Delhi District Court
The Handicrafts Handloom Export ... vs The Jammu Kashmir Bank Ltd on 7 October, 2024
DLND010027792015
IN THE COURT OF DISTRICT JUDGE- 01,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI
Presided over by :- MS. VIJETA SINGH RAWAT (DHJS)
CS No. 57296/16
The Handicrafts & Handloom Export
Corporation of India Ltd.,
(Through its Authorized Representative)
Jawahar Vyapar Bhawan Annexe,
1, Tolstoy Marg, New Delhi-110001
......... HHEC
Versus
The Jammu & Kashmir Bank Ltd.
(Through its Branch Manager),
G-40, Connaught Place,
New Delhi-110001
........ Defendant
Suit presented On : 08.12.2015
Arguments Concluded On : 05.10.2024
Judgment Pronounced On : 07.10.2024
CS no. 57296/16
The Handicrafts & Handloom Corporation of India Ltd.
vs. The Jammu & Kashmir Bank Ltd. Page no. 1 of 24
JUDGMENT
1. This suit has been filed by Handicrafts and Handloom Export Corporation of India Ltd. (hereinafter, referred to as 'HHEC') against The Jammu & Kashmir Bank, Connaught Place Branch (hereinafter, referred to as the defendant bank) seeking a decree of recovery of Rs.75,08,507/- as damages alongwith pre-litigation interest of Rs.95,35,803/- (@ 15% per annum w.e.f, 25.04.2005) and pendente lite and future interest @15% annum.
2. It is the case of HHEC that (a) it is leading Government of India Company which deals in handicraft and hand loom items. It claims to be reputed and to be enjoying considerable goodwill and reputation in the market. (b) HHEC maintained a current account bearing no. 0055010100007011 in the defendant bank since 2004. At the time of opening of account, HHEC had submitted a resolution dated 25.02.2004 for operation of bank account as per which, the account was operated on joint signatures of two officials duly authorized by the defendant bank. Telephone banking, email banking etc., had not been opted for. (c) As per stipulated terms and conditions, only on written instructions, the authorized officials of HHEC used to remit dollars equivalent to the amount deposited in the current of HHEC for imports of various items including gold from foreign suppliers. (d) HHEC entered into two agreements dated 14.10.2004 with one Shankar Shah Ishar Das Jewellers Pvt. Ltd. (hereinafter, referred to as SSID). (e) One was the general agreement CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 2 of 24 and the other was specific with details of the transactions to be carried out between the parties. (f) The agreements clearly envisaged that SSID would keep HHEC indemnified. (g) Vide letter no. HHCE/BI/SSID/G-03/2005-2006 dated 25.04.2005, HHEC issued written instruction duly signed by its two officials instructing the defendant bank to remit USD 8,10,000/- (equivalent to Rs.3,54,50,000/-) to M/s AGR Mathhey, Horrie Miller Drive, Western Australia 6104 subject to credit of Rs.3,54,50,000/- in the current account of HHEC by SSID. (h) However, in November, 2005, on reconciliation of the bank account, it was noticed by the officials of HHEC that SSID had only deposited Rs.2,79,00,000/- on 25.04.2005 instead of Rs.3,54,50,000/-. But the defendant bank remitted USD 8,10,000/- (equivalent to Rs.3,54,50,000/-) to M/s AGR Mathhey, Horrie Miller Drive, Western Australia 6104. (i) The remittance allegedly was contrary to the written instructions and in collusion with SSID. (j) The defendant bank unauthorizedly and illegally deducted Rs. 75,08,507/- on 25.04.2005. (k) Therefore, the matter was reported to the defendant bank who initially pursued it with SSID but no payment was made. (l) Formal letter dated 14.02.2006 was sent to the defendant bank and protests were also made vide letter dated 02.02.2006, 14.02.2006, 28.02.2006, 05.04.2006 and 01.05.2006. (m) HHEC demanded from the defendant bank that Rs.75,08,507/- be immediately credited to the account of HHEC. But it was not done.
(n) That since the defendant bank was negligent in its services, legal notice dated 01.03.2006 was issued which was vainly replied on 03.04.2006. (o) That HHEC gave complaint dated 21.06.2006 to the CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 3 of 24 Banking Ombudsman and the Ombudsman held that there was deficiency in service of the defendant bank but due to lack of pecuniary jurisdiction, rejected the complaint on 26.07.2007. (p) That Consumer Complaint bearing no. 130/2007 for deficiency in service was filed against the defendant but the same was allowed to be dismissed as withdrawn with liberty to approach the Civil Court vide order dated 06.05.2015. As per the same order, the NCDRC also granted benefit of section 14 of The Limitation Act, 1963 (hereinafter referred to as Limitation Act) to HHEC. Hence, the present suit for recovery came to be filed.
3. By of a written statement, following preliminary objections have been taken:
a) That the suit is barred by limitation- It is stated that cause of action arose on 25.04.2005 but HHEC approached NCDRC only in December 2007 by way of complaint No. 130/2007. Thus, it was after 2 years 8 months that the complaint was filed before NCDRC and was itself, barred by limitation1. Further, it is stated that the consumer complaint was contested by the defendant bank and was allowed to be withdrawn on 06.05.2015 but even thereafter, the present suit was filed in December 2015 and so, even if, the period of 3 years excluding the period consumed before NCDRC is calculated, the suit is barred by limitation as it has been filed beyond the period of 3 years.
1 In view of Section 24A of Consumer Protection Act, 1986 CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 4 of 24
b) That HHEC concealed material facts that SSID had remitted the deficient amount of Rs.75,00,000/- in the account of HHEC on 31.08.2005, itself vide cheque no. 6659 and yet, HHEC filed the present suit with ulterior motive of unjust enrichment.
c) That there is no cause of action as no loss was caused to HHEC.
4. On merits, it is denied that there was any deficiency of service. It is stated that letter dated 25.04.2005 was received from HHEC directing to remit USD 8,10,000/- in favour of M/s AGR Mathhey, Horrie Miller Drive, Western Australia 6104 towards transaction which had taken place between SSID (local buyer of HHEC) and the aforementioned foreign client for import of bullion. It is further stated that the letter contained all details such as the swift code which was to be sent to the foreign bank account which is necessary to start the remittance. Hence, the defendant bank as instructed by HHEC, sent the swift code message to the foreign bank and on the same day, in two tranches of Rs.2,79,00,000/- and Rs.75,50,000/-, as per the request of HHEC initiated the remittance. Whereas, on the same day, Rs.2,79,00,000/- was received from SSID. However, as the swift code message had already been forwarded to the foreign bank for the full amount of USD 8,10,000/- (equivalent to Rs.3,54,50,000/-) and as the process had already started, the defendant bank as a matter of practice, initiated the process of remittance of the remaining amount on the very next day. The defendant bank has claimed that the said remittance was done keeping in mind, the sufficient balance being maintained by HHEC in its current account. The defendant bank has CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 5 of 24 asserted that it is a customer friendly organization and keeping in mind the past record of the dealings, accepted to honour the instructions.
5. Letter dated 02.02.2006 is admitted to have been received but it is stated to be malafide as recovery of Rs.75,00,000/- had already been made from SSID on 01.09.2005. Receipt of legal notice dated 01.3.2006 is not denied. However, it is stated that the defendant bank immediately sprung into action to find out why Rs.75,00,000/- was not deposited in the account of HHEC and so, wrote to SSID letters bearing no. Jkb/CP/FEX/06-1289 dated 03.03.2006 and no. Jkb/cp/FEX/06-1289 dated 08.03.2006 which was replied on 20.03.2006 and 24.03.2006 informing that Rs.75,50,000/- had been paid to HHEC by SSID through cheque no.6659 dated 31.08.2005 and credited to the account of HHEC on 01.09.2005. Thus, it is also stated that HHEC had not suffered any loss.
REPLICATION
6. Through replication, preliminary objections have been denied. It is stated that suit is within limitation and that Rs.75,00,000/- received in the account of HHEC was pertaining to a different transaction. Rest of the contents of the plaint are reiterated.
ADMISSION AND DENIAL OF DOCUMENTS CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 6 of 24
7. No admission and denial of documents have been conducted by the parties.
ISSUES
8. Vide order dated 14.08.2018 following issues were framed:
i) Whether the suit of the plaintiff is barred by limitation?OPD
ii) Whether the plaintiff has suppressed material facts from this Court? OPD
iii) Whether the plaintiff is entitled to recover an amount of Rs.75,08,507/- as claimed in the plaint? OPP
iv) Whether the plaintiff is entitled to interest. If so, at what rate?
OPP v) Relief HHEC EVIDENCE
9. To prove his case, HHEC examined the following witnesses.
9.1 Sh. Ujjal Datta, Deputy General Manager (Finance) of HHEC was examined as PW-1. He tendered her evidence by way of affidavit Ex. PW-1/A and also relied upon the following document:
Sr. No. Document Exhibited as 1 Authority letter dated 06.12.2013 issued by Ex. PW-1/1 Sh. Nirmal Sinha Chairman-cum-Managing Director in favour of Sh. Ujjal Datta 2 Original agreement dated 14.10.2004 Ex. PW-1/2 executed between HHEC and the M/s Ch.
Shankar Shah Isher Dass Jewellers 3 Original LC Business Agreement dated Ex. PW-1/3 14.10.2004 between HHEC and M/s Ch.
CS no. 57296/16The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 7 of 24 Shankar Shah Isher Dass Jewellers 4 Copy of letter no. HHEC/SECY14 dated Ex. PW-1/4 25.02.2004 sent by K.K. Sinha Chairman & Managing Director 5 Letter reference no. HHCE/BI/SSID/G- Ex. PW-1/5 03/2005-2006 dated 25.04.2005 issued by HHEC to the defendant.
6 Bank statement w.e.f. 01.04.2005 till Ex. PW-1/6 31.03.2006 7 Letter no. HHEC/BI/SSID/G-03/2005-06 Ex. PW-1/7 dated 02.02.2006 issued by the HHEC to the defendant 8 Letter no. HHEC/BL/2006 dated 14.02.2006 Ex. PW-1/8 issued by HHEC to the defendant.
9 Letter no. HHEC/BI/SSID/G-03/2005-06 Ex. PW-1/9 dated 28.02.2006 issued by Sh. Harish Kumar (Senior Manager) to the defendant bank 10 Letter no. HHEC/BI/SSID/G-03/2005-06 Ex. PW-1/10 dated 05.04.2006 issued by HHEC to Chairman and MD, Jammu and Kashmir Bank 11 Copy of letter bearing no.HHEC/BI/SSID/G- Ex. PW-1/11 03/2005-06 dated 01.05.2006 sent by Sh.
K.K. Sinha Chairman and Managing Director of HHEC to Sh. Haseeb A Dabru, Chairman and Managing Director, The Jammu & Kashmir Bank Ltd.
12 Legal notice dated 01.03.2006 Ex. PW-1/12 13 Letter No. JKB/2006-002 dated 03.04.2006 Ex. PW-1/13 issued by Dr. Ashraf Ali (Sr. Manager) Law of the defendant bank to Sh. Amit Kumar, Advocate on record, Supreme Court of India 14 Complaint no.85/06-07 bearing subject Ex. PW-1/14 CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 8 of 24 'Unauthorized withdrawal/ Non credit of proceeds 15 Copy of order dated 06.05.2015 in Consumer Ex. PW-1/15 Complaint no. 130 of 2007 The witness was duly cross-examined by the Ld. Counsel for the defendant.
9.2 Sh. Nirmal Sinha, Practicing Chartered Accountant (after retirement of HHEC firm) was examined as PW-2 to prove authority in favour of Sh. Ujjat Datta (PW-1). He relied upon Ex. PW-1/A. He was duly cross-examined by the Ld. Counsel for the defendant.
DEFENDANT EVIDENCE
10. To prove its case, the defendant examined Mohammad Maqsood Wani (retired bank officer) as DW-1. He tendered his evidence by way of affidavit which is Ex. DA and relied upon the following documents:
Sr. No. Document Exhibited as
1 Letter of authority in favour of DW-1 Ex. A
2 Copy of complaint no. 130/2007 Ex. DW-1/1
3 Copy of order of NCDRC Ex. DW-1/2
4 Copy of letters/ replies dated 20.03.2006 Ex. DW-1/3
and 24.03.2006 from SSID to the (colly.)
defendant
5 Copy of letter dated 25.04.2005 sent to the Ex. DW-1/4
CS no. 57296/16
The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 9 of 24 defendant by HHEC 6 Copy of letter dated 02.02.2006 sent by Ex. DW-1/5 HHEC to the defendant 7 Copy of legal notice dated 01.03.2006 Ex. DW-1/6 8 Copy of resolution dated 25.02.2004 Ex. DW-1/7 He was duly cross-examined by Ld. Counsel for HHEC.
10.1 Sh. Riyaz Ahmad, Senior Executive was examined as DW-2. He only relied upon reply to legal notice dated 25.4.2014 sent by Bishwajit Kumar Shahi which was Ex. DW-2/3.
He was duly cross-examined by Ld. Counsel for HHEC.
10.2 Sh. Hakeem Arif Hussain was examined as DW-3. He tendered his evidence by way of affidavit to prove the contention of the defendants.
He was duly cross-examined by Ld. Counsel for HHEC.
FINAL ARGUMENTS
11. Final arguments have been advanced by Sh. Akshay Dev, Ld. Counsel for HHEC and by Sh. Kanika Agnihotri Ld. Counsel for the defendant.
REASONING AND APPRECIATION OF MATERIAL ON RECORD
12. This Court has considered the submissions and material on CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 10 of 24 record.
ISSUEWISE FINDINGS A) Whether the suit of the plaintiff is barred by limitation?OPD (Issue no. i)
13. The onus to prove the issue was upon the defendant.
13.1 It has been argued on behalf of the defendant bank that the suit is barred by limitation on the following accounts:
a) The complaint before the NCDRC itself, was barred by limitation having been filed after 2 years 8 months of transaction dated 25.04.2005. Therefore, the proceedings before NCDRC was itself, non est .
b) Benefit under Section 14 of The Limitation Act has to be pleaded as well as proved which HHEC failed to do.
c) Even if, the benefit of Section 14 of The Limitation Act for the period when CC No.130/2007 was being pursued before NCDRC is afforded to HHEC, yet, w.e.f. 25.04.2007, the suit for recovery has not been filed within the period of limitation of 3 years.
13.2 Per contra, it has been argued on behalf of HHEC that it first promptly approached the Banking Ombudsman within the period of limitation but due to want of pecuniary jurisdiction despite accepting deficiency in service of the defendant bank, the Banking Ombudsman dismissed the complaint. Therefore, bonafide complaint was filed CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 11 of 24 before NCDRC. It had been argued that before NCDRC, the bar of limitation was not agitated by the defendant bank. Placing reliance upon order dated 16.05.2015 (Ex PW-1/15), it has yet again, been urged that HHEC is entitled to benefit under Section 14 of the Limitation Act.
13.3 Whereas, according to HHEC, only on reconciliation of accounts in November 2005, it was learnt that SSID had only transferred Rs.2,79,00,000/- into the account of the former on 25.04.2005, therefore, limitation started to run then, the defendant bank asserts that the cause of action arose as far back as 25.04.2005 and so, limitation started to run.
13.4 In this regard, it is relevant to refer to the cross-examination of Sh. Ujjal Datta (PW-1) conducted on 16.05.2019. He stated as under:
'...The transactions are based on indent for Bullion placed by buyer on HHEC which further indents the same to foreign supplier which sent the goods to HHEC and the buyer remits the payment to HHEC for the transaction. The payment is released from local buyer is received either .. front or through deferred payment. The transactions with defendant no.2 were regulated vide Clause no.8 of the agreement dated 14.10.2004 (Objected to by Ld. Counsel for the HHEC on the ground that the regulation itself has not been disputed in the Written Statement and only amount has been disputed). The bank confirms about the receipt of payment in the account of HHEC and thereafter the Bullion is released. The receipt of money is confirmed through phone or bank statements. In this case the Bullion was released in favour of defendant no.2 despite complete amount had not been remitted by buyer in the HHEC account.
Q. Have you placed o n record any letter confirming from the bank showing the receipt of entire payment from SSID i.e. defendant no.2 before the Bullion of their favour was released? Ans. On going through the record that only letter placed on record CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 12 of 24 is letter dated 25.04.2005 in this regard.
It is correct that this letter is only an instruction to the bank and not confirmation from the bank with regard to receipt of entire payment from SSID i.e. Defendant no.2. Vol. This instruction was subject to credit of money of Rs.354,50,000/- in the account of HHEC. This letter is standing instruction. It is correct that no confirmation was obtained from defendant no.2 with regards to receipt of complete payment from defendant no.2 before release of Bullion in the present transaction. Vol. The letter dated 25.04.2005 is already mentioned this.' ....
Q. Have you placed on record any document requesting defendant no.1 to inform you as soon as the complete two batches of payment from M/s. SSID Defendant no.2 was received with respect to present disputed transaction.?
Ans. The letter dated 25.04.2005 is out standing instructions to defendant no.1.
Q. Have you placed on record any letter requesting/directing the Defendant no.1 to remit the balance amount with regards to transaction in question?
Ans. No. Vol. In the instant case HHEC suffered loss due to bank not following the instructions.
I have not placed on record in this case, any other judicial record of any other proceedings initiated by the HHEC against the Defendant no.2 with respect to present dispute.
Q. Is is correct to suggest that you have no initiated any proceedings before any Court, Tribunal etc. against the Defendant no.2 for recovery of the amount in question?
Ans. It is correct. Vol. There is no question of loss suffered on account of Defendant no.2.
It is wrong to say that HHEC has not suffered any loss in transaction with Defendant no.2 with regards to transaction in this case.' 13.5 Further, during cross-examination recorded on 04.06.2019 the witness stated as under:
'...It is correct that there were dispute the HHEC and Defendant no.2. It is correct that the dispute raised with Defendant no.2 was after 25.04.2005 about this transaction. I have mentioned the dispute with defendant no.2 but not placed any documents on record. It is correct to suggest that the dispute raised with Defendant no.2 includes the current transaction in question as well. I do not recall whether the dispute raised with Defendant no.2 was prior or after filing of the complaint with the Hon'ble NCDRC CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 13 of 24 against the Defendant no.1.' ......
I do not know when the HHEC raised the present dispute with the bank for the first time. This is a matter of record. It is wrong to suggest that the present dispute after thought. The time when the short fall in remittance of the amount by Defendant no.2 came to the notice of the HHEC is a matter of record. I am not able to locate the date from the court record when for the first time it came to notice of HHEC. Vol. It come to our knowledge from bank statement. I cannot say whether the date was August 2005 as suggested by the Counsel. I have to check from the company records. It is wrong to suggest that the disputed amount was remitted to the HHEC company by Defendant no.2. I will have to verify from company records with regard to cheque bearing no.6659 dated 31.08.2005 for an amount of Rs.75 lacs drawn in favour of HHEC by defendant no.2.' 13.6 Again, as per cross-examination dated 26.07.2019, Sh Ujjal Datta stated as under:
'... As per current practice and procedure the statement of account is cross checked with the bank statements on monthly basis. Vol. I am not aware of the earlier practice.
The fact of short fall in the payment to be received from D-3 for the first time came to the knowledge of the HHEC company in November, 2005., The HHEC company for the first time had raised a written communication raising the issue of short fall with D-1 in February 2006. Vol. Verbally it was communicated to the D-1 before issuing the above written instructions and the same has been confirmed by the bank officials verbally'.
13.7 It is evident from his cross-examination that he had no personal knowledge of the transaction. He clarified that he had no awareness of earlier practice. However, the practice prevalent during his tenure was that the bank account was checked every month. Further, his deposition was based upon records and therefore, he stated that as per records, reconciliation of account was done in November 2005. The onus lay upon HHEC to explain as to why the reconciliation of CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd.
vs. The Jammu & Kashmir Bank Ltd. Page no. 14 of 24 account was deferred till November 2005. It was an onus to be discharged by the plaintiff that reconciliation of accounts earlier was not on a monthly basis. But HHEC has not discharged the onus. As per written instructions Ex. PW-1/5, it was stated by HHEC that SSID had informed it that Rs.3,54,50,000/- had been transferred into the current account of HHEC. What can be gathered from annexure A of the terms and condition of agreement dated 14.10.2004 (Ex. PW1/2) is as under:
'...8. The buyer shall pay 10% of the value of bullion as defined in clause 2 hereinabove at the time of booking of each order and the balance on arrival of bullion. The delivery of Bullion will be made to the authorized representative on production of authority letter for each shipment and only after the balance amount is credited in the account of HHEC. The time for payment is of essence to this agreement.' 13.8 Therefore, it was prior to handing over of the bullion that complete payment was to be made by SSID. As per HHEC's own evidence, confirmation was required to be taken from the defendant bank but in the present transaction, the witness confirmed that prior to receipt of complete amount, the bullion was released to SSID.
Therefore, HHEC was unable to prove that transactions were being carried out as per the agreement (Ex. PW-1/2). Thus, it appears to be more probable that cause of action began on 26.04.2005 and not later in November, 2005 as the onus to explain the lack of due diligence was upon the defendant.
13.9 A question which now arises whether benefit under Section 14 of the Limitation Act is to be extended to HHEC for pursuing CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 15 of 24 remedies before the Banking Ombudsman and NCDRC?
13.10 In Purni Devi & Anr. vs. Babu Ram & Anr. 2 It has been held as under:
'...25. The relevant portion of Section 14 of the Limitation Act is extracted as under, for ready reference:
"Section 14. Exclusion of time of proceeding bona fide in court without jurisdiction. ...
...
(2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it."
26. The Plaintiffs have submitted that the provision of Section14 of the Limitation Act, finds place in the Limitation Act applicable to the then State of J&K, which has not been contested by the Respondents.
27. On a perusal of Section 14(2) of the Limitation Act, which is also applicable to the State of Jammu and Kashmir, it is evident that it carves out an exception excluding the period of limitation when the proceedings are being pursued with due diligence and good faith in a Court "which from defect of jurisdiction or other cause of a like nature, is unable to entertain it".
28. The first objection raised by Defendants is that the plea of exclusion of limitation has not been raised before the Courts below and cannot be raised at the first instance before this Court.
29. We do not find merit in this submission, the learned High Court in paragraph 9 has categorically recorded the submission of the Plaintiff pertaining to the exclusion of time spent in pursuing the proceedings before the learned Tehsildar. Therefore, it cannot be said that the plea of exclusion has been raised for the first time, before this Court.
30. The principles pertaining to applicability of Section 14, were extensively discussed and summarised by this Court in Consolidated Engg. Enterprises (Supra), wherein while holding the exclusion of time 2Civil Appeal no........ of 2024 (Arising out of Special Leave Petition (Civil) no.17665/2018 passed by Supreme Court of India on 02.04.2024 CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 16 of 24 period under Section 14 of the Limitation Act to a petition under Section 34 of the Arbitration Act it was observed:-
"21. Section 14 of the Limitation Act deals with exclusion of time of proceeding bona fide in a court without jurisdiction. On analysis of the said section, it becomes evident that the following conditions must be satisfied before Section 14 can be pressed into service:
(1) Both the prior and subsequent proceedings are civil proceedings prosecuted by the same party; (2) The prior proceeding had been prosecuted with due diligence and in good faith;
(3) The failure of the prior proceeding was due to defect of jurisdiction or other cause of like nature; (4) The earlier proceeding and the latter proceeding must relate to the same matter in issue; and (5) Both the proceedings are in a court."
31. This Court in Consolidated Engg. Enterprises (Supra) further expounded that the provisions of this Section, must be interpreted and applied in a manner that furthers the cause of justice, rather than aborts the proceedings at hand and the time taken diligently pursuing a remedy, in a wrong Court, should be excluded.' 13.11 Further, it is also no longer res integra that Banking Ombudsman is not a Court. It is relevant to refer to Ahlavath Orgnics Limited vs. State Bank of Mysore3 where it has been held as under:
'...17. As per Black's Law Dictionary, Eighth Edition, "Ombudsman is (1) an official appointed to receive, investigate, and report on private citizens' complaints about the government, (2) a similar appointee in a non- governmental organization (such as a company or university) - Often shortened to ombuds.
"An ombudsman serves as an alternative to the adversary system for resolving disputes, especially between citizens and government agencies....An ombudsman is .... (1) an independent and nonpartisan office of the legislature who supervises the administration; (2) one who deals with specific complaints from the public against administrative injustice and maladministration; and (3) one who has the power to investigate, criticize and publicize but not to reverse administration action. 4 Am. Jur. 2d Alternative Dispute Resolution 23(1995)"
3CS(OS) 1869/2011 decided by High Court of Delhi on 25.05.2012 CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 17 of 24
18. It would be useful to reproduce the guidelines laid down by the Apex Court in the case of Consolidated Engineering Enterprises Vs. Principal Secretary, Irrigation Department and Ors. (2008) 7 SCC 169, which read as under:
"21. Section 14 of the Limitation Act deals with exclusion of time of proceeding bona fide in a court without jurisdiction. On analysis of the said Section, it becomes evident that the following conditions must be satisfied before Section 14 can be pressed into service:
(1) Both the prior and subsequent proceedings are civil proceedings prosecuted by the same party;
(2) The prior proceeding had been prosecuted with due diligence and in good faith;
(3) The failure of the prior proceeding was due to defect of jurisdiction or other cause of like nature;
(4) The earlier proceeding and the latter proceeding must relate to the same matter in issue and;
(5) Both the proceedings are in a court.
22. The policy of the Section is to afford protection to a litigant against the bar of limitation when he institutes a proceeding which by reason of some technical defect cannot be decided on merits and is dismissed. While considering the provisions of Section 14 of the Limitation Act, proper approach will have to be adopted and the provisions will have to be interpreted so as to advance the cause of justice rather than abort the proceedings. It will be well to bear in mind that an element of mistake is inherent in the invocation of Section 14. In fact, the section is intended to provide relief against the bar of limitation in cases of mistaken remedy or selection of a wrong forum. On reading Section 14 of the Act it becomes clear that the legislature has enacted the said section to exempt a certain period covered by a bona fide litigious activity. Upon the words used in the section, it is not possible to sustain the interpretation that the principle underlying the said section, namely, that the bar of limitation should not affect a person honestly doing his best to get his case tried on merits but failing because the court is unable to give him such a trial, would not be applicable to an application filed under Section 34 of the Act of 1996. The principle is clearly applicable not only to a case in which a litigant brings his application in the court, that is, a court having no jurisdiction to CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 18 of 24 entertain it but also where he brings the suit or the application in the wrong court in consequence of bona fide mistake or law or defect of procedure. Having regard to the intention of the legislature this Court is of the firm opinion that the equity underlying Section 14 should be applied to its fullest extent and time taken diligently pursuing a remedy, in a wrong court, should be excluded."
19. The aforesaid guidelines are to be read along with the provisions of Section 14 of the Limitation Act which also stands reproduced above. In order to attract the provisions of Section 14 of the Limitation Act, the applicant must show that he was pursuing a remedy in a court without jurisdiction in a bona fide manner and with due diligence. This section includes the court of first instance or appeal or revision and the remedy should be against the same party. Section 14 of the Limitation Act makes it clear that the court in which the matter was being pursued should be unable to grant relief on account of defect of jurisdiction or any other cause of a like nature.
20. In the present matter, by issuing a notice to the bank and thereafter pursuing the matter before the Reserve Bank of India by no stretch of imagination can be said that the plaintiff was pursuing his relief against any court as neither the defendant nor Reserve Bank of India would fall in the definition of a court. Thus, Section 14 of the Limitation Act cannot be attracted to the facts of the present case.' 13.12 As regards, availing remedy before the NDCRC, it is not in dispute that (a) both proceedings were civil in nature (b) CC o.130 of 2007 failed due to defect of jurisdiction (c) both proceedings emanate out of alleged deficiency of service and (d) both proceedings are in Court4. It has not been proved that the proceedings before the consumer forum was without 'due diligence' and 'good faith'5 13.13 Therefore, there is no reason to deny the benefit of Section 14 of Limitation Act to HHEC for time spent in litigation before the 4Para 43 of M.P. Steel Corporation vs. Commnr. Of Central Excise decided by Surpreme Court of India on 23.04.2015 where it has been held relying upon P. Sarathy v. State Bank of India, (2000) 5 SCC 355 that court referred to in Section 14 would include quasi judicial tribunal 5Para 34 of MP Steel (Supra) CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 19 of 24 NCDRC.
13.14 Be that as it may, if cause of action is reckoned from 26.04.2005 (the day Rs.75,08,507/- was remitted to the account of M/s AGR Mathhey, Horrie Miller Drive, Western Australia 6104), the period lost before Banking Ombudsman and after order dated 16.05.2015 (Ex PW-1/15) of NCDRC adds up to more than 3 years before filing of the present suit.
13.15 In view of the discussions, the suit is barred by limitation.
13.16 Issue is accordingly, decided in favour of the defendant.
B) Whether the plaintiff has suppressed material facts from this Court? OPD (Issue no. ii)
14. The onus to prove the issue was upon the defendant.
14.1 It is a defence raised that HHEC concealed material fact that no loss has been caused to it as SSID had already transferred Rs.75,00,000/- vide cheque no. 6659 dated 31.08.2005. However, it is the contention of HHEC that the payment was on account of a different transaction.
14.2 Whereas, the defendant relied upon Ex. DW-1/3 (colly.) and led the Court through the statement of account of HHEC Ex. PW-1/6 (colly.) as per which Rs.75,00,000/- was credited in the account of CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 20 of 24 HHEC from SSID, Sh. Ujjal Datta (PW-1) merely referred to a different transaction between HHEC and SSID. However, no documentary proof of the same was placed on record and in view of the confirmation contained in Ex. DW-1/3 (colly.) that the payment was in specific for pertaining to the present transaction, pre- ponderance of probabilities tilts in favour of the defendant.
14.3 Issue is accordingly decided in favour of the defendant.
C) Whether the plaintiff is entitled to recover an amount of Rs.75,08,507/- as claimed in the plaint? OPP (Issue no. iii)
15. The onus to prove the issue was upon HHEC.
15.1 The cause of action is premised upon deficiency of banking services provided by the defendant, whereby the defendant caused pecuniary loss of Rs.75,08,507/- contrary to the express instruction of HHEC and such excess debit from the account of HHEC by the defendant bank resulted in damage to HHEC's business and reputation as well as diminution of HHEC's brand name and goodwill. It is stated that no verbal instructions were to be issued.
15.2 Per contra, it is denied that there was any deficiency of service as, it is stated that the written instruction (Ex PW-1/5) provided the swift code which was forwarded to the foreign bank for the full amount of USD 8,10,000/- (equivalent to Rs.3,54,50,000/-) and as the CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 21 of 24 process had started, the defendant bank initiated the process of remittance of the remaining amount, the next day itself. Also, the transaction was validated through verbal instructions. Further, it is stated that as SSID informed vide letters 20.03.2006 and 24.03.2006 Ex. DW-1/3 (colly.) that the Rs.75,50,000/- towards remittance made to M/s AGR Mathhey, Horrie Miller Drive, Western Australia 6104 had been paid to HHEC in its account maintained with the defendant through cheque no.6659 dated 31.08.2005, drawn on UTI Bank Karol Bagh, New Delhi. Therefore, the defendant also failed to prove any loss caused to it.
15.3 HHEC has not brought the present suit on tortuous acts of the defendant. HHEC was required to prove that the defendant bank had committed any fault, in performance, shortcoming or inadequacy in the manner of performance of it's service as was directed to it. It is further required to be established that the circumstances did not prevent the defendant from rendering the service in the manner in which it was directed. It is also to be considered whether the defendant bank did not act in good faith. Each case is to be decided on its facts and while doing so, guiding factors can be inefficiency, lack of due care, rashness, negligence, omission, haste, lack of bonafide etc. 15.4 Even though, HHEC has claimed that no verbal instructions were to be issued and only on written instructions, the account of HHEC was to be operated by the defendant bank, it is evident from CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 22 of 24 the cross-examination of Sh. Ujjal Datta (PW-1) reproduced above that telephonic conversations did take place between the officials of HHEC and the defendant bank. Therefore, HHEC could not establish that verbal instructions were not being issued to the defendant bank.
15.5 What can also be gathered from the written instruction (Ex. PW-1/5) is that a swift code was provided to the defendant bank. The defendant has stated that once the swift code was provided for the entire transaction, as a matter of practice, keeping in view the sufficient balance in the account of HHEC, remittance in two tranches was made. No cross-examination on the aforesaid assertion has been conducted. It has therefore, not been shown that the defendant bank acted without bonafide.
15.6 Even though, remittance by SSID vide cheque no.6659 dated 31.08.2005 of Rs.75,00,000/- was not denied by HHEC, it did not lead corroborative evidence of other agreement/ transaction under which the payment was made. Therefore, HHEC also failed to discharge the onus which has shifted on it to disprove that the payment made on 01.09.2005 as reflected in its statement of account (Ex PW-1/6 (colly.)) was not in pursuance to the transaction under dispute. Therefore, even on the account of pecuniary loss, the case of HHEC is improbable.
15.7 Hence, the issue is decided against HHEC.
CS no. 57296/16The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 23 of 24 D) Whether the plaintiff is entitled to interest. If so, at what rate? OPP (Issue no. iv)
16. In view of findings given on issue no. (iii), the issue is decided against HHEC.
RELIEF
17. In view of the discussions above, the suit is dismissed. Parties to bear their own cost.
18. Decree sheet be prepared, accordingly.
19. File be consigned to records.
Digitally signedVIJETA by VIJETA SINGH RAWAT SINGH Date:
2024.10.16 RAWAT 10:13:56 +0530 Pronounced in open Court (Vijeta Singh Rawat) on 07.10.2024 District Judge-01, New Delhi District, Patiala House Courts, New Delhi CS no. 57296/16 The Handicrafts & Handloom Corporation of India Ltd. vs. The Jammu & Kashmir Bank Ltd. Page no. 24 of 24