State Consumer Disputes Redressal Commission
Punjab Hammers Private Limited vs State Bank Of Patiala, on 2 June, 2014
2nd Additional Bench
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PUNJAB
DAKSHIN MARG, SECTOR 37-A, CHANDIGARH
Consumer Complaint No. 18 of 2010
Date of institution: 17.2.2010
Date of Decision : 2.6.2010
Punjab Hammers Private Limited, P.O. Box-46, G.T. Road (Sirhind side)
Mandi Gobindgarh - 147301 (Punjab) through its Director Sh. Satya
Prakash
.....Complainant
Versus
1. State Bank of Patiala, G.T. Road, Mandi Gobindgarh (Punjab)
through its Chief Manager.
2. State Bank of Patiala, Head Office : Patiala through its General
Manager (Operations).
.....Opposite Parties
3. ICICI Bank Limited, SCFO 9-10-11, Madhya Marg, Sector 9,
Chandigarh through its Manager
(Deleted vide order dated 15.12.2010)
(Performa O.P.)
Consumer Complaint under Section 17 of the
Consumer Protection Act, 1986.
Quorum:-
Shri Gurcharan Singh Saran, Presiding Judicial Member
Shri Harcharan Singh Guram, Member
2
Consumer Complaint No. 18 of 2010
Present:-
For the complainant : Mrs. Arti Vashisht, Advocate
For opposite parties No.1&2: Sh. Umang Khosla, Advocate
For opposite party No.3 : Deleted vide order dt. 15.12.2010
Gurcharan Singh Saran, Presiding Judicial Member
ORDER
The complainant has filed this complaint under Section 17 of the Consumer Protection Act, 1986 (hereinafter referred as 'CP Act') on the allegations that the complainant is a private limited Company registered under the Companies Act, 1956 on 22.10.1992 and is running the business of manufacturing and sale of Iron, Steel & Special and Alloy Steel Forgings etc.. The complaint has been filed through Sh. Satya Parkash, who is one of the Director of the Company. Since the Company is to send his shipments out of India, therefore, the business is carried out on the basis of Letter of Credit (in short 'LC'). The complainant sent his shipment to Dubai and letter of credit No. TF-727508103 dated 3.10.2007 and Letter of Credit No. EBI1LC07009110 dated 9.10.2007 were received by the Correspondent Bank in India, namely, ICICI Bank Ltd.-OP No. 3 on behalf of National Bank of Fujairah (Sharjah Branch) Sharjah UAE and opener Emirates Bank International PJSE Head Office Dubai UAE. The complainant after completing all the documentary formalities submitted the documents to OP No. 1 and was negotiated and accepted by Op No. 1. OP No. 1 had credited the account of the complainant for a sum of Rs. 26,59,500/- on 17.12.2007 against Invoice No. 27, Rs. 28,85,301/- on 26.12.2007 against Invoice No. 3 Consumer Complaint No. 18 of 2010 28, Rs. 16,59,749/- on 2.1.2008 against Invoice No. 29, Rs. 7,28,924/- on 2.1.2008 against Invoice No. 30, after duly verifying and accepting all the documents submitted by the complainant. These transactions were for an amount of Rs. US $ 201388 (Rs. 79,33,474/- ). However, due to utter surprise of the complainant, the OP No. 1 & 2 debited a sum of Rs. 80,13,228/- on 18.2.2008 as under:-
USD 67500 on 18.2.2008 (Rs. 26,85,825/-)
USD 73231 on 18.2.2008 (Rs. 29,12,861/-)
USD 18510 on 18.2.2008 (Rs. 7,36,513/-)
USD 42147 on 18.2.2008 (Rs. 16,77,029/-)
without giving any information to the complainant behind his back. Further OP No. 1 vide its letter dated 29.2.2008 and 6.3.2008 informed that the foreign buyer has not accepted the documents against the LC and the payment has not been released. Whereas the documents have been received back unpaid. It was further alleged that the foreign bank vide different swift messages pointed out to OP No. 1 some discrepancies in the document of 4 invoices sent to them. These discrepancies showed that OP No. 1 was negligent in checking the documents, which has caused great loss to the complainant. The following discrepancies were pointed out by the Emirates Bank International, which are as under:-
1. Shipment advice and the Relative Fax Transmission report sent to the applicant not presented.
2. BL does not state the address and telephone no. of the carrier as per LC clause 2 of 46 A.
3. Bill of Lading does not show on board notation.
2. These advices constitute their refusal of documents in accordance with the Article 16 of UCP 600. Ops replied to the Swift messages and pointed out to them that the discrepancies so pointed 4 Consumer Complaint No. 18 of 2010 out are trivial , therefore, these should be ignored. When OP No. 1 had checked the documents to their complete and full satisfaction before sending him to the Foreign Bank and released the payment against the same to the complainant, therefore, OP No. 1 did not have any grievance with the documents and in case any discrepancy was pointed out by the foreign bank, the same should have been sorted out or they should have consulted with him to accept the same. However, OP No. 1 has failed to do so, which amounts to deficiency in services on his part. The OP was to remove the discrepancies and to get release the payment from foreign bank and to save their own skin, they wrongly debited the amount in the account of the complainant and ultimately, in April, 2008, the complainant was forced to call back the ordered goods sent by the complainant vide Invoice No. 27, 28, 29 & 30 to Dubai. OP No. 1 vide its letter dated 22.9.2008 also informed that they have discounted the bills under FLC from EPC account of the complainant and recovered the over draft interest total amounting to Rs. 97,409/-. The deficiency in service on the part of OP No. 1 was again pointed out vide letters dated 28.1.2009, 11.6.2009 and 18.7.2009. The office of the complainant was checked by Deputy General Manager of the Bank on 11.6.2009 alongwith AGM. Since there is deficiency in services on the part of the Ops, hence, the complaint with a direction to the Ops to withdraw the debit entry of Rs. 80,13,228/- made by OP No. 1 from the account of the complainant, had a loss of Rs. 8,99,849/ suffered as direct loss for too & fro (Mandi Gobindgarh to Dubai & back); pay a sum of Rs. 21,33,733/- on account of loss of interest, a sum of Rs. 5 Consumer Complaint No. 18 of 2010 1,61,400/- wrongly earned by the Bank at the cost of the complainant; for making good the differential amount of Rs. 58,26,078/- relating to the reduction in value of the goods, litigation expenses of Rs. 1 lac, Rs. 7 lacs on account of undue harassment and mental agony.
3. The claim was contested by OP Nos. 1 & 2 whereas OP No. 3 was just a performa respondent. OP Nos. 1 & 2 in their written statement have taken the preliminary objections that the complaint is not maintainable as there is no lack of service, negligence or deficiency on the part of the Ops. The complaint is entirely mis- conceived, instituted with the malicious motive for extortion of money from the opposite parties. The Hon'ble Forum has no jurisdiction to entertain the complaint; the complaint is barred by limitation and that the complaint is not maintainable as the same has been filed just to extort the money. On merits, it has been stated that LC is a matter of record. It has been denied that the opposite party discounted the cost accepting all the documents as fully correct and being as per terms of LC, the bills were discounted on the request of the complainant, who was fully conversant with the discrepancies. The complainant had orally assured the opposite parties that discrepancies will be accepted by the foreign bank as was done in the past, accordingly, the Ops discounted the bills. The bank has rightly debited the amount mentioned in the bills as the bills became overdue and the bank does not require any authorisation from the complainant as National Bank has a right of recourse to drawer as per the terms and conditions of the Irrevocable Documentary Letter of Credit. The complainant was well versed with all the correspondence between the opposite party 6 Consumer Complaint No. 18 of 2010 and the LC issuing bank as various communications regarding discrepancies in the documents were orally informed and copy of the swift messages received from the foreign bank were delivered to the complainant Company by the Bank from time to time. The complainant is running the business under the LC for the past so many years and is well conversant with the requirements of the documents drawn under the LC. Since the bills had become overdue, therefore, OP No. 1 had to recall the documents and debit the account of the complainant. The bills were recalled on 14.2.2008 and the account of the complainant was debited on 18.2.2008. The complainant approached the OP after 1½ months from the date of debiting the account, which is an after thought. The Ops have not committed any type of deficiency, therefore, the complainants are not entitled to any relief as alleged by them in the complaint.
4. The parties were allowed to lead their evidence.
5. In support of his allegations, the complainant had tendered into evidence affidavit of Satya Parkash Ex. CA, resolution Ex. C-1, letter of credit Exs. C-2 & C-3, negotiating documents Exs. C-4 to C-7, bills Ex. C-8, audited profit and loss account Ex. C-9, ledger accounts Exs. C-10 & 11, letters Exs. C-12 to C-14, letter Ex. C-15, swift message Exs. C-16 & Ex. C-17, bills Ex. C-18, letters Exs. C-19 to Ex. C-24, complaint token Ex. C-25, letters Exs. C-26 & C-27, online complaint Ex. C-28, letters Exs. C-29 to C-31, online complaint Ex. C-32, letter Ex. C-33, bank reply Ex. C-34, letters Exs. C-35 to Ex. C-37, statement of interest Ex. C-38. On the other hand, opposite parties had tendered into evidence affidavit of Anil Kumar Bansal Ex. 7 Consumer Complaint No. 18 of 2010 OP-1/A, Receivers Reference Ex. O-1/1, message report Ex. O-1/2, statement of account Ex. O-1/3.
6. We have heard the learned counsel for the complainant as well as counsel for opposite parties No. 1 & 2 and have also carefully gone through the written arguments submitted by them.
7. OP Nos. 1 & 2 in their written arguments have taken the objection that the complainant does not fall within the definition of the 'consumer' as the complainant firm is a Private Limited Company and is running the commercial activities, therefore, the complainant does not fall within the definition of the 'consumer'. No doubt the complainant is a Limited Company, running the commercial activities but we have to see what type of services have been availed from the Bank. Only banking services were availed under which the Ops had taken the documents from the complainant, they were to negotiate the same with the foreign bank, get it clear and they were to charge their commission, therefore, out of this transaction, the complainants were not to earn any profit. Therefore, this type of services cannot be said to be a commercial in nature. On this point, there is a judgment of the Hon'ble National Commission "Swiss Air Cargo versus Century Silk Inc. and ors.", 2012 (2) CLT 118. In that case, plea that the goods were being transported for commercial purposes - whereas the findings recorded by the Hon'ble State Commission that the services of OP No. 3 were availed only for transportation of goods from Bangalore to Athens and it did not involve any sale, the question of commercial purpose did not arise upheld. Therefore, the contention of the Ops that the complainant does not fall within the definition of 8 Consumer Complaint No. 18 of 2010 'consumer' is not tenable. There is latest judgment titled as Himalaya Hydro Private Limited Hydro Power Project versus United India Insurance Co. Ltd." 2014(2) CLT 414. In that case, a plea was taken that the complainant is running commercial activity, therefore, complaint is not maintainable. It was observed by the Hon'ble Commission that insurance policy has not been taken for commercial purpose. The activity of the complainant may be commercial but insurance policy is not for commercial purpose. Since only the banking services were taken from the Ops out of which the complainant Company is not earning any profit, therefore, it cannot be said that the complainant Company does not fall within the definition of the 'consumer'. Whereas the counsel for the Ops have referred the judgments in Consumer Complaint No. 248 of 2011 "Victory Electricals Ltd. Versus IDBI Bank Limited", decided on 13.12.2011 by the Hon'ble National Commission; Consumer Complaint No. 39 of 2013 "M/s Sam Fine O Chem. Limited versus Union Bank of India", pronounced on 12.4.2013. In case the complainant had availed the credit facility from the OP Bank for expansion of its manufacturing facility, therefore, the credit facility was allowed to the manufacturer, in those circumstances, it was held that the transaction was commercial in nature and that the complainant is not covered under the definition of the 'consumer'. The other case is Consumer Complaint No. 207 of 2013 "M/s Shri Geeta Infratech Pvt. Ltd. Versus M/s Lodha Healthy Constructions & Developers Private Limited", decided on 7.8.2013. It was with regard to purchase of residential flats by the Company. It was held 9 Consumer Complaint No. 18 of 2010 that in case the property is purchased for the Company then it was for commercial purposes only. Another judgment is Consumer Complaint No. 212 of 2009 "Indraprastha Medical Corp. Ltd. Versus M/s Alpine International", decided on 11.11.2013. It was with regard to deficiency in services on the basis of contract of redesigning, addition, alteration and renovation of the atrium of the Apollo Hospital, Sarita Vihar, New Delhi. Therefore, the facts of these judgments are quite different from the facts of the present case. Keeping in view the nature of services taken from the Ops, it cannot be said that the complainant does not fall within the definition of the 'consumer'.
8. Another preposition as raised is that in involves intricate questions of law and facts, therefore, the matter be relegated to the Civil Court. As per allegations in the complaint, the Ops had negotiated the LCs of the foreign bank with the complainant Company and after negotiating they accepted the documents. It is to be seen on what basis the documents were not negotiated by the Op with the foreign bank and why these have been returned to the complainant unpaid. These points could be decided on the basis of documents on the record as the District Fora are headed by senior officers of the rank of the District Judges and High Court Judges and they are fully competent to examine the complicated questions. A reference can be made to the judgment of the Hon'ble Supreme Court in the case of "Dr. J.J. Merchant and others Vs. Shrinath Chaturvedi", 2002(6) SCC 635 that:-
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Consumer Complaint No. 18 of 2010 'the State Commission and District Forum are headed by retired High Court Judges and officers of District Judge level and in our view, this is not such a case which cannot be decided by the 'Consumer Fora' after obtaining evidence and if need be after getting an expert opinion'.
9. Further it was held by the Hon'ble National Commission in "Shiv Kumar Agarwal versus Arun Tandon and another", 2007(2) CLT 287. In that case - plea that case involves complicated questions of act and law and will need expert evidence, which is not possible in the summary proceedings adopted by the Consumer Fora repelled - Consumer Forum which is headed by Senior Judicial Officers, are capable of dealing with even complex questions. In those circumstances, it cannot be said that the matter in dispute cannot be decided by this Commission and that the same should be referred to the Civil Court.
10. In case we go through the pleadings of the parties, the complainant is a company and the complaint has been filed through one of its Directors. It is not being challenged because there is no plea on behalf of the Ops that the complaint has not been filed by a competent person. The complainant had dealings overseas as he had been sending his goods overseas. Goods worth Rs. 26,59,500/- on 17.12.2007 against Invoice No. 27, Rs. 28,85,301/- on 26.12.2007 against Invoice No. 28, Rs. 16,59,749/- on 2.1.2008 against Invoice No. 29 and Rs. 7,28,924/- on 2.1.2008 against Invoice No. 30 amounting to US $ 201388 (Rs. 79,33,474/-) and LC No. TF- 727508103 dated 3.10.2007 and LC No. EBI1LC07009110 dated 9.10.2007 were received by the Correspondent Bank in India, namely, ICICI Bank Ltd.-OP No. 3 on behalf of National Bank of 11 Consumer Complaint No. 18 of 2010 Fujairah (Sharjah Branch) Sharjah UAE and opener Emirates Bank International PJSE Head Office Dubai UAE, which was negotiated with OP No. 1 and negotiation was accepted by OP No. 1. But lateron the foreign bank did not clear the bills as there were some discrepancies in the documents, which were not corrected, therefore, the bills were not cleared. The bills were called back by Op No. 1 and a sum of Rs. 80,13,228/- was debited in the account of the complainant. The allegations of the complainant are that once OP No. 1 had negotiated the LC and accepted the same then they were to check the documents at that time and could seek any clarifications from the complainant with regard to removal of those discrepancies but they never intimated those discrepancies to them and of their own called back the bills and debited the amount in the account of the complainant. This fact is clear from the documents on the record Ex. C-2 and Ex. C-3 are LC receipts issued by ICICI Bank from National Bank of Fujairah (Sharjah Branch) Sharjah UAE and opener Emirates Bank International PJSE Head Office Dubai UAE. OP No. 1 had forwarded the documents to the Emirates Bank International PJSE Head Office Dubai UAE vide letter dated 17.12.2007 Ex. C-4. However, the documents were not accepted by the Foreign Bank, these were received back unpaid, which were sent by OP No. 1 to the complainant vide letters dated 29.2.2008 & 6.3.2008 Exs. C-12 to C- 15 and the payment of US$ 42147 against B/L No. LUH/JBL/LCL/20071757 dated 28.12.2007, US$ 67500 against B/L No. LUH DXB 5948 dated 30.11.2007, US$ 73231 against B/L No. LUD/DXB/FCL/20071726 dated 18.12.2007 was not released by the 12 Consumer Complaint No. 18 of 2010 Foreign Bank. Whereas the complainants vide their letter dated 5.7.2008 Ex. C-20 wrote to the OP bank that they had accepted the documents after thorough checking. In case there was any discrepancy, it was to be removed by them or would have been brought to the notice of the complainant and that once Ops No. 1 & 2 had accepted the documents and had made the payment, the responsibility devolves upon them. In case any discrepancy was pointed out by the LC bank to OP Nos. 1 & 2 and the same was referred to the complainant, they had immediately cleared being the petty one and that the amount has been wrongly debited from their account without their fault. Then vide letter Ex. C-22 again a letter was written to OP Nos. 1 & 2 to get a sum of Rs. 80,13,228/- to their account. A reminder was sent on 11.6.2009 vide letter Ex. C-23 and another letter dated 18.7.2009 was written as Ex. C-24. Then another letter dated 29.8.2009 (Ex. C-26), letter dated 6.10.2009 (Ex. C-27), customer complaint dated 20.10.2009 (Ex. C-28), another letter dated 20.10.2009 (Ex. C-29) were written to OP Nos. 1 & 2. OP Nos. 1 & 2 in their letter dated 10.11.2009 stated that the letter has been referred to the Competent Authority. Again another letter dated 20.11.2009 (Ex. C-31), customer complaint dated 3.12.2009 (Ex. C-32), another letter dated 4.12.2009 Ex. C-33 was written to the Ops. The Ops vide their letter dated 19.12.2009 Ex. C-34 again stated that the matter has been referred to the Competent Authority. However, the complainant again wrote a letter to OP Nos. 1 & 2 on 28.12.2009 (Ex. C-35), letter dated 15.1.2010 (Ex. C-36), another letter dated 3.2.2010 (Ex. C-37) but no reply was received from the Competent 13 Consumer Complaint No. 18 of 2010 Authority. That when once they negotiated the LC, accepted the LC, made the payment then they were to negotiate with foreign bank, removed the discrepancies and in case the discrepancies were as such, those should have been brought to the notice of the complainant but those were not brought to the notice of the complainant and received back the documents unpaid at their own risk, then there is no reason for OP Nos. 1 & 2 to debit the abovesaid amount in the account of the complainant.
11. However, in case we go through the plea taken by the Ops and documents on the record after acceptance of the LCs, these alongwith the documents i.e. Invoice Bills were sent to opener Emirates Bank International PJSE Head Office Dubai UAE and National Bank of Fujairah (Sharjah Branch) Sharjah UAE vide their letter dated 9.9.2009 (Ex. O-1/2), statement of account (Ex. O-1/3) which shows that a sum of Rs. 80,13,228/- was debited in the account of the complainant. The counsel for the OP has also referred to the Fax Messages Ex. O-1/1 and O-1/2. In case we go through these messages, these have not been addressed to the complainant, therefore, it cannot be said that the discrepancies, if any, in the documents were conveyed to the complainant. A plea has been taken that the complainant was an old customer dealing overseas and he knew very well about the acceptance of the LCs. He had been visiting their bank and the discrepancies were orally brought to the knowledge of the complainant. However, in case the complainant is old customer then the bank should have been more responsible. There is no evidence whether he had visited personally in the office 14 Consumer Complaint No. 18 of 2010 of the Ops or that the discrepancies were brought to the notice of the complainant to be cleared. The LCs were running in lakhs, therefore, huge amount of the complainant was involved and that the Ops had the responsibility to clear the documents and get the payment. Otherwise, once they had negotiated the LCs and had accepted the documents then lateron in case any discrepancies arise then they are to clear it at their own level or with the help of the complainant but it was not done. They adopted the easy method to get back the documents from Foreign Bank without payment and debited the amount from the account of the complainant. This certainly amounts to deficiency in services and unfair trade practice on the part of the Op Bank. Therefore, in case we analyse the entire facts and circumstances of the case, the OP bank had accepted the LCs, negotiated the same with the complainant and after taking the documents from the complainant, the same were duly forwarded to the Foreign Bank of the Consignee. In case the Foreign Bank had raised any objection, it was to be removed by the OP because once they had accepted the LCs, in case they need any help of the complainant to remove these discrepancies then they would have written to the complainant but there is no evidence on the record whether those discrepancies were brought to the notice of the complainant oral or in writing. The matter relates to a huge amount running in Lakhs, therefore, version of the Ops that orally they brought it to the notice of the complainant is not sufficient. Therefore, clearly there is deficiency on the part of OP Nos. 1 & 2. 15 Consumer Complaint No. 18 of 2010
12. Now what amount the complainant is required to recover from the Ops. The OP bank has made a debit entry of Rs. 80,13,228/-, which is required to be reversed back. Apart from that in the complaint, the complainant has stated that he has suffered a loss of sum of Rs. 58,26,078/- with regard to the value of the goods, which shows that the salvage value come to Rs. 21,07,396/-. This amount has to be deducted from the account of the complainant. The Ops had charged a sum of Rs. 21,33,733/- on account of interest debited in his account, a sum of Rs. 8,99849/- as freight charges and a sum of Rs. 1,61,400/- as bank charges, which has not been challenged by the Ops in their written reply or by filing any document. Accordingly, the complaint of the complainant is accepted with a direction to Ops No. 1 & 2:-
(i) to reverse the entry of Rs. 80,13,228/- after deducting salvage value of Rs. 21,07,396/-,
(ii) pay a sum of Rs. 21,33,733/- interest debited to the account of the complainant;
(iii) pay a sum of Rs. 8,99,849/- paid as freight charges, shipping line charges etc..
(iv) pay a sum of Rs. 1,61,400/- as bank charges charged by the Ops to extend the services;
(v) pay a sum of Rs. 1,00,000/- as compensation for
harassment, and
(vi) Rs. 11,000/- as litigation expenses.
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Consumer Complaint No. 18 of 2010
13. Opposite parties No. 1 & 2 are directed to comply with the above directions, otherwise proceedings under Section 27 of the CP Act shall be initiated against them.
14. The arguments in this Consumer Complaint were heard on 19.5.2014 and the order was reserved. Now the order be communicated to the parties as per rules.
15. The Consumer Complaint could not be decided within the statutory period due to heavy pendency of Court cases.
(Gurcharan Singh Saran) Presiding Judicial Member June 2, 2014. (Harcharan Singh Guram) as Member 17 Consumer Complaint No. 18 of 2010