtdAppellant, RespondentCorporationAppeal allowed in partPartial
Bank of IndiaRespondentCorporationClaim DismissedDismissed

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeYes
Andrew Phang Boon LeongJustice of the Court of AppealNo
Chan Sek KeongSenior JudgeNo

4. Counsels

Counsel NameOrganization
Tan Teng MuanMallal & Namzie
Loh Li QinMallal & Namzie
Max LimRajah & Tann Singapore LLP
Winston KwekRajah & Tann Singapore LLP
Winston WongRajah & Tann Singapore LLP
Sarjit Singh GillShook Lin & Bok LLP
Probin DassShook Lin & Bok LLP
Ng WenlingShook Lin & Bok LLP

4. Facts

  1. GRIPT was the beneficiary under a letter of credit issued by Indian Bank on 24 February 2012.
  2. The underlying contract was between GRIPT as sellers and Varun Industries Limited as buyers.
  3. The contract involved the sale of yellow soya beans to be shipped from the United States of America to Lanshan, People’s Republic of China.
  4. Payment under the letter of credit was to be made 180 days after its issuance.
  5. GRIPT sought to sell the credit to a bank other than Indian Bank for advance payment.
  6. Bank of India was the nominated bank under the letter of credit.
  7. GRIPT submitted the stipulated documents to Bank of India on 16 March 2012.

5. Formal Citations

  1. Grains and Industrial Products Trading Pte Ltd v Bank of India and another, Civil Appeal Nos 156 and 158 of 2014, [2016] SGCA 32

6. Timeline

DateEvent
Contract entered into between GRIPT and Varun Industries Limited.
Letter of Credit issued by Indian Bank.
Bank of India notified GRIPT of the opening of the Letter of Credit.
Sum payable under the Letter of Credit was amended.
Sum payable under the Letter of Credit was amended.
GRIPT submitted documents to Bank of India.
Letter of Credit expired.
Chew submitted account opening forms and documents to Prabhu.
Bank of India transmitted documents to Indian Bank.
Indian Bank sent Bank of India an Advise of Refusal.
Indian Bank informed Bank of India that it was holding the documents at Bank of India’s own risk and responsibility.
GRIPT wrote to Indian Bank demanding that it accept the documents and honour the credit.
GRIPT wrote to Bank of India stating that Bank of India was deemed to have accepted the draft and documents.
Bank of India wrote to GRIPT and Standard Chartered Bank, stating that the documents were sent to Bank of India “on collection”.
GRIPT’s solicitors wrote to Bank of India demanding payment.
GRIPT’s solicitors wrote to Indian Bank demanding payment.
Payment under the Letter of Credit would fall due.
GRIPT filed proceedings against both Bank of India and Indian Bank.
First hearing date.
Judgment reserved.

7. Legal Issues

  1. Liability under Letter of Credit
    • Outcome: The court held Indian Bank liable to honour the Letter of Credit.
    • Category: Substantive
  2. Agency Relationship
    • Outcome: The court found that Bank of India acted as an agent of Indian Bank.
    • Category: Substantive
  3. Pre-Judgment Interest
    • Outcome: The court awarded pre-judgment interest to GRIPT against Indian Bank.
    • Category: Procedural

8. Remedies Sought

  1. Monetary Damages
  2. Interest
  3. Costs

9. Cause of Actions

  • Breach of Contract
  • Failure to Honour Letter of Credit

10. Practice Areas

  • Commercial Litigation
  • Banking Law

11. Industries

  • Banking
  • Commodities Trading

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Chartered Electronics Industries Pte Ltd v Development Bank of SingaporeHigh CourtYes[1992] 2 SLR(R) 20SingaporeCited for the vital role of documentary credit in commercial transactions.
Grains and Industrial Products Trading Pte Ltd v Bank of India and anotherHigh CourtYes[2015] 1 SLR 1213SingaporeCited as the decision under appeal.
Garnac Grain Co Inc v HMF Faure and Fairclough LtdHouse of LordsYes[1968] AC 1130EnglandCited for the principle that consent of both the principal and agent is generally regarded as a prerequisite to agency.
Targe Towing Ltd v Marine Blast LtdCourt of AppealYes[2004] 1 Lloyd’s Rep 721EnglandCited for the principle that consent need not be expressed in words and can be inferred from conduct.
Forsikringsaktieselskapet Vesta v Butcher and othersCourt of AppealYes[1986] 2 All ER 488EnglandCited for the principle that the agent is to perform its obligations with care and skill.
Michael Doyle & Associates Ltd v Bank of MontrealOntario Court of AppealYes[1984] 11 DLR. (4th) 496CanadaCited for the principle that where a nominated bank is authorised to accept documents on the issuing bank’s behalf, it would owe the issuing bank a duty to examine the documents with due skill, care and diligence before accepting them.
Fortis Bank SA/NV and another v Indian Overseas BankHigh CourtYes[2010] 2 All ER (Comm) 28EnglandCited for the principle that a purposive approach to construction is appropriate in relation to UCP 600.
Fortis Bank SA/NV and another v Indian Overseas BankCourt of AppealYes[2011] 2 All ER (Comm) 288EnglandCited for the principle that a court must recognise the international nature of the UCP and approach its construction in that spirit.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appealCourt of AppealYes[2013] 4 SLR 193SingaporeCited for the touchstone of necessity for the implication of a term under Singapore law.
Lee Chee Wei v Tan Hor Peow Victor and others and another appealHigh CourtYes[2007] 3 SLR(R) 537SingaporeCited for the principle that a plaintiff need not plead a prayer for general damages subject to the qualification that the pleadings gave fair notice to the opposing party of the case that had to be met.
Chew Ai Hua Sandra v Woo Kah Wai and another (Chesney Real Estate Pte Ltd, third party)High CourtYes[2013] 3 SLR 1088SingaporeCited for the principle that an assessment of damages may nonetheless be ordered in such circumstances where a breach is found but where no evidence of loss has as yet been led and there has been no application to bifurcate the trial in respect of issues of liability and quantification.
Irvine v Commissioner of Police of the MetropolisCourt of AppealYes[2005] EWCA 129EnglandCited for the object in making an order of this sort is to avoid injustice befalling a plaintiff who is faced with two or more defendants and reasonably does not know whom to pursue for the wrong done to him.
Mulready v JH & W Bell LtdCourt of AppealYes[1953] 2 All ER 215EnglandCited to illustrate the importance of the causes of action being connected in deciding whether to grant a Sanderson/Bullock order.
Moon v Garrett and othersCourt of AppealYes[2007] 1 Costs LR 41EnglandCited for the principle that there are no hard and fast rules as to when it is appropriate to make a Bullock or Sanderson order.
Denis Matthew Harte v Tan Hun Hoe and anotherHigh CourtYes[2001] SGHC 19SingaporeCited for the factors that the court may take into consideration in deciding whether to grant a Sanderson/Bullock order.
Bullock v London General Omnibus CoKing's Bench DivisionYes[1907] 1 KB 264EnglandCited for the definition of a Bullock order.
Sanderson v Blyth Theatre CoKing's Bench DivisionYes[1903] 2 KB 533EnglandCited for the definition of a Sanderson order.
Hong v A&R Brown LtdKing's Bench DivisionYes[1948] 1 KB 515EnglandCited for the principle that even where a claimant reasonably brings proceedings against two separate defendants and succeeds against one and fails against the other, there is no rule of law compelling the court to make a Bullock or Sanderson order.
Scott v DavisHigh CourtYes(2000) 204 CLR 333AustraliaCited for the principle that agency connotes an agent being granted power or authority to affect the principal’s legal relations as against third parties.
St George Bank Ltd v Heinz Salzberger and Norma SalzbergerCourt of AppealYes[2001] NSWCA 67New South WalesCited for the principle that a nominated bank authorised by the issuing bank to transact with the beneficiary does so on behalf of the issuing bank and is the agent of the issuing bank to the extent of the authority granted.
Swiss Bank Corporation v Jai Hind Oil Mills CoUnknownYes(1994) 1 BCR 371UnknownCited for the principle that a nominated bank authorised by the issuing bank to transact with the beneficiary does so on behalf of the issuing bank and is the agent of the issuing bank to the extent of the authority granted.
Kronman (Samuel) & Co., Inc.Appellate Division of the Supreme Court of New YorkYes218 App Div 624, 218 N.Y.S. 616 (1926)New YorkCited for the principle that a nominated bank authorised by the issuing bank to transact with the beneficiary does so on behalf of the issuing bank and is the agent of the issuing bank to the extent of the authority granted.
Amarnath Sanganaria v Sonali BankHigh CourtYes(2003) AIR (CAL) 255IndiaCited for the principle that when an issuing bank authorises a nominated bank to accept a draft and when the nominated bank, acting in furtherance of such authority, accepts a presentation of documents made by the beneficiary, its acceptance binds the issuing bank, precluding it from taking a different stand from that taken by the nominated bank.
Southern Ocean Shipbuilding Co Pte Ltd v Deutsche Bank AG and anotherHigh CourtYes[1993] 3 SLR(R) 86SingaporeCited for the principle that when an issuing bank authorises a nominated bank to accept a draft and when the nominated bank, acting in furtherance of such authority, accepts a presentation of documents made by the beneficiary, its acceptance binds the issuing bank, precluding it from taking a different stand from that taken by the nominated bank.
TKM (Singapore) Pte Ltd v Export Credit Insurance Corp of Singapore LtdHigh CourtYes[1992] 2 SLR(R) 858SingaporeCited for the principle that historically, the common law provided no remedy in damages for the late payment of a debt or damages.
Ahong Construction (S) Pte Ltd v United Boulevard Pte Ltd (No 3)High CourtYes[1994] 1 SLR(R) 669SingaporeCited for the principle that historically, the common law provided no remedy in damages for the late payment of a debt or damages.
Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue CommissionersQueen's Bench DivisionYes[2006] QB 37EnglandCited for the principle that pre-judgment interest connotes the compensation awarded to a successful claimant for the time value of money the use of which was lost between the date on which the claimant’s cause of action arose and the date of the judgment.
Harbutt’s Plasticine v Wayne Tank and Pump CoCourt of AppealYes[1970] 1 QB 447EnglandCited for the principle that the basis for the award lies in the fact that the unsuccessful defendant had wrongfully kept the successful claimant out of monies to which he has been shown to be entitled, during which time, the defendant instead had the use of it.
Lee Soon Beng v Wee Tiam SingHigh CourtYes[1985-1986] SLR(R) 799SingaporeCited for the principle that the basis for the award lies in the fact that the unsuccessful defendant had wrongfully kept the successful claimant out of monies to which he has been shown to be entitled, during which time, the defendant instead had the use of it.
Robertson Quay Investment Pte Ltd v Steen Consultants Pte LtdCourt of AppealYes[2008] 2 SLR(R) 623SingaporeCited for the principle that as a general rule, damages should commence from the date of accrual of loss.
Jefford and another v GeeCourt of AppealYes[1970] 2 QB 130EnglandCited for the principle that among the most commonly cited justifications for refusing an interest award or for diminishing the award of interest in some way is where the claimant has been guilty of inordinate delay in bringing the action.
Hick v Raymond & ReidHouse of LordsYes[1893] AC 22EnglandCited for the principle that where an agent has an obligation to perform a certain act for a principal, and no time is stipulated for performance, the law implies an obligation to perform it within a reasonable time.
Scott v ScottProbate, Divorce and Admiralty DivisionYes[1921] P 107EnglandCited for the principle that where an agent has an obligation to perform a certain act for a principal, and no time is stipulated for performance, the law implies an obligation to perform it within a reasonable time.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Civil Law Act (Cap 43, 1999 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Letter of Credit
  • Negotiation
  • Discounting
  • Nominated Bank
  • Issuing Bank
  • Beneficiary
  • Presentation
  • UCP 600
  • Complying Presentation

15.2 Keywords

  • Letter of Credit
  • Agency
  • Negotiable Instruments
  • Singapore
  • Banking
  • International Trade

17. Areas of Law

Area NameRelevance Score
Contract Law75
Bills of Exchange Law70
Agency Law65
Trade Finance60
Banking and Finance50
Civil Procedure40
Damages30
Commercial Law30

16. Subjects

  • Banking
  • Finance
  • International Trade
  • Agency Law