State Consumer Disputes Redressal Commission
Transworld Clothing Pvt.Ltd. vs State Bank Of India & Ors. on 7 February, 2013
This complaint has been filed for the following reliefs:- IN THE STATE COMMISSION : DELHI (Constituted under Section 9 of the Consumer Protection Act, 1986) Date of Decision : 07.02.2013 COMPLAINT CASE NO. 270/1996 IN THE MATTER OF:- 1.TRANSWORLD CLOTHING PVT.LTD. C-161, EAST OF KAILASH, NEW DELHI-110065. ..........COMPLAINANT Versus 1.STATE BANK OF INDIA & ORS. FRIENDS COLONY BRANCH, NEW DELHI-110065. 2. STATE BANK OF INDIA (HQ) 11, SANSAD MARG, NEW DELHI-110001. 3. MR. SURENDER BINATI ASST.GENERAL MANAGER, STATE BANK OF INDIA, A-5, FRIENDS COLONY, NEW DELHI .. RESPONDENTS CORAM Justice Barkat Ali Zaidi, President S.A.Siddiqui, Member(Judicial) S.C.JAIN, Member 1. Whether reporters of local newspaper be allowed to see the judgment? Yes 2. To be referred to the reporter or not? Yes S.A.SIDDIQUI,(ORAL) ORDER
(1).This complaint has been filed for the following reliefs:-
(a) A credit entry of Rs.2,70,100/-
in current A/C no.2366 of complainant with OP bank.
(b) Another credit entry of Rs.49,600/- in current A/C no.2366 of the complaint.
(c) Payment of interest @ 20% p.a on above said two amount w.e.f. December 1995 to September 1996.
(d) A compensation of Rs.1,00,000/-
for mental pain agony and harassment to the complainant against OP.
(e) Power to encash FDRs as per Annexure-M amounting to Rs.1,98,600/- with accrued interest.
(f) Cost of proceedings. Brief facts reading to filing of complaint are discussed below: (2). Complainant is a
company duly incorporated under the India Companies Act, 1956, having its registered office at D-835, New Friends Colony, New Delhi-110065. Sh. K.S.Bhardwaj, Sh. Arvind Bhardwaj and Sh.
Chaitanya Bhardwaj are its directors. The Business of the company is to Export Garments to Foreign Countries in the world. The directors of the company also carry out similar business as the Complainant Company, as sole proprietor i.e M/S Apparel and Accessories Inc. The complainant companies as well as the other three entities of the complainant company have accounts with the Friends Colony Branch of the OP bank. For the purposes of the business, the complaints company opened current account no. 2366 with OP1. Their sole proprietorship firms belonging to directors of the complaint company, also have their accounts with respondent no.1.
(3).The procedure regarding the exporting garments to foreign buyers through the bank by garments exporters in India is that on receipt of purchase order from a foreign buyer, the garment exporter manufacturers the items as contained in the purchase order. The purchase order is also required to be covered by a letter of credit opened by the foreign buyers in favour of Indian exporter. The complainant sent their shipment against the letters of credit only. The letters of credits is send to the Indian exporters directly or through banks.
On the basis of LCs, Indian garments exporters can enter into forward exchange contracts with its bank. In case, the foreign buyers makes payments on or before a particular date, as agreed upon by the bank and Indian garments exporters, then a credit would be given to the exporter at a predetermined exchange rate is irrespective of the actual prevailing exchange rate on the date of the payments. If the exchange rate on the date of payment is higher than the negotiated rate, the exporter suffers a loss else the banks suffers a losses.
(4).On 6.07-09-95 an Italian firm by the name and style Euronova placed some purchase orders in the form of 3 LCs upon M/S Apparel & Accessories Inc, (a proprietary concern of one of the share holders of the complainant company) for purchase of garments for a total sum of Italian Lira 16,57,70,000/- favouring M/S Apparels & Accessories Inc. The validity of these letters LCs was upto 27.11.1995 (copies of the LCs are collectively marked as Annexure-A) These LCs were subsequently transferred in favour of complainant company partly on 14.09.1995 and thereafter on various dates after 25.09.1996 (collectively marked as Annexure-B).
(5). On 02.11.1995 the complainant entered into a forward exchange contract with responded no.1 i.e State Bank of India for a sum of Italian Lira 15,00,000,00/-. The exchange rate between the complainant and respondent no.1 agreed was Rs.2.19 per 100 lira and the delivery date was agreed as 15.12.1995.
It was meant if the complainant submits bills/shipping documents for negotiation/discounting on or before 15.12.1995 he would be entitled to a credit of Italian Lira upto 15,00,00,000/-
in rupees computed at the exchange rate of Rs.2,19 per 100 lira. The bills were negotiated before 15.12.95 by the complainant and according to said contract the amount due in rupees was credited to the current account of the complainant at the agreed rate of Rs. 2.19 per 100 lira. Since the total amount of LCs was Lira 16,57,70,000/- but contract was only for lira 15,000,00,00/- the remaining amount of LCs i.e. 1,57,70,000/- of the said LCs was also credited to the account of the complainant at then prevailing lower existing exchange rate i.e Rs. 2.17 per 100 Lira. Copy of letter written by the bank informing the complainant the terms and conditions of the contracts was Annexure-C and copy of the contract entered into is Annexure-D. (6).In Para 9 of complaint its has been alleged that during the course of business is a common practice that exporters to leave blank signed papers/stamp papers bearing rubber stamps of their company in the custody of the bank so that the same can be promptly used by the bank without any inconvenience and loss of time under the written instructions from the exporters. As per common practice the complainant had also kept certain blank signed papers/stamped papers with the seal/stamp of the company with OP1. On written instruction from the complainant, the bank filled up the signed papers and also affixed the rubber stamp of the complainant company on the aforesaid contracts. This fact is clear by looking at the contract papers in which although signature and stamp has been affixed on behalf of the complainant company but no signatures have been affixed by respondent no.1 but still the contract has been honored similarly Annexure-B which is an order written by bank to the complainant should be signed by respondent no.1 where as it has been typed on a paper signed by the complaint. This shows that for the sake of convenience and by reposing faith and trust in the OP, the complainant kept signed blank papers and stamp papers bearing company seal/ stamp with respondent no.1.
(7).It has further been alleged that on 05.12.1995 Mr. K.S.Bhardwaj went to the op bank for some business transaction he was surprised to discover that a sum of Rs.2,70,000/- was debited in the complainant current account no. 2366. Since no such transaction had taken place within the knowledge of the director, he immediately inquired from the respondent bank regarding the said debit.
He also confirmed from his own office as to whether any cheque of Rs.2,70,000/- had been issued and it was confirmed that no such cheque was issued. One Mr. Binati (OP3), the then Assistant General Manager of OP1 bank promised to look into matter of debit entry, and will see how it has been made. Since Mr. Binati could not explain the matter to the director of the complainant, he gave letters dated 5.12.1995 and 6.12.1995 requesting that he should find out and intimate the basis of the said debit immediately. Copies of these letters are marked Annexure-E. There after Sh. Kishan Bhardwaj director of the company was asked by Mr. Binati (OP3) to call again on 6.12.1995 by which time he would be able to find out the basis of said debit entry. Mr. Bhardwaj went to the bank on 6.12.1995 as well as on 7.12.1995 but the officials of the bank did not disclose the basis of the said entry. Mr. Bhardwaj was asked to come after 3-4 days. Mr. Bhardwaj went to the OP bank on 10.12.1995. On that day a letter dated 06.12.1995 was handed over to him in which it was mentioned that debit of Rs. 2,70,100/- was correct. It was further stated in that letter that on the request of the complainant, OP1 had (allegedly) booked a forward purchase exchange contract on 13.09.1995 for Italian Lira 15,00,00,000/- at the Rs.2.01 per 100lira and delivery date was 27.11.1995. However this contract ws allegedly cancelled at the request of the complainant on 31.10.1995 on the same date with same hand script and re-booked the contract again for Italian Lira 15,00,00,000/- at Rs. 2.19 per 100 Lira for latest delivery by 15.12.1995. It was alleged that under these circumstances, the foreign department of the bank had advised them to debit the amount of Rs. 2,70,100/- as a result of cancellation of the earlier contract. Consequently the said debit entry had been made. Copy of the letter dated 6.12.1995 is Annexure-E. It is noteworthy that on 13.9.1995 the complainant had neither any purchase order nor any letter of credit issued by the foreign buyers. The LCs were transferred in favour of complainant partly on 14.09.1995 and their after as per Annexure-B. (8). Along with letter dated 06.12.1995 (Annexure-B) another letter dated 31.10.1995 purported to have been written by complainant was also annexed. This letter dated 31.10.1995 was hand written letter and is on the letter head of the complainant company and at the bottom it also bears the rubber stamp of the company signed by Sh.Chetanya Bhardwaj, one of the directors. Since such a letter dated 31.10.1995 had not been written by the complainant immediately the matter was taken up with OP1 and any action taken based upon such letter was not binding upon them. Copy of the letter dated 31.10.1995 is Annexure-G. On through enquiry it was found that one Sh. T.R.Bakshi who was earlier manager with OP1 bank was rendering part time service with the complainant company to teach banking/account keeping, had written this letter under the instructions of the manager of OP1. It was also discovered that Sh. Chetanya Bhardwaj one of the director of the complainant company had sent a blank letter head of the company duly signed and stamped through Sh.T.R.Bakshi. This was done because OP1 had asked the complainant company that in order to book a forward contract letter of request was required and for that purpose company should sent a blank letter head duly signed on which the bank would write the letter of request for forward contract.
(9) As a matter of fact no contract was ever entered into between the Complainant Company and OP1 on 13.09.1995 and 31.10.1995 and there was no question of canceling and rebooking of the contract. The contract for Italian Lira of 15,00,00,000/- was entered into only on 2.11.1995 and the same was honored. On 13.9.1995 the complainant company did not have any purchase order or a letter credit. Like wise no forward contract for Italian lira 3,25,000,00/- was entered into between complainant and OP1.
These fact go to show that letter dated 31.10.1995, purported to have been written by the complainant, was never written by them, but the same was forged by OP no.1 bank with an ulterior motive.
Good faith reposed by the complainant in the OP bank was broken and blank letter head was misused by offices of the OP bank.
(10.). Complainant wrote several letters to OP1 regarding correcting and reversing the debit entry of Rs. 2,70,100/- in their Current A/C No.2366 but in vain. It was also made clear to the bank that contract dated 13.09.1995 for Italian Lira of 2,25,000,00/- was never entered into between complainant and OP no.1 and no opaper for the same were ever signed nor any consent was given by the complainant. The contents of the letter dated 31.10.1995 were wrong and mischievously forged by officials of OP1. Since the bank was not ready to reverse the debit entry the complainant was left with no choice but to take resort to legal proceeding. A legal notice dated 19.12.1995 was therefore sent to OP bank (Annexure-H).
(11). In the month of June 1996 the complainant again received a letter dated 6.6.1996 from op1 in which it was mentioned that they had been advised by their foreign department to debit current A/C No.2366 on account of cancellation and rebooking of forward contract of Italian Lira 2,25,00,000/- on 13.09.1995. As already stated above, there was no such contract and letter dated 31.10.1995 had been forged by OP1 bank. Thus debited amounts of Rs.2,70,100/- and Rs.49,600/- are totally illegal.
(12). And during the course of business transaction the complainant company had got made FDRs of the value of more than Rs. 2,000,00/- in the name of State Bank of India Account Transworld Clothing Pvt. Ltd. For the purpose of applying quota in Apparel Export Promotion Council (within AEPC) due to said false debited entries, the complainant was not in a position to encash the said FDRs as OP1 before encashing them was going to deduct the amount of false debited entries and further likely to raise their false debit entries. Thus the complainant was being deprived of utilizing this money for business purpose. The matter was also referred to the banking ombudsman for reconciliation who gave a recommendation to the effect that loss of Rs. 2,70,100/- be equally shared by both the parties. It was not acceptable to complainant list of FDs and photo copies of FDs which have not been encashed are Annexure-M. (13). Thus the bank is guilty of rendering deficient services and the complaint is liable to be allowed and the complainant entitled to the reliefs claimed.
(14). Opposite parties filed their written statement. It was stated therein that M/S Apparels & Accessories Inc. had bagged a contract for supply of garments from Italian buyer. The deutsche bank, a Torino Italy on behalf of foreign buyer Euro nova opened the following 3 letters of credit (LCs) L.C.No. 730/CIM/8964 dated 6.9.1995 for Italian Lira 2,53,70,000/-, L.C.No.730/CIM/8964 dated 06.09.1995 for Italian Lira 4,60,40,000/- and L.C.No.730/CIM/8966 dated 06.09.1995 for Italian Lira 9,43,60,000/-.
(15). To save itself from any fluctuation in rate of foreign exchange, the complainant booked a forward contract for sale of Italian Lira 15 crore between 20.11.1995 to 28.11.1995. The said contract was entered into by Sh. Chetanya Bhardwaj director of the complainant company on 13.09.1995 on telephone on behalf of the complainant.
Accordingly the Friends /Colony Branch of the OP book booked with its overseas branch on 13.9.1995 for sale of the Italian Lira 15,00,00,000/- between 27 & 28 November 1995. The op bank accordingly agreed to purchase Italian lira 15,00,00,000 between 20 and 27 November 1995 @ 2.01= Italian lira 100. The respondent bank also agreed to purchase another Italian lira 2,25,00,000/- between the 25 to 31 January 1996 @ Rs.2.02 =Italian lira 100. The relevant entries were made in the books of accounts being maintained by the respondent bank in its ordinary course of business Sh. Chetanya Bhardwaj accordingly received booking advice passed from OP on 13.09.1995. Who in token of his acceptance, signed the carbon copy thereof.
(16). It was alleged that complainant failed to supply the goods under the afforded LCs within the agreed time and as such could not expect to receive the proceeds of Italian lira 15,00,00,000/- between the 28 to 27 November 1995 and thus preferred to cancel both the forward contracts entered into with the OP bank. Vide its letter dated 31.10.1995 the complainant requested the OP bank to cancel both the forwards contracts and for rebooking of forwards contracts for Italian lira 15,00,00,000/- and Italian lira 2,25,00,000/- respectively. Under the new forward contracts the complainant had requested to respondent bank to purchase Italian lira 15,00,00,000/- on 15.12.1995 and another Italian lira 2,25,00,000/- on 15.2.1996. The OP bank booked on 15.2.1996 the Italian lira 15,00,00,000/- for sale by complainant on 15.12.1995 @ Italian lira 100 = Rs.2.19 and another Italian lira 2,25,00,000/- @ Italian lira 100= Rs.2.18, as per the instruction received from the complainant.
(17). It was agreed between the parties that in the event of cancellation of forward contracts, the complaint would be liable to pay all the money which become due and payable to the OP bank on account of fluctuation in rate of foreign exchange prevalent at that time. Therefore, respondent bank recovered a sum of Rs. 2,70,100/- from the complainant on account of cancellation of forward contracts and debited the account of the complainant accordingly.
(18). It was denied that there is any practice in the OP bank to keep blank duly signed papers/ documents of its consumers it was therefore denied that the complainant had kept any blank duly signed papers / documents with the OP bank as alleged. The averments made by the complainant/self are contradictory. At one hand the complainant has mentioned that it had kept certain blank duly signed papers/documents with op bank for convenience and on the other hand it was mentioned that the said documents were to be used by the op bank only on the written instructions of the complainant. If such was the position then there was no use of keeping any blank duly signed papers/documents with the OP bank. All the required papers/documents could have very well been sent by complainant to the bank along with its written communication/instruction. It was denied that OP bank had ever prepared any document on blank papers as alleged.
It was also denied that OP had affixed rubber stamp of the complainant on any paper/document. It was further denied that the alleged Annexure-B attached to the complaint was prepared on any paper which was signed by the complainant prior to its preparation/execution as alleged.
(19). It was stated that debited entry of Rs.2,70,100/- pertains to cancellation of foreign exchange rate order.
As explained earlier on enquiry the complainant was immediately advised source of said debited entry, vide its letter dated 6.12.1995. On enquiry from Sh.K.S.Bhardwaj cancellation letter dated 31.10.1995 written by Sh.Chetanya Bhardwaj was shown to him. It was emphasised that the said letter dated 31.10.1995 was in the hand writing of Sh.T.R.Bakshi who was an employee of the complainant. It was denied that the op bank has failed to advise the source of debited entry. Through letter 6.12.1995 op bank explained the source/basis of the debit entry of Rs.2,71,100/-. It was also denied that Sh. T.R.Bakshi had written the said letter at the instruction of some manager of the op bank as alleged. It is noteworthy that Sh.Chetanya Bhardwaj had signed the said letter written by Sh.T.R.Bakshi.
(20). It was wrong to say that no contract was entered into between the complainant and OP bank on 13.9.1995 and on 31.10.1995 the complaint had requested the OP bank to cancel the said booking and also to make fresh booking for sale of foreign exchange (within Italian lira) on different dates for which a formal contract was entered into between the parties on 12.02.1995. It was mentioned that it was wrong to say that on 13.09.1995 Complainant Company was not having any purchase order at hand. The complainant has admitted the fact that it its sister concern i.e M/S Apparels and Accessories Inc. had bagged a contract for supply of goods on 6.9.1995 and the letters of credited therefore had also been received. It was denied that there was any false debit entry on the part of the OP bank. The allegation of forgery on the part of the OP was totally baseless and the OP bank has every right to recover its due out of the deposits. The OP bank has bankers lien over the amount deposited with it. Thus there was no deficiency of services on the part of the OP bank nor any question of harassment to the complainant arises and the complaint is liable to be dismissed with cost.
(21). Both the sides led evidence in support of their case. Written arguments we also filed.
(22). We have heard learned counsel for both the sides;
Sh.Sunil Kumar Adv. for the complainant and Sh.Sanjeev Kakra adv. for OPs the complainant was heard on the basis of letter dated 5.9.2012 asked by Honble National Commission remitting back case for fresh hearing. Some main features which required our special considerations are whether the complaint had given blank papers/documents duly signed by him for the purpose of exchange contract? Whether any contract was booked by the complainant with OP bank for cancellation & rebooking of the contract? And also whether the complainant had ever entered into a forward contract with OP bank on 13.09.1995 and 2.11.1995 for Italian lira Rs. 15,00,00,000/- and Rs. 2.25,00,00,000/- respectively?
(23). On the basis of documentary evidence on record we have no doubt in our mind that on the request dt.31.12.1995 of the complainant (Sh. Chetanya Bhardwaj directors of the company) earlier contract dt.13.09.1995 was cancelled and another contract was rebooked for Italian Lira Rs. 15,000,00,00/- @ 2.19 for delivery latest by 15.12.1996. Therefore, the date of delivery on the contract for Italian Lira Rs.15,000,00,00/- was changed for 27.11.1995 to 15.12.1995.
(24). Accordingly as per advice of their Foreign Deptt. OP debited a sum of Rs. 2,71,000/- (Rs. 2,70,000/- exchange difference and Rs. 100/- handling charges) to the complainants current account no. 2366 on 4.12.1995 by virtue cancellation of contract dt. 13.10.1995. It is also to be noticed that on questioning by Sh. K.S.Bhardwaj about the source of debit entry and cancellation of contract etc the complainant was immediately advised about the source of debit entry vide its letter dt.
06.12.1995. The OP bank had advised the source of said debit entry to the complainant on further questioning by Sh. K.S.Bhardwaj about cancellation of contract etc, letter dt.31.10.1995 written by Sh. T.R.Bakshi on instructions of Sh. Chetanya Bhardwaj was shown to him. Under the circumstances the allegation of complainant to the effect that Sh. T.R.Bakshi took instructions from the OP bank does not appear convincing. Sh. T.R.Bakshi though a previous employee of the OP bank was serving the complainant at the time of writing letter dt.
31.10.1995. letter dt. 31.10.1995 was thus written on the instructions of Sh. Chetanya Bhardwaj.
(25). As regard the allegation of forgery on the part of the bank it was denied. It was categorically denied that complainant left any blank papers/documents duly singed and stamped with the OP bank. It is noteworthy that allegation made in the complainant in this regard is self-contradictory. At one hand the complainant contended that it had kept certain blank papers duly signed any stamped for the working convenience of the bank, on the other hand it also said that those documents were to be used only on written instructions of the complainant. If this was the position, there was no need of keeping any blank duly singed and stamped paper/documents. All the required papers/documents could have well been sent by the complainant to the banker along with written instruction/communication. It was denied that any document was prepared, executed or was forged by the OP bank.
(26). In view of entire facts and circumstances and documentary evidence on record, we have come to the conclusion that the allegations of the complainant against the OP bank are not based on firm footing as it lacks sufficient support from evidence on record. They are also self contradictory in nature. On the other hand defence taken by OP bank finds sufficient support from the documents on record. It also gets support from the facts and the circumstances. This leads us to a definite finding that the complainant has failed to prove that the OP bank was deficient in providing its services to the complainant. The complainant is therefore liable to be dismissed.
ORDER The complaint is accordingly dismissed. The cost is made easy.
(Justice Barkat Ali Zaidi) President (S.A.Siddiqui) Member (S.C.Jain) Member R.Fatima