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of <h1>Appellants liable for plaintiff's loss due to forged documents and breach of fiduciary duty under Letter of Credit terms</h1> <h3>Firoz Akhtar Baidya & Anr. Versus Dalgreen Agro Pvt. Ltd. & Ors.</h3> Firoz Akhtar Baidya & Anr. Versus Dalgreen Agro Pvt. Ltd. & Ors. - TMI ISSUES: Whether the appellants (defendants Nos. 6 and 7) can be held liable for non-payment under Letters of Credit due to alleged discrepancies in transport documentation and delivery of goods.Whether the appellants acted beyond their authority or were complicit in a fraudulent scheme affecting the plaintiff's recovery of price for goods sold and delivered.Whether the appellants' failure to use an Indian Banks' Association (IBA) approved transporter and substitution of transport documents constituted a breach of contract and caused loss to the plaintiff.Whether the appellants discharged their duty of care and fiduciary responsibility in handling the transportation and customs clearance of goods.The evidentiary standard required to establish fraud or collusion in civil proceedings involving commercial transactions under Letters of Credit. RULINGS / HOLDINGS: The appellants were held liable for the loss suffered by the plaintiff due to their acts and conduct resulting in non-payment under the Letters of Credit, as they 'acted beyond their authority' and failed to comply with the terms requiring use of an IBA-approved transporter.The appellants' knowledge and use of the consignment note of 'Jain Parivahan' without plaintiff's consent or approval, and the failure to produce verifiable proof of delivery to the importer, established their complicity and negligence contributing to the plaintiff's loss.The court found that the appellants owed the plaintiff a duty of care and fiduciary responsibility which they failed to discharge, and that their conduct facilitated a 'web of fraud' involving forged documents and misrepresentations that caused the Letters of Credit to be dishonored.It was held that the plaintiff was not required to unravel every detail of the fraud, and that 'the cumulative effect of all the facts and evidence' sufficed to establish fraudulent intent and liability on the appellants.The decree for recovery of the price of goods sold and delivered was upheld against the appellants, as a reasonable estimate of the loss caused by their breach and conduct. RATIONALE: The court applied the contractual terms of the Letters of Credit, specifically clause 46A(15) requiring use of an IBA-approved transporter and accompanying certificate, as a condition precedent to payment under the LC.Evidence from pleadings, witness testimony, and the Bangladesh Customs Investigation Report established that the appellants knowingly substituted transport documentation and failed to maintain proof of delivery, breaching their contractual and fiduciary duties.The legal principle that fraud in civil proceedings must be established beyond reasonable doubt was considered, but the court emphasized that 'suspicions and surmises and conjecture are not permissible substitutes,' while also recognizing that 'every puzzling artifice or contrivance' need not be fully unraveled to find fraud.The court relied on precedent affirming that the cumulative evidence of collusion and fraudulent conduct suffices to impose liability, especially where appellants' acts directly resulted in non-payment and loss to the plaintiff.The decision reflects a doctrinal approach balancing strict compliance with LC terms against the practical realities of commercial fraud, holding agents responsible for acts beyond their authority that cause loss.
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