Chak wrote:If the issuing bank refuses the docs and says that the docs are at the disposal of the presenter, then the issuing bank should wait for the instructions from the presenter for further instructions regarding the disposal, right.
What Sean is also trying to find out is, If the presenter does not respond regarding the disposal of the documents after receiving the refusal notice, then what is the course of action for the issuing bank.
The general position is that sub-article 16 (e) provides for the issuing/nominated bank to return the documents "at any time" provided it has served the notoce of refusal in accordance with sub-art. 16 (c) (iii) (a) or (b). Whilst this may suggest that the bank is allowed to act in contradiction with its earlier advice (for example, that is holding documents at disposal), he better interpretation is that this should be exercised as a last resort option, where for example, it fails to receive disposal instructions from the presenter despite chasers, and subject to the bank giving prior notice of its intention to return documents.
The Fortis Bank + Stemcor vs Indian Overseas Bank (IOB) turned on a different issue. Here, IOB stated that it was returning documents (16 (c) (iii) (c)) but failed to return them within a resonable time. At the same time, Fortis Bank (confirming bank) acting on behalf of the beneficiary ,Stemcor, instructed that the documents not be returned, as Fortis did not agree with the discrepancies, as agreeing to the return of the documents would put them in a weaker position to dispute the discrepancies through the courts. To complicate matters, IOB relied on the refusal to of Fortis to return documents, as justificaion for the delay. However, the courts ruled that since IOB did not do what it said it would originally do, viz return the douments, they were precluded from asserting that the documents were not in order, and therefore must honour.