NASARALAI ENTERPRISES LTD V. ARAB BANK MG. LTD.

• Pages: 1039-1067

NASARALAI ENTERPRISES LTD V.

ARAB BANK NIG. LTD.



OD

Having read in draft the 'Reasons for Judgment' just delivered by my learned

brother, Coker, J.S.C.,

I

am in complete agreement with those reasons and here-

by adopt them as mine.

It was for the above reasons and those wider reasons of my said brother, Coker,

5



J.S.C., that I allowed this appeal on 19th June, 1986,

substituting a verdict of not

guilty

for the verdict of guilt found by the trial Court and confirmed by the Appeal

Court, and ordering an acquittal and a discharge of the appellant.

UWAIS, J.S.C.:

I agreed with my learned brothers on 19th June, 1986 that this

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

appeal must be summarily allowed, the conviction and sentence quashed and a

verdict of acquittal and discharge be substituted. My reasons for so agreeing were

reserved till today.

I have had the opportunity of reading in draft the reasons for judgment read by

my learned brother, Coker, J.S.C. with which I am in complete agreement. As it

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

was for the same reasons that I allowed the appeal, I adopt his reasons as mine

and I have nothing to add.

KARIBI-WHYTE, J.S.C.:

On the 19th June, 1986, I allowed the appeal of the

appellant against the dismissal of his appeal to the Court of Appeal, Division, Benin

20



City for his conviction for the offence of Murder by the High Court of Ondo State.

I also quashed the conviction and sentence and substituted an order of not guilty,

and discharged and acquitted the Appellant. I stated then that I will give my reasons

for so doing today.

I

have heard a preview of the judgment of my learned brother D.O. Coker,

25



J.S.C. in this appeal, I agree entirely with his reasoning and conclusion. I adopt

the reasons given as mine.

Appeal allowed.

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NASARALAI ENTERPRISES LTD V. ARAB BANK

NIG. LTD.

35

NASARALAI ENTERPRISES LTD.



APPELLANT

V

ARAB BANK NIGERIA LTD.



RESPONDENT

SUIT NO. SC 13

8

/

1

985

SUPREME COURT OF NIGERIA

BELLO,



J.S.C.

ESO,



J.S.C.

UWAIS,



J.S.C.

COKER,



J.S.C.

KARI BI-WHYTE,



J.S.C.

KAWU,



J.S.C.

OPUTA,



J.S.C.

10th July, 1986

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Banking - Bankers' Commercial Credits - Action between Buyer and Issuing Bank

- Proper venue - Whether cognisable in State High Court.

1040



NIGERIAN SUPREME COURT CASES

[1986] 2 N.S.C.C.

Bankers Documentary Credit - Duties of issuing bank - Issuing bank inspecting

documents called and uncalled whether bank entitled to act on documents

uncalled which are inconsistent with a called document.

Equity - Waiver - Buyer authorising payment on detective documents - Whether



right to refuse payment thereby waived - Evidence - Estoppel in pais -

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5

Credits - Presumptions - Document dated a particular day - Whether document

presumed signed.

Jurisdiction - State High Court - Conzinercial Law - Bankers Commercial Credit

- Letter of Credit Transaction.

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ISSUES:

1.

What is the basic characteristic of the law and practice relating to commercial

letters of credit?

2.

Whether an action based on the Commercial Law of Documentary Credits is

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an action in Maritime Law, over which the Lagos High Court has no jurisdiction.

3.

Whether the failure of a bank to adhere strictly to the instructions given by it's

customer, amounts to a breach of duty.

4.

Can the failure of a Bank under a Commercial credit transactions with another



foreign Bank to examine and discover the inconsistencies in documents it called

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for with those documents it never called for amount to negligence under Article

7 of the Uniform Customs and Practise for Documentary Credits 1974 otherwise

referred to as Rules?

5.

Whether the failure of a company to reject faulty documents forwarded by the



bank, amounts to a waiver of their right to complain of the bank's breach of

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duty.

FACTS:

The respondents issued, on the application of the appellants, an irrevocable

letter of credit to the Bank of Tokyo in Thailand. The letter of credit was issued to



facilitate the purchase by the appellants of, 100,000 bags of rice at the price of

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$2.2 million.

The Bank of Tokyo was instructed in the letter of credit to pay the said purchase

price to the World Grain Company Limited the sellers, on receiving from them do-

cuments drawn up in conformity with the letter of credit. The sellers presented to



the Bank of Tokyo a bill of lading and other related documents showing that the

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rice had been loaded within stipulated time.

After the Bank of Tokyo had paid the purchase price to the sellers and informed

the respondents, the Managing Director of the appellant company authorised the

respondents to debit their account to the tune of N778,607.97 being part payment

of the purchase price.

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The ship transporting the rice stopped at Singapore and could go no further

the rice was therefore stored in Singapore. Since the rice was due to reach Lagos

by December 1978 and by March 1979 it had not arrived, the Managing Director

of the appellant Company went to Thailand to investigate. He signed with another



company to transport the rice, the vessel conveying the rice subsequently became

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unseaworthy and was diverted to South Africa where it was off loaded.

The appellants thus sued the respondents, claiming damages for breach of

contract, or alternatively damages for negligence for issuing a letter of credit with-

out enforcing the mandatory provisions of the Merchant Shipping (Amendment)



Decree of 1978, and making payments on a forged bill of lading. They also claimed

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a declaration that the defendant was not entitled to debit their account with any sum

arising out of the transaction. The High Court gave judgment in favour of the plain-

tiffs, and the defendant appealed to the Court of Appeal, who reversed the deci-