The State Consumer Commission in Delhi has ordered Standard Chartered Bank to pay textile firm HB Impex Ltd compensation of around US$10,000 and legal costs of around US$1,100 as compensation for the bank's delay in preparing a letter of credit (L/C) for a cross-border transaction.

The commission found that the delay in preparing the L/C had caused the textile firm to lose money.

Exhibition

The company's complaint began between 28 January and 1 February 1996 when HB Impex took a stand at an exhibition in India where a company from Singapore, C K Tang Ltd, placed a sample order for handicrafts to the value of US$7,302.

HB Impex asked a firm in Andhra Pradesh to make and supply the goods and asked Standard Chartered to open a L/C on 22 March. The bank was pressed to open the L/C quickly but it did not do so until 17 April.

Arguments

Standard Chartered argued that because the dispute involved two commercial entities the bank and the textile firm - it did not fall under the consumer protection act, thus the case should not have been brought to the State Consumer Commission. The bank also argued that HB Impex had not incurred losses because of the L/C delay.

The commission, however, said the firm was a consumer and that the bank had admitted the delay in a letter to HB Impex. CK Tang moreover declined to accept goods from the company since ''time was of the essence in the contract."

HB Impex thus successfully argued that the delays in the shipment resulted in losses for the company.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.