Metro Exporters Pvt. Ltd. and Another v. State Bank of India & Ors.
K.S. RADHAKRiSHtAAN, J. !· Leave granted.
A 2. We are, in this case, concerned with the question
whether the State Bank of India, Overseas Branch, Mumbai is
right in debiting the appellant's EEFC A/c EURO
No.10937619705 an amount of €136,027.03, after a long lapse
of time, on the ground that it was wrongly deposited in the
B appellant's account and driving the appellant to recover the
amount by way of civil proceedings.
3. Writ Petition under Article 226 was filed by the Appellant
challenging the action of the Bank which was dismissed by the High
Court on the ground that it is a dispute which arose out of a
C contractual relationship between the parties and hence the
appropriate remedy for the appellant was by way of a civil suit and
not a writ petition under Article 226 of the Constitution of India.
Aggrieved by the same, this appeal has been preferred by way of
special leave.
4. Shri Dushyant Dave, learned senior counsel appearing
for the appellant, submitted that the High Court has committed
a grave error in holding that the remedy available to the
appe:lant is to approach the civil court since the dispute arose
E is of contractual nature. Learned senior counsel submitted that
since the State Bank of India is a nationalized bank and is a
State within the meaning of Article 12 of the Constitution of
India, the writ petition under Article 226 is maintainable and the
bank has no legal right to reverse a legal entry after having
credited the same in the appellant's account. Learned senior
F counsel submitted that, in any view, without obtaining the
consent of the appellant, the entry should not have been
reversed. In support of his contention reliance was placed on
the Judgment of this Court in A.K. Gupta and Sons Ltd. v.
Damodar Valley Corporation AIR 1967 96. Learned senior
G counsel also submitted that the writ petition is perfectly
maintainable and the reliance was placed on the Judgment of
this Court in ABL International: Limited and another v. Export
Credit Guarantee Corporation of India Limited and others
(2004) 3 sec 553 and Shri Vallabfl Glass Works Limited and
H another v. Union of India and others (1984) 3 sec 362.
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 73
INDIA [K.S. RADHAKRISHNAN, J.]
5. Shri J.P. Gama, learned senior counsel appearing for A
the respondent-bank, explained the circumstances which led to
the bank in reversing the entry. Learned senior counsel
submitted that the amount credited in the appellant's account
is not its, but the amount exclusively belonged to the Bank,
which was deposited in the appellant's account by mistake, and B
hence could be recovered debiting its account, which is a
normal banking practice and was done in good faith. Learned
senior counsel submitted that only when the Bank debits an
amount which exclusively belongs to the account holder, then
only the bank needs consent of the account holder. Learned c
senior counsel submitted that the Bank had a lien on the amount
deposited in the appellant's account and it is that which could
be debited from the appellant's account. Learned senior
counsel submitted that, in any view, the High Court is justified
in holding that even if the appellant has any grievance, the same 0 . could be remedied only through a regular civil suit and not by
way of writ petition under Article 226 of the Constitution of India.
FACTS
· 6. The appellant, in the course of its business activities, E
exported steel coils to Mis Abdul Zafar Ghulam at Nacala, in
Mozambique (for short 'the importer') in August 2006 and
raised an invoice No.MV/028/08/2006 on the importer for an
amount of US$ 581,841.65 dated 25.08.2006. Appellant
received part payment in relation. to the above-mentioned F
invoice on 18.10.200.6, 20.10.2006, 08.11.2006 and
17 .11.2006, on the basis of the credit advice raised by the SBI
Overseas Branch, Mumbai from time to time. On 02.11.2006
the appellant was informed of the export .collection payment
advice by the State Bank of India for US$ 199,959.74. G
7. The appellant stated that after two and a half years on
07.03.2009 State Bank of India, Mumabi, sent a letter to the
appellant with reference to the credit entry of US $ 199,959. 7 4
dated 02.11.2006 to appellant ECFC account and advised that
credit was erroneously passed on to the SBl's Nostro account H
74 SUPREME COURT REPORTS [2014) 9 S.C.R.
A by Bank of America and that the SBI had marked a lien on the
appellant's EEFC account (pending rectification). Few
correspondence and meetings took place between the parties
on this aspect. Later, the appellant received a letter on
22.10.2009 from the SBI calling upon the appellant to restore
B the credit of US$ 199,959.74 within few days failing which, the
appellant was informed, they would initiate further steps. Yet
another letter dated 28.10.2009 was also received by the
appellant from the bank calling upon it to restore the credit of
US$ 199,959.74 along with overdue interest@ 18 p.a. from
c the date of credit to the date of re-payment i.e. Rs.48, 18, 149/
- Later on 29.10.2009 the bank lifted the lien and debited
appellant's EEFC account (EURO No.10937619705), realized
the amount of Rs.94,56,094/-.
8. We have gone through the writ petition as well as the
D various affidavits filed by the parties including the counter
affidavit filed by the Bank of America and the report of the Chief
Operating Officer, submitted following the order passed by this
Court on 22.2.2012. The fact that emerges is that the appellant
was maintaining a Current Overseas Account'with the State
E Bank of India, Cuffe Parade Branch, Mumbai. In August 2006
it exported steel coils to the importer at Mozambique. The
export documents were not routed through the SBI and SBI was
neither the collecting bank, nor the bills were discounted with
. S.B.l Mumbai. Any foreign remittance to overseas branch, Cuffe
F Parade would carry the said branch code which is 047991 in
addition to the beneficiary's name.
9. The SBI, Foreign Department, Kolkata (SBI, FD,
Koll~ata) maintains several Nostro accounts with various foreign
G banks for transacting business for global exporters, wherein
large number of debit and credit transactions take place. The
SBI, FD, Kolkata on 02: 11.2006 received the remittance advice
from the Bank of America in favour of the appellant's account
at "Bank of India, Overseas Branch, Mumbai". The SBI, FD,
H Kolkata, ~s instructed by Bank of America sent the amount to
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 75
INDIA [K.S. RADHAKRISHNAN, J,]
Bank of India on 03.11.2006. The Bank of India, in turn, A
informed the SBI, FD, Kolkata that they do not have any
account of the Metro Exporter (the appellant) which fact was,
in turn, informed to the Bank of America. The Bank of America
on 09.11.2006 recalled the funds and accordingiy the SBI, FD,
Kolkata refunded the amount to Bank of America on E\,
13.11.2006.
10. SBI Overseas Branch, Mumbai, while reconciling its
account with the SBI, FD, Kolkata, in the year 2009, came to
know that the a'!1ount which was credited in the account of the C
appellant was re-called by the Bank of America in the year 2006
itself, and therefore, the amount was not available with SBI, FD,
Kolkata. SBI, Overseas Branch, Mumbai, then on 6.3.2009
marked a lien on the appellant's EEFC account. In other words,
the SBI, Cuffe Parade Branch had credited an amount of US
$ 199,959.74 in the appellant's EEFC account erroneously, D
contrary to the advice made by Bank of America, which is
clearly reflected in the letter dated 07.03.2009 sent by the SBI,
Overseas Branch, Mumbai to the appellant, which reads as
under: ·
"STATEl3ANK OF INDIA
Overseas Branch, World Trade Centre,
Post Box No.16094, Cuffe Parade, Mumbai-400005
Tel:22189262, 22189161, Fax:221844328, 22188550
Email:sbi04791@sbi.co.in F
..
Cable:OSBRANDY-MUMBAI, Branch Code:4791
The Managing Director,
Metro Exporters Pvt. Ltd.
132, Kakad Chambers,
Dr. Annie Beasant Road,
Worli, Mumbai-400019
Dear Sir,
Dated 07.03.2009
76 SUPREME COURT REPORTS (2014] 9 S.C.R.
A Credit entry of USO 1 .99.959.74 dAted 02.11.2006 to your
EEFC Account
We refer to the above amount credited to your EEFC
account and have to advise that the credit was erroneously
B passed on to us by Bank of America (BOA). They had
claimed from our FD Deptt. Kolkatta citing that the same
was meant for Bank of India and not for our NOSTRO
account.
Accordingly, our FD Deptt. Kolkata had repaid the amount
to BOA on 13.11.2006 at their request. Due to this amount
credited by us to your EEFC account remai_ned
unreconciled in the close of corresponding credit.
As the matter is old and we are required to square off the
above outstanding NOSTRO unreconciled entry from our
books, we are in the process of verifying our old records.
In the meanwhile we request you to submit us the full details
of the amount credited to your account to enable us to take
a view. We further advise that we have today lien-marked
your EEFC account pending rectification of our
outstanding entry.
Yours faithfully,
Sd/-
Chief Operating Officer"
11. SBI, Overseas Branch, Mumbai, as already stated, on
29.10.2009 lifted the lien and debited Euro 1.36 lakhs and
realized Rs.94 lakhs from the appellant. We have to examine
whether the SBI, Overseas Branch, Mumbai or even the SBI,
G FD, Kolkata had ever received US$ 199.959.74 in the SBl's
account sent by the importer to the appellant. The stand of the
bank is that the amount had never come to the SBls account
either at Mumbai or at Kolkata, but in the account of Bank of
India.
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 77
INDIA [K.S. RADHAKRISHNAN, J.]
12. We have to first examine, before dealing with the main A
issue, what is actually meant by SWIFT Message and what is
meant by Nostro account and whether the SBI, FD, Kolkata or
the SBI, Overseas Branch, Mumbai had got any control over
the Nostro account maintained by the SBI, FD, Kolkata for Bank
of America when the advice given by the Bank of America B
states "Bank of India A/c Metro Exporters Pvt. Ltd.", instead of
"SBI". The importer, in this case had made a payment of US$
581.841.65 meant for the appellant, but one part of the said
amount i.e. US$ 199.959.74 was received by the SBI, FD,
Kolkata in Nostro account of Bank of America, New York with c
remittance advice to Bank of India.
SWIFT:
13. SWIFT (Society for Worldwide Interbank Financial
Telecommunication), established in the year 1973, is a non- D
profit making co-operative society organized under the Belgian
Law with its headquarters in Brussels. SWIFT operate_s an
international financial message system which enables payment
instructions and related messages, including statements,
foreign exchange and money market confirmations, collections. E
SWIFT, therefore, deals with transfer of relevant payment
messages. (For further details, see Paget's Law of Banking,
Twelfth Edition, Page 304)
14. Bank of America sent an Electronic SWIFT Message F
dated 01.11.2006 to SBI, Overseas Branch, which reads as
under:
WTX0010
PAGE 421857
WORK OF 11/01/06
RUN 11/07/06 04:32
Fulltran Report
BANK OF AMERICA -CONFIDENTIAL
< < AIX VERSION 1.2 > > >
A RCVD FROM CITIBANK N A NEW YORK NEW YORK
SENDER'S DOA # ***Message: NOT TESTED***
TRN REF #:20061101-00125666
B *** MESSAGE ENVELOPE*** (Bank: NYK)
D ,
, F
SRC:CHP CALLER SND DATED: 06/11/01
RPT# AMT:199,959.74 CUR:USD TRDR#
TEST: DUE: TYPE: FTR/ FUNDS:S CHG:DB:N CD:N
COM:X CBL:N
DBT P/0008 CDT D/006550692214 ADV:WIR
DEBIT VAL:06/11/01 CREDIT VAL:06/11/01
DEPT: IDFMT STATE BANK OF INDIA
CITI BANK N A DOLLAR RECONCILIATIONS,
19 FLOOR
NEW YORK NEW YORK JEEVAN SUDHA 42/C,
JAWAHAR LAL NEHRU
KOLKATA 700071, INDIA
SNDR REF NUM: SPECIAL INSTRUCTIONS
S0763050E5F401
ORDERING BANK: AC 655892218 IS FOR ALL
S/NBPAGB2L
UNITED NATIONAL BANK DEBIT MT103
2, ROOK STREET AND RELATED REFUND ONLY
LONDON, GB
ORIG: BNF BANK:S/BKIDINBBBOS WIR:Y
AL ZAROONI EXCHANGE BANK OF INDIA
P 0 BOX 116348 (OVERSEAS BRANCH)
AL SABKHA STREET MUMBAI, !NIDA .
DEIRA DBAI (U.A.E.) BNF:/ CHG:S BK?N
METRO EXPORTERS PVT.LTD.
ORIG TO BNF INFO:
BIO AL TAWFEER TRADING
LESS CHARGES
·***~CREDIT PAYMENT MESSAGE TEXT****
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 79
INDIA [K.S. RADHAKRISHNAN, J.]
Message Text
Destination:
D/SBININBBFXD
STATE BANK OF INDIA
DOLLAR RECONCILIATIONS, 19 FLOOR
JEEVAN SUDHA 42/C, JAWAHARLAL NEHRU
KOLKATA 700071, INDIA
Output Time:12:29:32 Output sequence number:071446
Input:
S/BOFAUS3N D
BANK OF AMERICA, NA .
NEW YORK-BRANCH'~ \
15. SWIFT Message, referred to above, would indicate
that Nostro Account No.CDTD/006550692214 was maintained
by the SBI, FD, Kolkata for Bank of America. On receiving the E
electronic SWIFT Message from Bank of America, the SBI, FD,
Kolkata sent the amount to the Bank of India because that was
the advice given by Bank of America. Bank of India then through
their null and void SWIFT Message dated 3.11.2006 informed
the Bank of America that they did not have any account in the F
name. of 'Metro Exporters' (the appellant herein), the said
communication is extracted herein:
"mid M061122-000689 current list status RATTACH type
COMIN
Attached iid 3105-03NOV06 memo CLOSED CASE
3105-03NOV06
Next 22-NOV-06
80 SUPREME COURT REPORTS (2014] 9 S.C.R.
A PCRM468819
QQPCRM
Vf!FV MTP:199 CUR:USD AMT:199959.74 SRC:SWF
SWF
CRM
STX TRN:WTX/20061122-00064705 (01)
**AUTHENTICATED MSG**
FROM:/Ml-061122BKIDI NBBACOS5378814423
BANK OF INDIA
(OVERSEAS BRANCH)
D KOLKATA I KOLKATA, INDIA
TO: /M0-061122BOFAUS3NBXXX5751696203
BANK OF AMERICA N.A.
NEW YORK BRANCH
E NEW YORK, NY 10048
(CUS'l'OMER SERVICE USE ONLY)
DATE:061.122
::199 CUSTOMER TRANSFER FREE FORMAT
F MESSAGE
:20 SENDERS REF:4048/REM/AS/012
:21 RELATED 'REF:BOA3105-03NOV06
:79 TEXT
REF YOUR MT-199 DTD.15.11.06 TO BKIDINBBCOS
FOR CANCELLATION OF MT-103 DTD.01.11.06 FOR
USD199.959.74 UNDER YOUR REF.2006110100125666
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 81
INDIA [K.S. RADHAKRISHNAN, J.]
IN FAVOUR OF METRO EXPORTERS PVT. LTD. WE A
HAVE ALREADY INTIMATED YOU THAT WE ARE NOT
EFFECT THE PAYMENT AND TREAT THE MT-103 AS
NULL.AND VOID,
AS THE RECEIVER OF THIS MESSAGE WAS OUR
MUMBAI OVERSEAS BRANCH, WE HAVE SENT ALL
ORIGINAL PAPERS TO THEM FOR FINAL DISPOSAL.
WITH THIS WE CLOSE OUR FILE.
REGARDS
REMITIANCE.
AMT:2006112200064705
11220700
WTX2006112200064705-1
WXB089841 11220405
IGATEWY\\llD:3105-03NOV06\MEMO:SWF 199959. 74
usd 199\
MSN:061122-001034\AMT: 199959. 74\USDI
EUPD By SYSTEM to Z8JR /CLOSED CASE3105-
03NOV /22-NOV-06 07:11
EATI By Z8JR /CLOSED CASE3105-
03NOV06 /22-NOV-06 08:28
Attached to iid :3105-03NOV06"
16. Bank of America, in turn, sent a recall message dated
3.11.2006 to the SBI, FD, Kolkata, which reads as under:
"Template name RTN-FULLRECALL Corr type SWF
Queue NORMAL verify flat Y iid 3105-03NOV 06 party name
STATE BANK OF INDIA
CEDIT:SWIFTI
82 SUPREME COURT REPORTS [2014) 9 S.C.R.
A :CMAP : SWFHORT
:DEST : TEMP : RTN-FULLRECALLSWF
QQ NYKO
.NYCS MTP:199 CUR:NOA AMT:0.00
SBININBB
STX
:TEXT:X
:20: BOA3105-3NOV06
c :21: 2006110100125666
:79:PLEASE RETURN OUR PAYMENT DATED
01-NOV-06
REFERENCE 2006110100125666
PAYMENT, DETAILS AS FOLLOWS, AVOIDING
DUPLICATION. VALUE DATE 01-NOV-06
AMOUNT 199,959.74USD
BENEFICIARY CUSTOMER
METRO EXPORTERS PVT LTD.
E ORDERING CUSTOMER AL ZAROONI EXCHANG
PER
REMITTER REQUEST
PLEASE ADVISE US THE DATE YOU
HAVE RETURNED THE PAYMENT, QUOTING
OUR REFERENCE BOA3105-03NOV06.
REGARDS
MNELLESIA HENRY
BANK OF AMERICA WT INVESTIGATIONS
G PHONE 646.733.4550 FAX 212-378-4900"
17. Bank of America then, on the basis of the debit
authorization from the SBI, FD, Kolkata debited the Nostro
account No.6550692214, which is reflected in the
communication dated 13.11.2006 and the same reads as
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 83
INDIA [K.S. RADHAKRISHNAN, J.]
under:
"mid mo61113-000610 current list status RATIACH type
COMIN attached iid 3105-03NOV06 memo CLOSED
CASE 3105-03NOV06 next 13-NOV-06
PCRM450151
QQ PCRM
RBKN MTP:199 CUR:USD AMT: 199959.74·SRC:SWF-
·.-· ..... -·
SWF
CRM
STX TRN:WTX/20061113-00045762 (01)
AUTHENTICATED MSG**
FROM: /Ml-061113BOFAUS3NBXXX5734497703
STATE BANK OF INDIA
(FOREIGN DEPARTMENT)
'TAT A CENTRE 43 JAWAHARLAL NEHRU RD
KOLKATA (CALCUTIA), INDIA
TO: /M0-061113BOFAUS3NBXXX5734497703
BANK OF AMERICA N.A.A
NEW YORK BRANCH
NEW YORK, NY 10048
(CUSTOMER SERVICE USE ONLY)
DATE: 061113
**
:: 199 CUSTOMER TRANSFER FREE FORMAT
MESSAGE
: 29 SENDERS REF:E2/BOFA/407/06
:79 TEXT:
AS PER BANK OF AMERICA REQUEST UNDER
1REFERENCE MT 199 DATED 08 NOVEMBER 2006
WE HEREBY AUTHORISE YOU TO DEBIT NOSTRO Al H
A C. NO. 6550692214 WITH VALUE DATE : 11 NOVEMBER
2006 WITH A SUM OF USD 199939.74 IN REVERSAL
OF YR CREDIT FOR USD 199,959.74
DATED 01 NOVEMBER 2006 UNDER YR
B TRANSACTION
REF. NO. 2006110100125666
2. PLS AVOID DUPLICATION.
3. REASON FOR REFUND: FUNDS NOT MEANT FOR
US.
C REMITTING BANK REQUESTING REFUND.
4. DEDUCTION OF USO 20.00 REPRESENTS OUR
HANDLING CHARGES.
5. PLS QUOTE OUR REFERENCE NUMBER IN
D FUTURE
CORRESPONDENCE
.F
6. YR REF BOA 3105 - 03 NOV 06
AMI: 2006111300045762
11130251
WTX2006111300045762-1
WXB670843 11122357
iGATEWY\\110:3105-0CNOV06\MEMO:SWF
199959.74 USD 199\
MSN: 061113-000363\AMT: 1999959L.74/USD\I
·EUPD BY SYSTEM to Z8JR I CLOSED CASE3105-
03NOV06 I 13-NOV-06 02:57
·EATT BY Z8JR /CLOSED CASE3105-03NOV06 /14-
NOV-06 09.17
G attached to iid: 3105-03NOV06"
18. The above communication would clearly indicate that
the SBI, FD, Kolkata has maintained a Nostro account·
No.6550692214, with Bank of America. It was on the debit
authorization of Bank of America, the SBI, FD, Kolkata debited
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 85
INDIA [K.S. RADHAKRISHNAN, J.]
the amount of US$ 199,939.74 from its Nostro account. A
INTERNATIONAL FUNDS TRANSFER
19. An international fund transfer occurs with either the
payer's or the payee's bank, or both banks, located in a country
other than that of the currency of the transfer. Most international B
funds transfers are credit transfers and they operate in a similar
way to domestic credit transfers, although international credit
transfers generally involve greater use of correspondent
(intermediary). banks. Furthermore, unlike a domestic credit
transfer, an international funds transfer may be subject to more C
than one law. Each account relationship in the transfer - for
example, as between the payer and his own bank, the payer's
bank and a correspondent bank, the correspondent and the
payee's bank and a payee's bank and the payee - may be
subject to its own applicable law which, in each case, may be D
different from the law governing the underlying obligation
between the payer and the payee . .,.
20. In international funds transfers, each payment
message, wrether between the payer and his bank, the payee E
and his bank, or the banks themselves, may be communicated
orally, in writing, or by electronic means. In the past, overseas
or cross-border inter-ba.nk payment messages were sent by
airmail, telegram, or- telex, whereas now most banks
communicate with t.heir overseas, or cross-border counterparts
using the telecommunication network operated by SWIFT.
21. An international funds transfer may be either onshore
F.
or offshore. The transfer will be onshore where either the
payer's bank or the payee's bank is located in the country of G
the currency of the transfer and offshore where neither bank is
located in the country of the currency of the transfer.
[From the Law of Bank Payments - Third Edn.
(~ichael Brindle Raymond Cox) Sweet & Maxwell, 2004] H
A 22. SBI Foreign Department, Kolkata, maintains several
Nostro accounts with various foreign banks for transacting
global business. Nostro account is an overseas account which
is held by a domestic bank in the foreign bank or with the own
foreign branch of the Bank. For' example, accounts held by
B State Bank of India with Bank of America, New York is Nostro
account of State Bank of India in Bank of America.
23. The SBI, FD, Kolkata, in the instant case, has opened
a Nostro account with Bank of America, an account which is
Nostro for one bank is Vostro for another. So when, State Bank
C of India, FD opens a Nastro account with Bank of America, it
is Vostro for State Bank of India and Nostro for Bank of
America.
NOSTRO AND VOSTRO ACCOUNTS:
24. This banking principle is wen articulated in the above
mentioned book and we extract the: same as under :
"(a) Onshore transfers
Where the transfer is onshore, the payer's bank and the
payee's bank may be correspondents, i.e. one maintains
an account with the other, thereby allowing bilateral
settlement between them. In such cases, the nostro
account is usually denominated in the foreign currency
and the vostro account in the domestic currency. Thus,
for example, where a London bank maintains a US dollar
account at a New York bank, ·the account would be nostro
on the books of the London bank and vostro on the
books of the New York bank. Inter-bank payment between
the correspondents would appear as a credit to the
· account on the books of the payer's bank and a debit to
the account on the books of the payee's bank. In the case
of a US dollar payment from the New York bank to the
London bank, the New York bank credits the vostro
account and the London bank debits the nostro account,
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 87
INDIA [K.S. RADHAKRISHNAN, J.]
but where the US dollar payment is from the London bank A
to the New York bank, the London bank credits the
nostro account and the New York bank debits the vostro
account. The movement of credit balances in these US
dollar transfers can be illustrated as follows:
(b) Account transfers between correspondent banks
(a) US$ transfer from New York to London
New York ............. London
US$ account US$ account
·"vostro" "nostro"
credit debit
(b) US$ transfer from London to New York
London ................. New York
US$ account • US$ account
"vostro" "nostro"
debit credit
Where the payer's bank and the payee's bank are not
correspondents, it will be necessary to employ the services F
of at least one correspondent bank. Where funds are
transferred from the payer's bank located overseas to the
·payee's bank located in the country of the currency, the
payer's bank will employ a correspondent bank in the
country of the currency to transfer funds to the payee's G
bank. Typically, the transfer between the local
correspondent and the payee's bank will be through the
local clearing system, but where the payer's bank and the
payee's bank use the same local correspondent. the
A transfer will be through account adjustments on the local
correspondent's books. Where funds are transferred froni
the payer's bank located in the country of currency to the
payee's bank located overseas, the payer's bank will
transfer funds to the local correspondent of the payee's
B bank, typically through the local clearing system, and that
correspondent will complete the transfer to the payee's
ban~."
25. We m_ay, bearing in mind the above-mentioned
C principles of international banking, examine the point of
controversy. Appellant, as already indicated, used to export
goods to Abdul Zafar Ghulam (importer). Appellant used to
bank with State Bank of India's Overseas Branch for a number
of years. Appellant used to export the goods directly and submit
documents to State Bank of India and it was for the bank to
D claim payment and report the transaction to Reserve Bank of
India to claim export benefits. In the instant case, SBI, FD,
Kolkata records would indicate that on 25.8.2006, the Appellant
had raised an Invoice No.MV/028/08/2006 and shipped the
goods directly to the importer at Mozambique, Nigeria and
E subsequently lodged the documents with the State Bank of India
Overseas Branch, Mumbai. The Appellant on 2.11.2006
submitted a copy of the export bills to SBJ Overseas Branch,
Mumbai to see the credit of US$ 199,959.74 in the name-of
Metro Exporters Pvt. Ltd. (Appellant) in "Smart Screen
F Reconciliation" (SBI used to offer credit entry in SSR Software/
Swift Message received from Bank of Amertca, who had been
crediting the amounts from time to time in the foreign currency
denominated Nostro accounts maintained with them_ by the
State Bank's Foreign Department, Kolkata) and in good faith
G credited the above-mentioned amount to the account of the
Appellant on the same date i.e. 2.11.2006.
26. The SBI Foreign Department, Kolkata received US$
199,959. 7 4 in the Nostro account of Bank of America with
...
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 89
!NOIA [K.S. RADHAKRISHNAN, J.]
remittance advice, but the swift message advising actual
transfer of funds by Bank of America had gone to "Bank of India,
Mumbai" rightly, inste€ld of "State Bank of India, Mumbai". Bank
of America, in its statements, referred to in the. earlier part of
this judgment, had correctly'informed the credits, but the mistake
in naming the Bank of India might have occurred either at the
end of Bank of America, City Bank New York, United National
Bank, London, AL Zaroone Exchange or at the level of the
Importer, but, of_ course, not at the end of SBI, FD, Kolkata or
SBI, Mumbai. The Bank of India had informed the Bank of
America and also the SBI, FD, Kolkata that they have no
account in the name of the Appellant. Consequently, the Bank
of America recalled the fund on 9.11.2006 and recovered the
said amount from the Nostro ac6olmt of State· Bank of India on
13.11.2006. Since Nostro account has been maintained by the
SBI, FD, Kolkata with Bank of America having the Account
No.006550692214 legally, the SBh FD, Kolkata had no option
but to return the fundsJo Bank of America as the amount was
recalled by the Bank of America since it was the remitter.
27. The SBI Overseas Branch, Mumbai, however,
committed a mistake whe·n the Appellant had submitted copies E
of the export bills to it. The SBI Overseas Branch, Mumbai, after
seeing the credit of US$ 199,959.74 in the name of Metro
Exporters Pvt. Ltd. (Appellant) in the "Smart Screen
Reconciliation" (SSR Software Mumbai), evidently in good faith
credited the said amount to the account of Metro Exporters Pvt. F
Ltd. which was meant for Bank of India. Bank of India had no
account in the name of Metro Exporters Pvt. Ltd., hence that
Bank had, in turn, informed the Bank of America as well as the
State Bank of India. Consequently, the Bank of America had
recalled the funds on 9.11.2006 and recovered the said amount G
from the Nostro account of State Bank of India maintained for
Bank of America on 13.11.2006. In other words, an amount of
US$ 199,959.74 had never come into the credit of State Bank
of India, either at Kolkata or Mumbai, at any point of time. The
A amount, as already stated, was credited by Bank of America
in the Nostro account of State Bank of India maintained for
Bank of America and that the Bank of America had credited
the amount in the account of "Bank of India Ale Metro Exporters
Pvt. Ltd.", not in the credit of SBI, FD, Kolkata or Mumbai. SBI
B Overseas Branch, Mumbai, of course, might have committed
a mistake in crediting the amount in the appellant's account.
SBI Overseas Branch, Mumbai or the SBI Foreign Department,
Kolkata, it may be true, had no control over the US$ 199,959. 7 4
which was lying in Nostro account maintained by SBI, FD,
C Kolkata for Bank of America. But the question is whether the
SBI Overseas Branch, Mumbai was right in debiting Euro 1.36
lakh. and realizing Rs.94 lakh from the account of the Appellant,
on 29.10.2009, after a period of more than two years, eating
away the valuable time of the appellant to proceed against the
D importer to recover the amount .. if the Bank was at fault
28. The Bank, of course, has a right to recover the money
paid under a mistake as per Section 72 of the Indian Contract
Act, which reads as under :
E "72. Liab!lity of person to whom money is paid or
thing delivered by mistake or under coercion.- A
person to whom money has been paid, or anything
delivered, by mistake or ..under coercion, must repay or
return it."
F .29. Learned counsel appearing for the Appellant brought
to our notice a judgment of this Court in Jammu & Kashmir
Bank Ltd. v. Attar-VI-Nissa and others AIR 1967 SC 540. In
that case, this Court had held that if a third party, by mistake
deposits the money in account of s~me other person, as soon
G as the money is deposited in the account of such third person, •,
who is a customer of the bank, the money becomes the money
of customer, and it is not open to the bank in such
circumstances, without obtaining the consent of the customer,
to reverse the entry of credit made in his account and in effect
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 91
INDIA [K.S. RADHAKRISHNAN, J.]
pay back the money to the person who had deposited it, even A
though it might have beeh deposited by mistake. In this
connection, we may refer to a judgment in United Overseas
Bank v. Jiwani (1977) 1 All ER 733, wherein the defendant had
an account in Switzerland in which there was a credit of US$
11000. The defendant intended to purchase a hotel as an B
investment. The Bankers in Switzerland sent by telex US$
11000 to London bankers at the instance of the defendant and
also an advice confirming the telex. The London bank by a
mistake credited two sums of US$ 11000 to the defendant.
Later, when the defendant enquired about its balance, it was c
shown to be about US$ 32000. The defendant purchased a
hotel out of the amount with the London Bankers. Facts would
reveal, but for this balance shown, he would not have been·able
to purchase the hotel. The bankers rectified its error.
Consequently, there was a debit balance of US$ 9000 as 0 against the defendant. Plaintiff bank demanded the money of
the overdraft. It was held by the Court that the extra money
credited to the defendant's account was under mistake of fact
and the bank was entitled to recover it.
30. In R.E. Jones Ltd. v. Waring and Gil/ow Ltd. (1926) E
AC 670, the House of Lords upheld the principle of Kelly v.
Solari (1841) 9 MW 54 stating that however grossly negligent
a payer may be and whatever lapses he may be guilty of, he
is entitled to recover if he had paid the money under a mistake
of fact, provided always that he owes no duty to the payee not F
to make a mistake. In Thomas Abraham and six others v.
National Tyre and Rubber Co., Kottayam (1973) 3 SCC 458,
this Court held that the law implied an obligation to rep.ay the
money which is an unjust benefit.
31. We are of the view, even if the amount was credited G
by the Bank to the appellants' account by a mistake, the
question is whether, in the facts and circumstances of this case,
the Bank is justified in marking a lien on the appellants' EEFC
account, thereby realizing the amount paid. Bank, as already
stated, had credited the amount in the appellants' EEEC
account on 2.11.2006 and, so far as the appellants are
concerned, their claim as against the importer stood satisfied,
since the same forms part of a series of transactions. The
question is· whether the Bank can, after a lapse oLmore than
two years, thaf is on 6.3.2009, could mark a lien_c>n the
appellants' EEFC account and latEilr receive amount by making
a debit entry on 29.10.2009 for an aggregate amount of Euro
1,36,027.
32. Facts, in this case, clearly indicate, so far as importer
is concerned, he had already paid the amount and the SBI,
Foreign Department, Kolkata had received the amount in the
Nostro account of Bank of America with remittance advice to
Bank of India, instead of SBI, Overseas. Branch, Mumbai.
Appellant was also informed on 2.12.2006 of the export
collection advice by the SBI for US$ 199,959.74 and the
appellant received the amount. Bank might have committed a
mistake, but now it would be impossible for the appellant to
recover the amount from the importer since, so far as the
importer is concerned, it had paid the amount. If the SBI,
Overseas Branch had not given <(redit of the amount, then,
appellant could have proceeded against the importer at the
earliest opportunity, but now the question is whether the
appellant should suffer for the mistake committed by the Bank,
to which our answer is in the negative.
33. Under such circumstances, we are inclined to allow the
appeal and set aside the judgment of the High Court and grant
the reliefs prayed for in the writ petition, to the appellant. Bank
is directed to comply with the order within one month from today.
However, we make it clear that it is open to the SBI to use their
good offices to follow up the matter with the Bank of America
or Bank of India or any other entity, which is in receipt of control
of subject money and recover the amount, if the amount is still
METRO EXPORTERS PVT. LTD. v. STATE BANK OF 93
INDIA [K.S. RADHAKRISHNAN, J.]
available, for which, of course, the appellant cannot raise any A
objection.
34. The Appeal is allowed as above, however, there will
be no order as to costs.
Bibhuti Bhushan Bose Appeal allowed. B