State Consumer Disputes Redressal Commission
American Express Bank Ltd vs Krishan Kumar Karnani on 26 September, 2008
IN THE STATE COMMISSION:DELHI IN THE STATE COMMISSION: DELHI (Constituted under Section 9 of The Consumer Protection Act, 1986) Date of Decision: 26.09.2008 Appeal No.231/04 (Arising out of Order dated 05-02-2004 passed by the District Consumer Forum(New Delhi) Barracks, Kasturba Gandhi Marg, New Delhi in Case No. 1539/2000) American Express Bank Ltd. Appellant 1-A, Hamilton House, Through Connaught Place, Mr. Jaswinder S Nischal, New Delhi. Advocate Versus Mr. Krishan Kumar Karnani Respondent S/o Late Sh. C.D. Karnani, R/o A-98, Shivalik, New Delhi. CORAM: Justice J.D. Kapoor President Ms. Rumnita Mittal Member
1. Whether Reporters of local newspapers be allowed to see the judgment?
2. To be referred to the Reporter or not?
Justice J.D. Kapoor, President (Oral)
1. This appeal is directed against the order dated 05.02.2004 passed by the District Forum whereby the appellant has been directed to pay a sum of Rs. 15,000/- as compensation and cost for unfair trade practice and deficiency in service.
2. The facts of the case leading to the impugned order, in brief, were that the appellant had issued a publication in the Economic times on 21.08,2000 intimating the general public about the scheme of spot loan. The detailed information regarding the scheme of loan amounts, eligibility and monthly equated instalments was given in the said publication. Pursuant to the said publication/advertisement, the respondent also approached the appellant who was found eligible for on the spot loan and after completion of the formality he was handed over a cheque on the spot for Rs. 1,72,000/- after deduction of Rs. 3,000/- towards service charges. The respondent also handed over 36 post dated cheques to the appellant. The respondent further added that he, being a businessman, had made arrangements of payments in the transaction being done by him in his business and accordingly issued cheque to the respective creditors. However, the said cheque of Rs. 1,72,000/- was returned dishonoured with the remarks Stop Payment. This resulted in dishonour of the cheques issued by the respondent and thus in view of the circumstances created by dishonour of the cheque of Rs. 1,72,000/-, the respondent had to cancel his orders which not only caused him a humiliation but also loss of goodwill in the market. Terming this action of appellant as a breach of trust and confidence which caused him suffering and agony, the present complaint has been filed seeking directions to appellant to pay a sum of Rs. 3 lacs towards the loss suffered by the respondent and pay damages of Rs. 1,50,000/- w.e.f. 5.2.2000.
3. In reply, the appellant pleaded that as per the terms and conditions as contained in the application form which was signed by the respondent prior to the disbursement of the cheque in question, any dispute, difference, claim, on question arising between the parties in respect of the loan shall have to be settled or decided by arbitration and, therefore, this complaint deserves to be dismissed on this preliminary ground. It was further added that they had launched a scheme of Cheque on the spot where under the application of a prospective borrower would be scrutinized at a fairly low level on a prima facie basis and a cheque would be issued subject to verification and final approval of the loan application. If the application did not gain final approval, there would be no question of payment against the cheque.
It further added that this is incorporated in a leaf of paper attached to the reverse of the cheque in question and all cheques which are disbursed in accordance with the scheme of Cheque on the spot, physically carried this caveat in question. They annexed format of this caveat with the reply. They admitted to the issue of cheque of Rs. 1,72,000/- on the spot but since the loan was not finally approved, no welcome letter was issued, but instead letter dated 26.9.2000 was issued to the respondent requesting him not to bank the said cheque. It was further added in the reply that in this case appellant had availed all its right in accordance with the contractual terms and conditions in declining the final approval of the loan and that it is not obligatory on appellant to grant the loan to the respondent.
4. The impugned order has been assailed mainly on the ground that the District Forum has failed to appreciate the procedure followed by the financial institutions while granting /approving/sanctioning the loans and completely over-looking the attending facts and circumstances and also the fact that no Welcome Letter as stipulated on the Application Form was ever issued to the respondent, which indicated the approval of the loan and as such the absence of any approved loan was completely overlooked.
5. It is further contended that the District Forum erred in coming to the conclusion that the appellant had caused deficiency in service by not sanctioning the loan. The question of deficiency in service does not arise because the respondent himself was well aware of the terms and conditions of the loan and, if he chose to take any risk, with regard to his own business commitments, based on his own assumptions about sanction of the loan(assuming that he had indeed acted upon any expectation of loan as he claims), then his actions were obviously at his own risk and consequences.
6. Lastly it is contended that the caveat would not bind the respondent as the appellant has not filed the caveat signed by the respondent but has filed only a format of the same. On the contrary, once the respondent has accepted the cheque, he cannot choose not to abide by the terms that are clearly incorporated on a leaf of paper attached to the reverse of the cheque.
7. We are afraid that none of the contentions have merit or substance.
8. At the outset, it is contended that the arbitration clause in the terms and conditions of the loan ousts the jurisdiction of the consumer court to entertain the complaint. It is settled law that the remedy under the Consumer Protection Act by virtue of Section 3 is in addition to and not in derogation of the provisions of any other law for the time being in force and include the arbitration law. This is what had been held by Supreme Court in case after case and some of the judgments are as under :-
(i) Fair Air Engineers Pvt. Ltd. and Anr.
Vs. N.K. Modi, 1996 (6) SCC 385.
It would, therefore be clear that the legislature intended to provide a remedy in addition to the consequent arbitration which could be enforced under the Arbitration Act or the civil action in a suit under the provisions of the Code of Civil Procedure.
In view of the object of the Act and by operation of section 3 thereof, we are of the considered view that it would be appropriate that these forums created under the Act are at liberty to proceed with the matter in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties.
The reason is that the Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the forums on their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the appropriate forum for adjudication of the disputes would be otherwise those given in the Act.
(ii) Smt. Kalawati and others Vs. M/s United Vaish Co-operative Thrift and Credit Society Ltd. R.P. No. 823 to 826 of 2001, SC & NC Consumer Law Cases (1886-2005) 275, wherein the National Commission observed that
4. Section 3 is worded in widest terms and leaves no one in doubt that the provisions of CPA shall be in addition and not in derogation of any other law for the time being in force. Thus even if any other Act provides for any remedy to litigant for redressal by that remedy a litigant can go to Dist. Forum if he is a consumer under CPA. That remedy exists in any other law which creates the right is no bar to District Forum assuming jurisdiction.
9. In Fair Air Engineering Pvt. Ltd. case, the Supreme Court specifically held that wherever there is an arbitration agreement between the parties, still the consumer has right to file the complaint u/s 12 of the Consumer Protection Act seeking compensation arising out of charge of deficiency in service which has to be independently adjudicated. It has also been held that even if there are other legal forum or courts available, still the consumer can approach the consumer forum u/s 12 of the Consumer Protection Act or any other legal forum. The arbitration award cannot grant compensation for mental agony, harassment, emotional suffering, actual loss or expected loss, physical discomfort, expenses incurred and other components. These are only awardable by these consumer forums and commissions established under the Consumer Protection Act, 1986.
10. Further there is no dispute that the appellant had floated a scheme for sanction of loan on the spot and issuance of a cheque as a follow up and that the said cheque was issued to the respondent by appellant but later on, on 26.09.2000 appellant informed the respondent that they had not approved the loan and, therefore, he should not present this cheque whereas the cheque had already been presented and received back with remarks stop payment. Certain judgments were relied upon by the appellant before the District Forum which have been referred in the order and were rightly held that these are not applicable as to sanction of a loan as the facts of the case are altogether on different footing inasmuch as that the appellant had sanctioned the loan and had also given the cheque dated 5.9.2000 and after 21 days it intimated that they have not approved the loan.
11. As regards the caveat, the appellant only filed a format and not the actual caveat without containing any directions or suggestions or advice to the respondent not to present the cheque till he hears from them.
12. The aforesaid facts of the case persuade us to dismiss the appeal.
13. Bank Guarantee/FDR, if any furnished by the appellant, be returned forthwith.
14. A copy of this order as per the statutory requirements be forwarded to the parties free of charge and also to the concerned District Forum and thereafter the file be consigned to Record room.
15. Announced on 26th day of September, 2008.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member ysc