Bank/Shipping company/Drawees collude. Is this fraud?

[JawedHasan]

A set of Export documents were sent from India by Bank of Maharashtra (BOM) to Commonwealth Bank of Australia (CBA) for collection under URC 522, The Export documents contained Original B/L's, Invoices 4 sets, Packing List 4 sets and Sola of Exchange 1st & 2nd The instructions to the collecting Bank CBA on the forwarding letter of BOM clearly states that the collecting Bank should:

1. Acknowledge Receipt of the documents and advise their Reference number.
2. Deliver documents against acceptance.
3. Advise by Telex/Swift Non-payment stating reasons.
4. Collect all their charges from Drawees.
5. In case of Non payment/Dishonour Please protest.
Tenor : 30 days from the Date of B/L.

It has been found that the collecting Bank (CBA) delivered the documents to the Drawee without any acceptance of the same on either 1st or 2nd Sola of Exchange.

The collecting Bank (CBA) on being charged by us of neglect/fraud/mishandling of the above documents have tried to hide under the pretext that: (We quote from the correspondence recieved by us from Commonwealth Bank of Australia.)

"Unfortunately it appears that the instructions to the Bank from Bank of Maharashtra were contained in an envelope addressed to the Client. i.e. within an envelope addressed to the Branch of the Bank. The branch did not open the envelope addressed to its client, it merely passed it on (as though it were a post office) and did not, as a result, know that the contents of the envelope contained the instuctions to act as a collecting bank or the bills of lading. The branch does not handle trade transactions - they are handled by a specialist central group within the Bank where all instructions should be addressed by remitting banks and it is known to them (the group has been in operation for a number of years).
Under these circumstances the bank could not "elect" to reject the instructions, because it did not know it had recieved any - it had handed them over to its client."

The Bank of Maharashtra has aggressively refuted the claim of an Envelope addressed to the Drawees in the Envelope addressed to the collecting Bank (CBA), also pointing out here that for any documents meant to be delivered to the client directly, they would use the services of the Post Offices or Couriers and not the services of the Bank.

Under the above circumstances it is assumed that the collecting bank (CBA) and the Drawees are hand in glove with each other.

On enquiries with the Shipping company with regards to this consignment, it has been found that the Original B/L against which delivery has been taken by the Drawees has not been Endorsed/released in favour of the Drawees by the Commonwealth Bank of Australia who are the Consignee on the B/L. The Drawess are the Notify Party. So we assume that the shipping company is also hand in glove with the Drawee.

Please advise.

[larryBacon]

The Discussion Forum is set up as a basis for general discussions on general issues. If you wish to discuss specific issues as in this Topic, it is more appropriate that you contact me on a professional level by e-mail where I can help you on a consultancy basis.

Laurence A. J. Bacon

[T.O.Lee]

I fully agree with Mr. Bacon. DC PRO should be used as a forum to comment on academic or educational queries. It is not a right forum for resolving real life trade disputes.

As an owner of an LC consultant firm we do not comment on real life cases because:

1 It is dangerous to comment on the issues solely based on the unilateral presentation from an enquirer. In our experience, nearly all our clients told us their stories on the sunny side only. We of course understand that this is only human nature. In other words, we are misled by our clients who are also not aware that they have done this to us. Under such circumstances, our comments are of course not appropriate. If the enquirer relies upon or acts according to our advice or comments, we may kill the enquirer unintentionally. And maybe we also have legal liabilities for misleading the enquirer.

2 A second reason is that we do have high operating costs, such as travelling to Paris and other cities for meetings and other LC activities, buying expensive reference publications, and the time to study them. Bankers have steady income and other benefits from the banks. We have to find our own bread and butter or rice and Chinese noodles.

I am leaving tonight for Hong Kong to conduct workshops to bankers, traders and carriers. See you all again on the 10th June when I come back to Toronto.

We are from www.tolee.com

[edited 2/2/02 7:09:44 PM]