State Consumer Disputes Redressal Commission
State Bank Of India vs Manwani on 3 January, 2011
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR
Appeal No.464/2010
Instituted on 24.07.10
State Bank of India, Through: Branch Manager,
Shashtri Market Branch, Nr. Budapara Electricity Office,
RAIPUR (C.G.) ... Appellant.
Vs.
Ashok Manwani, S/o Late Shri H. R. Manwani,
R/o. Nr. Golchha Apartment, Shankar Nagar,
RAIPUR (C.G.) ... Respondent.
Appeal No.476/2010
Instituted on 29.07.10
Ashok Manwani, S/o Late Shri H. R. Manwani,
R/o. Nr. Golchha Apartment, Shankar Nagar,
RAIPUR (C.G.) ... Appellant.
Vs.
State Bank of India, Through: Branch Manager,
Shashtri Market Branch, Nr. Budapara Electricity Office,
RAIPUR (C.G.) ... Respondent.
PRESENT: -
HON'BLE JUSTICE SHRI S.C. VYAS, PRESIDENT
HON'BLE SMT. VEENA MISRA, MEMBER
HON'BLE SHRI V.K. PATIL, MEMBER
COUNSEL FOR THE PARTIES IN BOTH APPEALS: -
Shri N. K. Shrivastava, for State Bank of India.
Shri R. K. Bhawnani, for Ashok Manwani.
ORDER
Dated: 03/01/2011 PER: - HON'BLE JUSTICE SHRI S. C. VYAS, PRESIDENT This order will govern disposal of appeal No.464/10 as well as 476/10 which have arisen out of the same impugned order dated 30.06.10, passed by District Consumer Disputes Redressal Commission, Raipur (hereinafter called "District Forum" for short) in complaint case No.74/05, whereby and wherein the appellant of // 2 // appeal No.464/10 which was OP before the District Forum has been directed to pay Rs.1,24,972/- along with interest @ 6% p.a. w.e.f. 01.06.06, and compensation for mental agony Rs.5,000/- as well as cost of litigation Rs.1,000/- to the complainant, who has preferred appeal No.476/10. For the purpose of convenience parties will be referred as per their capacity in the complaint case before District Forum, hereinafter. Original copy of this order be retained in appeal No.464/10 and its copy be placed in the record of appeal No.476/10.
2. As per the case of the complainant, he deposited Rs.1,00,000/- in his sole name under reinvestment plan of the OP under Special Term Deposit Receipt (hereinafter „STDR‟) for a period of 36 months expiring on 01.01.03. On maturity an amount of Rs.1,40,514/- was payable under the said STDR. In the month of March 2000, in the capacity of proprietor of M/s. Panacea Investments he had applied for dealership of Inter Connected Stock Exchange of India Ltd. (hereinafter „ICSE‟), to acquire trading rights in the ICSE and as per terms and conditions of ICSE membership, he was required to deposit Rs.5,00,000/- as Admission Fee, Rs.25,000/- as Annaul Subscription, Rs.5,000/- for SEBI Registration Fee, Rs.8,925/- as Insurance Premium, Rs.5,000/- towards initial contribution to settlement Guarantee Fund and Rs.2,00,000/- as Security Deposit (Base Minimum Capital i.e. BMC) Out of BMC of Rs.2,00,000/-, Rs.1,00,000/- was payable by // 3 // Demand Draft in favour of ICSE and balance Rs.1,00,000/- by way of D/D or Fixed Deposit for a period of 2 years, or Bank Guarantee or Pledge of Securities. The STDR of Rs.1,00,000/-, which was available with the OP Bank was utilized for this purpose and the Bank was requested to mark lien over STDR No.894860 in favour of ICSE. The Bank / OP marked lien over the bank deposits, the STDR, in favour of third party. It is averred in the complaint that as per Banking Law, marking of lien over a Bank Deposit in favour of a third party is not permissible and also it never creates any right or any charge over STDR. But the complainant fulfilled requirements and other conditions of ICSE and then was granted dealership by the ICSE, but the ICSE failed to keep its promises and after a long spell of correspondence, the complainant was forced to close down his terminal in July 2001 due to incurring heavy losses and loss of connectivity with the exchange. He also requested the ICSE to return all his deposits including the captioned STDR of Rs.1,00,000/-. He was apprehending misuse of lien by the ICSE, marked in the STDR, so he requested the OP to cancel lien over the STDR, by revoking the instructions of marking lien over the STDR by letter dated 17.07.02. It was also requested that no payment be made to the ICSE, but the OP Bank did not initiate any action to safeguard customer‟s interest and the ICSE did not return the said STDR, despite written request by the complainant. Then a request was made to the OP for making payment // 4 // of the STDR on maturity, on the basis of complainant‟s discharge on the photocopy of original STDR. Complainant also requested to renew the principal amount for further period of 36 months and credit the interest in his current account with the OP. On 09.01.03, the OP renewed the principal amount for a further period of 36 months by issuing another STDR No.655848 with its maturity date as 01.01.06. The net interest amount of Rs.35,100/- after deduction of TDS Rs.5,414/- was also credited to complainant‟s account on the basis of his discharge on the back of photocopy of Original STDR. The renewed STDR was delivered to the complainant in a plastic cover. Later on when that cover was opened, at the end of the financial year, then it was found by the complainant that on the renewed STDR also, there was a mark of lien in favour of ICSE, though no such instruction was given by the complainant to the OP. Then objections were raised by the complainant before OP and the matter was taken to the Deputy General Manager of the Bank, but the mistake was not corrected and when pre-mature payment of STDR was demanded, then the OP Bank demanded production of original STDR No.894860, which was in possession of the ICSE. Then again protest was made by the complainant before the OP and notice was also sent through Advocate, but the OP clearly refused to discharge the renewed STDR and illegally demanded refund of Rs.40,514/-. This action of the OP comes in the category of deficiency in service and refusal to make payment of // 5 // the STDR of the complainant was also an action of deficiency in service. The OP disbursed the amount under old nonexistent STDR No.894860 to the ICSE on 26.02.05, declaring the renewed STDR No.655848 as null and void. So, complaint was filed before District Forum seeking direction to the OP to pay the amount of STDR No.655848 along with interest @ 12% p.a. and also to pay Rs.1,00,000/- as compensation for the amount, which the complainant borrowed from the market because pre-mature payment was not allowed by the OP in spite of prayer. Further compensation of Rs.25,000/- was also sought under the head mental pain and agony.
3. The OP in the written version refuted all the allegations leveled in the complaint against it and averred that lien in favour of third party ICSE was marked over STDR of the complainant on his own request, which was perfectly legal and as per rules of the Bank. It has also been averred that, when once lien was marked in favour of a third party then it cannot be revoked by the complainant without permission of that third party. The Bank also issued an undertaking to the third party ICSE in respect of lien and therefore consent of that third party was necessary for revoking that lien. As the complainant failed to obtain the original STDR from the ICSE, therefore the deposit was renewed for a further period of three years, on the request of the complainant along with mark of lien in favour of ICSE. There was // 6 // already instruction of the complainant to that effect. It has also been averred that the ICSE demanded payment of that STDR along interest and the Bank was required to make payment in view of the undertaking given by it. The complainant was a retired Higher Officer of the Bank and was having influence with the Junior Officers of the Bank and was in habit of misusing such influences with the Officers. It has also been averred that marking of lien on STDR of Rs.1,00,000/- was for commercial purpose, as the complainant was having connectivity with the ICSE and SEBI. In view of this commercial nature of transaction, the consumer complaint is not maintainable. Marking lien over STDR was unconditional and binding upon the Bank as well as the complainant, in view of the interest credited by the complainant himself in favour of third party and was paid to that third party and in doing so the Bank has committed no deficiency in service. On the basis of these defences it was prayed that the complaint be dismissed.
4. Learned District Forum, vide order dated 06.08.07, earlier dismissed the complaint on saying that complicated questions in respect of banking contract, bailment and stock exchange are involved in the matter, which needs detailed inquiry and trial and also opinion of an expert, which can only be done by a Civil Court and it is not possible for the District Forum to do this exercise in a summary // 7 // proceeding by way of consumer complaint. It was also found that the ICSE, in whose favour the lien was created, has also not been made party, so the complainant was not entitled of getting any relief from the District Forum. This order was challenged by the complainant before this Commission by way of appeal No.448/07, which was decided vide order dated 27.04.09, wherein it was found that the questions which are involved in this matter are not complicated and can be resolved by the District Forum. The controversy between the parties lies in a narrow compass as to whether the amount which was deposited by the complainant, had become payable to the complainant and whether in spite of the fact that it had become payable it has not been paid and if it is so then, it is definitely deficiency in service, but on the contrary if the amount was not payable to the complainant and therefore it was retained by the OP Bank, then it may not be deficiency in service. It has been directed by this Commission to the OP to produce original instructions of the complainant in respect of creating lien and also to adduce evidence to show that whether they sought any information from ICSE of fresh instructions for the OP before date of maturity of FDR. If no default was committed and if there was instruction to mark lien in the renewed FDR also, then the amount did not in fact became payable to the complainant and the complaint can be ordered to be dismissed. Thus, the District Forum was required to see whether any instruction was given by the complainant for marking // 8 // lien for a particular period and when such instruction was given by the complainant for marking lien, then whether on maturity of the STDR any fresh instruction was given by the complainant for marking lien over it or whether original instruction was to be continued. It was also to be seen as to whether any default has been committed by the complainant, so that the security by way of STDR can be encashed by the ICSE.
5. It appears that after remand of the matter, no evidence was adduced by the OP in this regard neither in the form of instruction by the complainant to the Bank for creating lien on the STDR nor in the form of any material or document to show that default was committed by the complainant, making the security liable to be forfeited. Thereafter, the District Forum after providing appropriate opportunities to both parties again heard the matter and decided the matter vide impugned order against the OP Bank.
6. Question for consideration before us are: (i) whether the amount of STDR No.655848 is payable to the complainant along with interest and whether the OP has committed any deficiency in service in not paying the same, (ii) whether the OP has committed any deficiency in service in paying the amount of the STDR to a third party, and (iii) as to whether amount of the award of the District Forum is on lower side.
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7. We have heard arguments of both parties and perused the record of the District Forum.
8. During the course of hearing of these appeals, on 18.10.10 it was observed by this Commission that after remand of the matter to the District Forum vide order dated 27.04.09, in appeal No.448/07, no document has been produced before the District Forum in respect of instructions of the complainant for creating lien or regarding the instructions from the ICSE and regarding defaults made by the complainant in making payment to ICSE. Therefore, it was found appropriate to decide the matter after having such material and both parties were directed to obtain necessary papers from ICSE and to produce the same on next date of hearing. It was also asked to be shown specifically as to whether any default has been committed in respect of lien marked in STDR, otherwise it will be presumed that no default has been committed. But on next date of hearing, counsel for the OP Bank has submitted that the Bank has already written letter to ICSE for providing documents in respect of defaults committed by the complainant and reply of the ICSE was still awaited and one more opportunity was sought. But, so far as the complainant is concerned, affidavit of the complainant was filed to show that he never committed any default and the amount of FDR was not payable to the ICSE. On // 10 // the next date of hearing no document or affidavit was filed by counsel for the OP and therefore final arguments were heard.
9. The complainant in the affidavit filed before us, has stated that he has not retained any copy of instructions given by him to the Bank for creating lien in favour of ICSE. He has also filed affidavit dated 04.08.09 before District Forum and has also referred letter dated 27.11.09, Ex.D-3, of the OP Bank, addressed to the ICSE, whereby the Bank‟s liability towards ICSE was limited till the maturity of such STDR i.e. up to 31.12.2000. It has also been stated by him that no notice of default was ever given by the ICSE to the complainant or the Bank on or before maturity of the original STDR or even till today. So forfeiture of the original STDR was not necessitated. It has also been stated by him that the complainant has never received amount of Rs.1,00,000/- or any amount, towards such STDR from the ICSE nor he has filed any claim against them for recovery of this amount. He sent a registered letter, demanding return of the original STDR, copy of which were also sent the Bank with request for cancellation of marking lien over it. But the ICSE had not return the original STDR and the Bank also had not acted upon the request and suggested the applicant to wait till maturity of the STDR, after which ICSE will have No Claim over the FDR and Bank will be able to pay back dues of the complainant. On 31.12.2000 when the complainant approached the // 11 // Bank and requested to renew the principal without lien and to credit the interest amount in his current account, then request was accepted by the OP Bank and fresh STDR No.655848 was issued and delivered to the complainant and at that point of time, the Bank not insisted for bringing original TDR or NOC from ICSE. Amount of interest of old STDR was also credited to applicant‟s current account after deduction of TDS and he was permitted to withdraw that interest without insisting for NOC from ICSE.
10. The OP Bank has not filed any affidavit to controvert the facts stated in the affidavit of he complainant. Similar affidavit was also filed before District Forum, after remand of the case. Right from the very beginning, the complainant was saying that after the date of maturity, the interest of STDR was credited in his account and he was permitted to withdraw that interest, new STDR was also prepared and was handed over to him.
11. To understand the controversial facts, it would be useful to refer the documents filed by both parties before District Forum. The OP Bank has filed copy of STDR in question, which is Annexure OP-1. In this copy, at the top of the STDR, this endorsement has been made that „under lien of Inter-Connected Stock Exchange of India Ltd.‟. There appears no specific date, of marking this lien, in this endorsement and // 12 // the endorsement also does not bear signature of the complainant. This endorsement merely shows that the STDR was under lien of ICSE and thus the ICSE was having some right over the amount of STDR. Annexure OP-4 is a letter addressed to the OP Bank by ICSE, dated 18.01.03, whereby a request was made to encash the STDR in the name of the complainant being a beneficiary of it and being the person having possession over it. It has been stated in this letter that the complainant Ashok Manwani is the registered stock broker of their exchange. Annexure OP-5 is a letter written by the OP Bank to the ICSE on 24.12.03, whereby it was advised that STDR No.894860 has been renewed on maturity on 01.01.03 for a further period of 36 months, acting upon the request of Shri Ashok Manwani. The Bank has also clearly written that it had no information regarding validity period of lien, marked in favour of the Exchange, nor had any information regarding its dues or termination by the Stock Exchange. It has further been mentioned that the request for payment of the STDR came from the ICSE after the original date of expiry of the STDR and therefore factual position regarding the lien was sought to be clarified earlier. It was also advised to settle the dispute with the complainant and to clear the position regarding lien.
12. In the letter of undertaking, which has been marked as Annexure OP-3, it was stated by the Bank that in case of default of the // 13 // dealer, as per instruction received from you, the amount of the FDR / TDR, along with interest accrued thereon will be paid to you on demand on or before the maturity of the said FDR / TDR. These words „on or before the maturity of the said FDR / TDR ‟ are very important and admission of the OP Bank in this letter was to the effect that the lien was only up to the period of maturity and the Exchange was required to make claim or to demand payment on or before maturity of such FDR / TDR.
13. It appears that when on the date of maturity of the STDR no claim was preferred by the Stock Exchange and when nothing was brought to knowledge of the Bank regarding any default of the dealer, then the OP Bank permitted the complainant to encash the STDR and to deposit the interest of STDR in the Bank account of the complainant and issued a fresh STDR, in the name of the complainant, of the principal amount. It appears that this was not an act of renewal of STDR, it was an act of encashment of previous STDR and thereby the interest was deposited in the bank account with permission to withdraw and new STDR of the principal amount, in the name of the complainant, was prepared.
14. The OP bank has not filed any document to show the specific instructions given by the complainant in writing for marking lien in // 14 // favour of Stock Exchange or in favour of anyone. The Bank has also not filed any document of giving instruction by the complainant regarding marking of lien on the original STDR for indefinite period. The case of the complainant is that the lien was to be marked for a period of three years. As per letter Annexure OP-5 of the OP Bank addressed to the Stock Exchange, lien was to be continued till the date of maturity of the STDR and claim was required to be preferred by the stock exchange on or before the date of maturity and as no claim was preferred so a fresh STDR in the name of the complainant was prepared, which has been referred as renewal of original STDR on maturity by the bank in letter dated 24.12.2003. Whatever may be its name, but it was a fresh STDR in the name of the complainant and there was no instruction given by the complainant for marking any lien in favour of the third party, on such fresh STDR or renewed STDR. In the original instruction also no period has been specified for marking lien and it has not been stated that the lien will continue even after the date of maturity. The endorsement of marking lien was also not signed by the complainant. In absence of original instruction, given by the complainant to the bank, for marking such lien, it is difficult to draw any conclusion in favour of the bank particularly keeping in mind action of the bank that after the date of maturity of STDR, it permitted the complainant to encash the STDR on the basis of photocopy and to deposit its interest in its bank account and prepared // 15 // a fresh STDR in the name of the complainant. This action clearly shows that at that time, the OP bank was also of this opinion that the period of lien has already expired.
15. Counsel for the OP Bank submitted that there was an endorsement on the fresh STDR also in respect of lien. It is just possible that such endorsement might have been made by employees of the OP bank by way of abundant caution, but unless there is some instruction given by the complainant, such endorsement does not create any right of a third party on the amount of fresh STDR. Annecure-OP-3, which has been referred above in which the bank has stated that the Exchange was required to make demand for payment of the amount of STDR on or before the date of maturity, incase of default of the dealer, was the copy of the undertaking given by the bank to the Stock Exchange, in compliance of its letter dated 27.11.2000, thus it was also agreed by the parties that the period of continuation of lien would be till the date of maturity of such STDR and unless there is a fresh agreement between the parties, such period was not to be extended by any party unilaterally.
16. In view of aforesaid and in view of the fact that the bank had already encashed the earlier STDR and issued a fresh STDR, the action of the bank while refusing payment of any amount against the new // 16 // STDR, definitely amounts deficiency in service and therefore the order passed by the District Forum in this regard appears perfectly alright and calls for no interference.
17. On behalf of OP Bank only affidavit of one R. P. Bhat Pahri, Branch Manager has been filed before the District Forum and he was cross-examined also, at length, by the complainant. During cross- examination, he had admitted that he was posted in that branch in the month of October 2005 and remained there up to June 2006. He was not there, when request of marking lien was made by the complainant and when the lien was marked in favour of Stock Exchange and later on also, when new STDR was prepared in the name of the complainant and was handed over. Therefore, there appears no evidence in support of case of the Bank in the form of affidavit on the basis of which its action of refusal of paying any amount of STDR can be justified.
18. The complainant in his appeal has made grievance that the District Forum has not awarded any compensation in respect of amount, which was adjusted by the appellant bank from the joint account in the name of Smt. Madhu Manwani & Ashok Manwani, for making payment to the Stock Exchange.
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19. No material has been placed on record to show that there was any joint account in the name of the complainant and Smt. Madhu Manwani. Smt. Madhu Manwani has never filed any complaint before District Forum and had never made any grievance against the Bank and unless it is shown that the complainant was also joint account holder with Smt. Madhu Manwani, it is not possible to award any amount by way of compensation in respect of that account against the OP bank and unless a complaint is filed by Smt. Madhu Manwani or documents are filed in the record, this question cannot be considered.
20. So far as the rate of interest is concerned, the grievance of complainant is that in the STDR itself 7.5% p.a. minimum interest was agreed and therefore the interest should have been awarded at least on that rate. Copy of the STDR Annexure A-6 shows that rate of interest in that STDR was mentioned as 7.5% p.a. and it was the agreed rate of interest between the parties till the date of maturity. Therefore the complainant is entitled to get interest on the aforesaid rate till the date of maturity and thereafter as per rules of the Bank, and so the impugned order passed by the District Forum is required to be modified up to that extent.
21. Therefore the appeal filed by the OP bank fails and is dismissed. The appeal filed by the complainant Ashok Manwani succeeds in part // 18 // and is allowed and it is directed that the amount of STDR No.655848 be paid to the complainant by the OP with accrued interest as agreed between the parties from the date of deposit till the date of maturity and thereafter as per rules of the Bank till date of payment. So far as the award of compensation for mental agony and award of cost of litigation is concerned, it requires no interference. Thus, both these appeals are disposed of with no further order as to cost.
(Justice S.C.Vyas) (Smt. Veena Misra) (V.K. Patil)
President Member Member
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