In Brief
Export Credit Guarantee Corporation (ECGC) issued two separate insurance policies: one to an exporter (M.S. Creations) covering shipment risks, and another to a bank (Punjab National Bank) securing the bank's advances. When the exporter's buyer defaulted, the bank claimed under its policy and ECGC paid Rs. 6 lakhs provisionally. The exporter then claimed under its policy, but ECGC rejected the claim, citing default by the collecting bank (which released documents without receiving acceptance). The lower commissions held ECGC liable, reasoning that paying the bank amounted to admitting liability to the exporter. The Supreme Court allowed ECGC's appeal, holding that the two policies are distinct instruments, and payment under one does not create liability under the other. However, under Article 142, no recovery was ordered from the exporter."
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