Jammu & Kashmir High Court
J And K Bank Ltd. And Anr. vs Srinagar Carpet Company on 21 July, 2003
Equivalent citations: 2004(1)JKJ380
JUDGMENT
V.K. Jhanji, A.C.J.
1. This Appeal is directed against judgment and order dated 4th September, 1998 passed by the Jammu and Kashmir State Consumers Protection Commission, Srinagar (hereinafter referred to as the Commission), whereby the Commission has allowed the complaint of the respondent against the appellant-Bank. Before adverting to the quantum of compensation awarded by the Commission and other directions made by it in the impugned judgment a resume of the relevant facts is given hereunder.
2. The complainant-firm namely, the respondent herein, is stated to be dealing in the manufacture, supply and export of Kashmir hand-made/hand-knotted woollen and silken carpets, and enjoying the banking facilities offered by the Opposite Party, namely, the appellant-Bank herein. In its complaint before the Commission, the respondent alleged that being a regular consumer of the services offered by the appellant-Bank, a Bills Purchase Limit of Rupees fifty lacs (Rs. 50,00,000) and a Packing Credit Limit of Rupees twenty lacs (Rs. 20,00,000) was sanctioned and allowed in its favour. Vide invoice No. 37/96 dated 6th April, 1996, the respondent consigned twenty-five bales of its merchandise valuing US Dollars 38,190.60, through Kuwait Airways in terms of their bill No. 229 34195114 dated 8th April, 1996, to its buyer, namely, M/s ENG Ahmad Saleh A1 Wakeel Co. Ltd., Riyadh, Kingdom of Saudi Arbia, (KSA). The respondent further alleged that the bill and other documents were drawn by it or D/P basis (i.e., Delivery on Payment) and endorsed in favour of the appellant-Bank at its Branch Office, Dalgate, Srinagar, who discounted and purchased the same for collection on 24th April, 1996 under the Foreign Exchange facility and, vide DLC No. 002757/96, credited an amount of Rupees twelve lac fifty thousand (Rs. 12, 50,000) into their account on the aforesaid date, i.e. 24th April, 1996. The respondent specifically alleged that the aforesaid amount was credited into their account after the appellant-Bank deducted charges/recovered their exchange commission. According to the respondent, the discounting and purchase of the bill and the payment of its value to the respondent was done by the appellant-Bank in usual course of its banking services and after full satisfaction of the nature of the bill. In this manner, according to the respondent, the ownership and title of the documentary bill in full value thereof, stood transferred to the appellant-Bank.
The respondent further stated that the Riyadh Bank in Saudi Arbia, allegedly an agency of the appellant-Bank, ostensibly, mishandled the documents and the goods and, without any authority, handed over the documents to the buyer without payment. The respondent alleged that appellant-Bank, thereafter, indulging in unfair trade practice illegally, unjustly, unilaterally and deceptively, recovered Rs. 12,50,000 representing the proceeds of the said documentary bill from the respondent (i.e. Rs. 6,00,000) recovered on 3rd February, 1997 from the Packing Credit Limit advanced to it by the Bank and Rs. 6,50,000 recovered on 17th April, 1997 from the proceeds of a fresh documentary bill deposited by it vide DLC 017251 with the Appellant-Bank). This, according to the respondent was done by the appellant-Bank despite it having purchased the said bill and in fact, having lodged a claim with the International Chamber of Commerce for reimbursement of the loss. The respondent claimed a total compensation of Rs. 20,50,000 on account of loss of Rs. 12,50,000 as being the price of the goods Rs. 7,00,000 as loss of business profits at the rate of 40% per annum and Rs. 1,00,000 as compensation on account of agony suffered by them.
3. The stand of the appellant-Bank before the Commission was that the respondent has been enjoying the Pre-shipment Packing Credit facility to the extent of Rupees twenty lacs (Rs. 20,00,000) and Post-shipment Credit facility to the tune of Rupees fifty lacs (Rs. 50,00,000) as per the terms and conditions contained in sanction letter dated 10th May, 1994. It was stated by the appellant-Bank that the goods were consigned by the complainant to Riyadh Bank A1 Sitteen Str. branch Riyadh, KSA (hereinafter referred to as the foreign Bank) and the documents pertaining thereto, drawn by the respondent on its buyer on D/P (Delivery on payment) basis, were delivered by it to the appellant-Bank on 12th April, 1996 in terms of even dated letter with the instructions to send the same to the foreign Bank for "Collection on Payment" basis. The appellant-Bank vehemently denied that the documents were endorsed to the appellant-Bank for payment or were discounted or purchased by it under the Foreign Exchange Documents Bills Purchase facility (FDBP account) on 24th April, 1996 or on any other date, or that the proceeds thereof were paid and credited to the respondent's account. It was specifically stated that the appellant-Bank received the documents on 12th April, 1996 for collection and, as per the instructions of the respondent, the documents were sent to the foreign Bank for collection without charging any commission, whatsoever, from the respondent. It was the specific case of the appellant-Bank in their reply before the Commission that, at the request of the respondent, the appellant-Bank allowed Post-shipment Advance of Rs. 12.50 lacs in favour of the respondent on 24th April, 1996 against the said collection. The advance of Rs. 12.50 lacs as aforesaid was not credited to the respondent's account by debit to FDBP but by debit to ACC account i.e., Advance against Collection. It was further stated that the respondent, whose consignment was not accepted by the buyer, did not liquidate the amount of Rs, 12.50 lacs advanced to it as Post-shipment Advance, which constrained the appellant-Bank to issue notice to the respondent.
In response to the notice, the respondent vide letter dated 1st October, 1996 undertook to liquidate the advance of Rs. 12.50 lacs in five instalments. It was further the case of the appellant-Bank that the outstanding on account of the Post-shipment Advance of Rs. 12.50 lacs was recovered by the appellant-Bank at the request of the respondent. The appellant-Bank denied that the Drawee Bank, i.e., the foreign Bank (Al Sitteen St. Branch, Riyadh, KSA) was an agency of the appellant-Bank. It was further the case of the appellant-Bank that the foreign Bank, which was an agency of the respondent on refusal of the buyer to take the goods against payment, re-exported the goods to India which shipment arrived at Delhi on flight No. SV 760 on 20th June, 1996. On arrival of the goods in India, the Manager Cargo operations of Air India Cargo Terminal, Indira Gandhi International Airport, New Delhi, vide letter dated 21st June, 1996, asked the respondent to take the delivery of the consignment. The appellant-Bank denied that it lodged any claim with the International Chamber of Commerce in this regard. According to the appellant-Bank, it only sought their intervention for which the respondent was asked to make available an amount of US$ 1000, but the respondent did not respond. The appellant-Bank denied that it resorted to any illegal trade practice or that the amount was recovered by it from the respondent illegally, deceptively or unilaterally.
4. The Commission arrived at a finding that the documentary bill in respect of the consignment in question was purchased by the appellant-Bank, the proceeds whereof, in terms of Indian currency to the tune of Rs. 12.50 lacs, were credited into the Foreign Exchange Documentary Bills Purchase (FDBP) account of the respondent and therefore, there was no reason or justification for the appellant-Bank to recover the said amount from the respondent. Secondly, the Commission concluded that the Riyadh Bank A1 Sitteen Street branch, Riyadh, was an agency of the appellant-Bank, therefore, on the doctrine of master-servant relations between the two, the appellant-Bank, as being the principal, was liable for the lapse committed by its agent On the aforesaid two conclusions, the Commission, as observed above, vide its judgment and order dated 4th September, 1998, allowed the claim of the respondent and ordered as under :
"The OP shall pay to the complainant a sum of Rs. 12.50 lacs with 18% interest on this sum from the date of release of bills i.e. 19th June, 1996 till the date the final payment is made. We are allowing 18% interest as the complainant himself is paying interest @ 12% for the first 180 days and at the rate of 20% beyond 180 days on advance by the OP.
Having regard to the fact that the complainant was subjected to utmost hardship, humiliation, loss of business and financial strain, we allow a further sum of Rs. 1.00 lac as compensation to the complainant. The award shall be satisfied within six weeks."
Apart from the aforesaid award of compensation, the Commission also directed under:
"While parting with this order it is our duty to point out that the OP is dealing with the funds of the depositors which makes it all the necessary for the Management to exercise utmost control and supervision on the activities of its functionaries. We are distressed to notice that in this case the dereliction in duty, irresponsible and negligent behaviour of the concerned officials have subjected the OP to great loss which burden ultimately, is to be borne by the depositors. We, therefore, direct the Management to locate the responsibility for the negligence and recover in the loss from persons responsible for the same. We expect the Chairman of the Bank to take it seriously and not to take such things as a routine matter. If no action is taken and the consumer finds that the bank is dealing with their funds in unwarranted manner, it might even affect the business of the bank. This situation is to be avoided in the interests of bank itself."
5. In this appeal, the appellant-Bank has contended that the Judgment of the Commission is against the material existing on record, contrary to law and falls outside the purview of the provisions of Consumer Protection Act. Reiterating its persistent stand that the appellant-Bank did not purchase the bill in question, but only forwarded the same to the foreign Bank, nominated by the respondent, for collection, it is contended that, having regard to the facility granted to the respondent, the appellant-Bank allowed, by way of advance, an amount of Rs. 12.50 lacs to the respondent which did not represent the total consideration of the bill in question, but only represented 96.13% of it. The amount so advanced at the request of the respondent, carried interest at the rate of 13% and above. According to the appellant-Bank, this fact was proved by it before the Commission by placing on record all the necessary and requisite documents, which was corroborated by the respondent during the course of its own evidence. It is contended that the judgment of the Commission is perverse, based on surmises and conjectures and is an outcome of mis-appreciation of evidence. The perversity of the impugned judgment is also pleaded on the ground that the goods, the subject-matter of the whole controversy have been re-exported into India and have, in fact, been retired by the respondent.
6. It may be mentioned here, that on 20th May, 2002, the Division Bench of this Court directed Mr. Z. A. Shah, learned counsel for the appellant-Bank, to supply paper books containing all relevant documents produced before the Commission along-with the complaint and objections etc. In compliance of that direction, the appellant-Bank has submitted the paper books, copy whereof has been supplied to, and received by, the counsel for the respondent, Mr. R. A. Jan, on 3rd June, 2002. Apart from the documents produced before the Commission, some other documents have also been brought on record which have originated from either of the parties, or the foreign Bank, and touch the pleadings already made. These documents and their implication would be referred to and dealt with at appropriate place in this judgment.
7. We have heard learned counsel for the parties at great length and have carefully perused the material on record.
8. On a careful consideration of the arguments advanced before us and perusal of the record, in our opinion, the result of this appeal lies in answer to the following two questions:
(i) Whether the transaction in question between the appellant-Bank and the respondent was, in fact, a Purchase of Foreign Exchange Documents Bill by the appellant-Bank? and
(ii) Whether Riyadh Bank, A1 Sitteen Str. Branch, Riyadh, KSA, is an agent of the appellant-Bank ?
9. In order to find an answer to the first question (supra), it becomes imperative to first ascertain as to what are the pre-requisites to the constitution of such a transaction as a 'Purchase of Foreign Documentary bill'. These prerequisites and tests have been laid down by the Supreme Court in Corporation Bank v. Navin J. Shah, (2000)2 SCC 628 in the following words:
"....If the bills and the relevant documents presented by its drawer are accepted by a banker with endorsement in its favour and the same are immediately discounted by the banker without waiting for its collection, by giving full credit for the entire amount of the document, so presented, the banker itself becomes a purchaser and the holder thereof for full value. A banker discounts a bill as opposed to taking it for collection or as security for advances, when he takes it definitely and at once as transferee for value and that it does not matter that the amount of the bill, less discount, is carried to current account as in the case of a customer that is the usual course and where the transaction is really one of discounting, the banker is of course at liberty to deal with the bill as he pleases, rediscounting or transferring it."
Analysing the above authoritative observations of the Supreme Court, it is clear that such a transaction can be said to be a 'purchase' only when:
(i) the bill and relevant documents are endorsed in favour of the bank;
(ii) the bill and the relevant documents presented by the drawer are accepted by a banker;
(iii) the bill is immediately discounted by the banker without waiting for its collection;
(iv) the banker immediately gives full credit for the entire amount of the document, so presented before it;
It is further held that a banker discounts a bill, as opposed to taking it for collection or as security for advances, when:
'the banker takes it definitely and at once as transferee for value'.
10. In the present case, it has been the consistent stand of the appellant-Bank that the goods were consigned to the Riyadh Bank, A1 Sitteen Str. Branch, Riyadh, and that the documentary bill was not endorsed to the appellant-Bank, but were drawn in the name of the buyer of the respondent, namely, M/s ENG Ahmad Saleh A1 Wakel Co. Ltd., Riyadh, KSA, and endorsed to the foreign Bank. The document were presented before the appellant-Bank with specific instructions to 'please send documents on collection basis', identifying the foreign Bank. This contention of the appellant-Bank is supported by a letter dated 12th April, 1996 of the respondent, placed on record of the Commission as annexure "R 1" to the reply filed by the appellant-Bank. Perusal of the letter reveals that the respondent mentioned the name of the Bank, i.e., Riyadh Bank, A1 Sitteen St. Branch, Riyadh, as also the name of the buyer, M/s ENG Ahmad Saleh A1 Wakeel Co. Ltd., Riyadh, KSA. The first point that arises for determination, therefore, is whether the documentary bill was endorsed in favour of the appellant-Bank.
11. It hardly needs to be mentioned that a documentary bill is a bill of exchange and a negotiable instrument within the meaning of Negotiable Instruments Act, 1881. Under Section 15 of the Act "Endorsement" is defined as under:
"15. Endorsement. -- When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to endorse the same, and is called the 'endorser'.
Section 16 defines the Endorsement "in blank" and "in full" in the following terms :
"16. Endorsement 'in blank' and 'in full'. -- (1) If the endorser signs his name only, the endorsement is said to be 'in blank' and if he adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specific person, the endorsement is said to be 'in full', and the person so specified is called the 'endorsee' of the instrument...."
A bare perusal of the aforesaid provisions of the Act unambiguously reveal that endorsee is a person who, in pursuance of the direction or instruction of the endorser, is entitled to receive, or order payment of, the amount mentioned in the instrument. Such an endorsement is called "full endorsement". In Black's Law Dictionary, Seventh Edition, the meaning assigned to the terms "full endorsement", "endorsment in full" or "special endorsement" is "an endorsement that specifies the person to receive payment or to whom the goods named by the document must be delivered. Further, the term "endorsee" is defined to mean a person to whom a negotiable instrument is transferred by endorsement.
12. Going by the connotation and meaning given to the words "endorsement" and "endorsee", as said above, in terms of letter dated 12th April, 1996 of the respondent, presented before the appellant-Bank, the endorsement was made in favour of the foreign Bank and the endorsee was the foreign Bank. This letter, dated 12th April, 1996, is not even addressed to the appellant-Bank. In the invoice also the respondent identified the foreign Bank as the "consignee" and mentioned the name of the buyer therein. Though Banks do not deal in goods, they only deal with documents, yet this fact gives out the clear intention of the respondent that the documents were not intended to he endorsed to the appellant-Bank, but to the foreign Bank, to which the goods were consigned. The appellant-Bank did not take the documentary bill definitely and at once as transferee for value. The appellant-Bank simply forwarded the bill for negotiation on collection basis and was acting only as an agent of the respondent, not an endorsee. We, therefore, are of considered view that the documents were not endorsed to the appellant-Bank. Consequently, the question of accepting the bill in question by the appellant-Bank did not arise
13. The law, as noticed and observed earlier is settled that, when a documentary bill is purchased, it is discounted and the amount to the full value thereof, minus the discount, is simultaneously and immediately credited into the customer's account. It is contended on behalf of the appellant-Bank that, in this case, since the bill was not purchased, the appellant-Bank did not do anything like that. On the other hand, it is the case of the respondent that their documentary bill was duly discounted. We proceed to examine this aspect of the matter.
14. The appellant-Bank has placed on record of this appeal a photocopy of the original Collection Memo sent to the foreign Bank, which bears the Bank seal and receipt seal of the foreign Bank. The receipt seal of the foreign Bank affixed on the document bears the date 15th April, 1996. That means the documentary bill reached the foreign Bank within three days of its despatch by the appellant-Bank. The Collection Memo is in a format shape and, among other things, there are as many as twenty-two instructions printed in it. Comparison of this Collection Memo with the one produced by the respondent before the Commission reveals that the copy of the Memo that is handed over to the client is a folio of the original. It appears that, when a Collection Memo is prepared, the instructions, that may have to be conveyed, are identified by marking "X" against the relevant instruction. It is further revealed that important instructions marked on the original Collection Memo are obliterated on the copy which is meant for, and handed over to, the client/ customer, obviously, lest the same are tampered with. The photocopy of the original Collection Memo, which had been sent to the foreign Bank, inter alia, reads as under:
"We enclose the following drafts and documents for collection & disposal of proceeds subject to the instructions given below:
Please follow the instructions marked 'X' X
1.
Deliver documents on payment.
X
4. Airmail/cable non-payment stating reasons.
X
11. Please acknowledge receipt on its attached copy of schedule advise us promptly of acceptance/maturity and exact date of payment by airmail.
X
15. Collect our commission of $20 and Postage $20 plus all your charges.
X
22. Remit proceeds to: American Express Bank Ltd., P. 0. Box-740, N Y- 10008, New York, U. S. A. For Credit of our Account with them A/C No.000197723. Under Airmail Advise to us.
Special Instructions. Pls. acknowledge receipt of documents and remit funds as per our instruction No. 22 after quoting our ref. No. D.C-002757096 for all future correspondence." (Underlining supplied) From a bare reading of the instructions, especially instruction No. 15, quoted above, it is revealed that the commission of the appellant-Bank in relation to this transaction was to be charged from the buyer by the foreign Bank as and when he would get the documents released. It, therefore, lends credence to the stand of the appellant-Bank that it did not discount the documentary bill at the time the same was presented before it, nor did it receive any charges or commission at that time. Instead, it forwarded the documentary bill to the foreign Bank with the instructions of the respondent and, of course, to collect the appellant-Bank's commission of $ 20 and postage $20 plus all the charges of the foreign Bank. Had the bill been purchased by the appellant-Bank, it would have discounted it and would not have asked the foreign Bank to collect its commission and postage. Apparently, the original Collection Memo, which was sent to the foreign Bank, was not produced before the Commission. The photocopy of the Collection Memo placed on record of the complaint as annexure thereto by the respondent is illegible and conditions 13 to 22, as are contained in the original Collection Memo, are obliterated therein and, therefore, not readable. However, that should make no difference, since the respondent knew the terms and conditions on which the transaction had taken place. The Collection Memo indicates that the appellant-Bank did not discount the documentary bill, muchless immediately, nor charged any commission and, instead, despatched and forwarded the same on 12th April, 1996 itself to the foreign Bank nominated by the respondent,
15. In support of its stand, the appellant-Bank, apart from examining two witnesses, placed on record of the Commission certain documents marked as annexures "R1" to "R 11". "R 1" is the communication dated 12th April, 1996 whereunder the documentary bill was produced before the appellant-Bank. "R2" is letter dated 1st October, 1996' sent by the respondent to the appellant-Bank. It reads as under ;
"We exported sight bill for $38190.60 to Riyadh vide your DLC-0275 dated 12.4.96.
We received advances against this bill Rs. 12.50 lacs. Unfortunately the Riyadh Bank released the goods without collecting the payment by ignoring your instructions to the buyer, which we bring into your kind notice vide letters dated 6.7.96 and 1.8.96.
The buyer re-exported goods without or consent. Your bank brought this matter before the authorities of Riyadh Bank, but the matter remained unsolved yet. We suffered very loss by this shipment due to negligence of banking. Demurrage is one lakh sixty thousand and freight is extra to that.
In view of the above facts your goodself is requested that the interest of the above bill should be waived and loan should be adjusted in five instalments."
"R3" is Purportedly a letter dated 3.2.1997 from the respondent addressed to the appellant-Bank, authorising the appellant-Bank to adjust Rs. 6.00 lacs on account of the outstanding against bill No. DLC 002757/96 out of the ad hoc Packing Credit of Rs. 15.00 lacs sanctioned by the appellant-Bank in favour of the respondent. "R 4" is a letter dated 3rd February, 1997 from Manager, Central Foreign Exchange Department, Central Office, Srinagar of the appellant Bank to the Branch Manager, Dalgate Branch, conveying the sanction of additional ad hoc Packing Credit facility of Rs. 15.00 lacs in favour of the respondent over and above the limit of Rs. 20.00 lacs which it had been enjoying. "R 5" is yet another communication dated 16th April, 1997 conveying sanction of an additional ad hoc one-time Post-shipment Credit facility of Rs. 15.00 lacs over and above the already existing regular Post-shipment limit of Rs. 50.00 lacs. "R6" is letter dated 24th April, 1996, addressed by the respondent to the appellant-Bank, requesting for sanction of advance of Rupees twenty-seven lacs against the documentary bill, the subject-matter of controversy herein, and another identical bill. "R7" is the invoice of the respondent in the documentary bill in question. "R8" is an intimation letter dated 2nd June, 1996, addressed by Air India Limited Cargo Terminal-II, IGI Airport, New Delhi, to the respondent, advising them to collect the goods which were re-exported by the foreign Bank. "R9" is a letter dated 16th September, 1997, addressed by the appellant-Bank to the respondent, requiring them to provide US$ 1000 so as to enable the International Chamber of Commerce to intervene in the matter. "R10" and "R11" are two debit/credit vouchers. In paragraph 16 of the impugned Judgment, the Commission has recorded that Mohammad Yasin, one of the partners of the respondent, in his statement, admits annexures 1. 4, 5, 6, 7, 9, 10 and 11 yet in paragraph 15 of the Judgment, the Commission has recorded as under:
"...[We] have to assess and evaluate the letters annexures "R 1" to "R 11" on which the OP has tried to built up a case which in reality was never in existence. In our view these letters appear to have been taken from the complainant only after the situation went out of control."
16. It be seen that annexures "R 1" to "R 11", inter alia, include the invoice of the respondent on which their complaint is based; the request of the respondent for sanction of Rs. 30.00 lacs (Rs.15.00 lacs each in the two Credit facilities enjoyed by them); the communication from Air India Limited, New Delhi, requiring the respondent to collect the re-exported goods etc. The Commission has not cared to appreciate these documents but, as noted above, has discarded all these documents en bloc, though most of these documents are admitted by the partner of the respondent. The Commission also discarded the oral evidence produced by the appellant-Bank supporting their stand, Therefore, this is not only a case of mis-appreciation of evidence but non-appreciation as well. These documents sufficiently demonstrate, inter alia, that the documentary bill was neither intended to be presented for purchase before the appellant-Bank nor the appellant-Bank, in fact, purchased the same.
17. Mr. R. A. Jan, learned counsel for the respondent, has contended that these documents lose their significance in view of the fact that there is an explicit admission made by the appellant Bank that they had purchased the bill in question. In this connection reference is made to the documents marked "A", "B" and "C". In fact, the judgment of the Commission is mainly based on these three documents.
The document marked "A" is a letter dated October 26, 1996 written by the appellant-Bank's Manager, Foreign Exchange, to the General Secretary, International Chamber of Commerce, 38, Paris, France. Its contents are reproduced below :
"Gentleman, Our Collection Bill No. DLC 002757/96 for US$ 38190.60.
We would like to seek your kind intervention in resolving the dispute with Riyadh Bank, Riyadh, Saudi Arabia. The summary of the dispute is submitted hereunder supported by the documentary evidence.
(1) On 12th April, 1996 we had purchased a documentary bill worth US$ 38190.60 from one of our constituents and sent the same to Riyadh Bank, A1-Sitten Street, Riyadh, K.S.A., for collection, with specific instructions to deliver the documents against payment (ANX-1) (2) The merchandise of Kashmir handmade carpets was covered vide Kuwait Airways, Airway bill No. CN-229-34195114 dated 8th April, 1996, consigned to the collecting bank, i.e., Riyadh Bank, A1-Sitten Street branch, Riyadh (A NX-2).
(3) The Riyadh Bank without seeking prior authorisation returned the documents on 5.6.96 after non-acceptable by the drawee (ANX-3) and surprisingly issued a delivery order No. 3701 dated 16.6. 96 in favour of \Saudi Airlines (authorised Cargo Manager at Riyadh Airport) to hand over the merchandise to M/s Mohandis Ahmed Saleh A1-Wakeel (drawee) who had not agreed to pay for the documents on presentation as per ANN-4.
(4) The para-3 of annexure 3 has proved negligence of Riyad Bank beyond doubt when they issued the delivery order and thus violated the Article 10 of URC, 95.
(5) The concerned Bank should have sought our prior instructions regarding the disposal of the documents and if at all the local authorities have directed them for the disposal of goods, the same should have been consigned to the remitting bank and not to the drawer who had transferred the title of goods to ourselves by way of purchase of documents (ANNEX-5b ).
(6) While enquiring from the collecting bank about the negligence committed by them and about settlement of claim, we have been receiving confusing replies from them and almost nullifying the spirit of article 10 of URC which is unexpected from such a bank. ANNEX 5A-5B.
(7) The exchange of correspondence with the collecting Bank is hereby enclosed for your necessary records and reference which makes Annex-7 to 20 and our remained have [sic. [have remained)] unattended to for the last one month. This attitude of the Riyadh Bank have forced us to seek your intervention in resolving our genuine claim.
(8) As is clear from the above narrated facts that the collecting bank has been negligent in discharging his obligations under URC 522 and is supposed to pay us the cost of documents, interest, demurrage which we hope your goodself will arrange the settlement at the earliest." (underlining supplied) The aforesaid letter, as noticed, is addressed to the International Chamber of Commerce, Paris, France. As is seen, in the said communication, the concerned Manager of the appellant-Bank made a statement about the purchase of the bill in question. In paragraph 5 thereof, he further stated that the title of the goods had been transferred to the appellant-Bank. Mr. Z. A. Shah, learned counsel for the appellant Bank, submitted that there are several documents shown annexed to the letter. The statement in question is to be read together with the annexures, and that, the annexures thereto, do not support this statement of the concerned Manager. As to the need of making such a statement against the record, he submitted that it was made in the interest of the client of the appellant-Bank, i.e., the respondent. On the other hand, according to Mr. Jan, no matter, what preceded or followed this communication, it is sufficient and explicit admission on the part of the appellant Bank that the bill was purchased by the appellant-Bank.
18. We have considered the rival contentions of the learned counsel in this respect. At the out-set, it may be observed here that alleged admission is made in the first sentence of paragraph (1) of the communication. In the same sentence, immediately after the alleged 'admission, the respondent is described as "one of our constituents". The word "constituent" has different connotations. In law "constituent" means a person who appoints another as an agent (the Concise Oxford Dictionary of Current English, Ninth Edition). In other words, in this letter, the appellant-Bank is described as an "agent" of the respondent. That means, the document marked "A", relied upon by Mr. Jan, learned counsel, admits the appellant-Bank to be an agent of the respondent. If that be so, this not only negates the first portion of the sentence containing the alleged admission, i.e., a self-denied-statement, but cuts at the very root of the argument being advanced. Apart from that, the statement is wholly against the record and the nature of the transaction. The intention and purport of the letter is not to make a statement about the nature of the transaction the appellant-Bank had entered with the respondent.
It, instead, is aimed at highlighting the alleged mishandling or negligence on the part of the foreign Bank and inducing the International Chamber of Commerce to intervene, with the objective to render some help to the respondent. A wayward self-denied statement, negated by the very documents by which it is sought to be supported, cannot constitute an admission, muchless an explicit one. When, in a document, a point or an issue or an argument is raised and substantiation is sought to be derived from the appendices thereto, the appendices constitute a supplementary part of that document. And, therefore, the court has to read the import of such a document and gather the intention behind it in correlation with other documents. One single self-denied statement, made in a document, contradicted by the appendices thereto, will not change the basic character and nature of a banking transaction, especially the one involved in the present case, moreso when there is other overwhelming evidence, legal and factual, to the contrary, available on record. The various annexures appended to the document are such letters and communications as have already come to be noticed by us, or would be dealt with by us hereafter in this judgment, and all these neither help the argument advanced, nor support the in statement in question. Therefore, the statement made in document "A" cannot be construed to be an admission in any manner.
19. The document marked "B" is a communication dated 27th July, 1996, that is, prior in time to the document marked "A" and, is appended as an annexure thereto. This document is addressed to the foreign Bank. Its contents, relied upon by the Commission and Mr. Jan, are in fact, a negation of the statement made in the document marked "A". It, instead, inter alia, states :
"Our exporter (Shipper/Drawer) who was annoyed for non-payment of his bill wanted the shipment to be diverted and delivered to another alternate buyer..."
It is clear from these contents of the letter, that the drawer had not been paid the amount of the bill, therefore, he was annoyed. It, therefore, contradicts the statement made in the document marked "A". There is a distinction between the terms "non-payment" and "non-collection". It was impressed upon us to read "non-payment" as "non-collection" but, that is not the import and intention conveyed in the letter. This document is strenuously relied upon by the learned counsel for the respondent. The contents of the document marked "C," which is a letter dated 15th July, 1996 addressed again to the foreign Bank and prior in time to the documents marked "A" and "B", do not, in any way, improve the case of the respondent. This letter also forms an annexure to the document an marked "A". At best, these two documents "B" and "C" can be said to be highlighting the alleged negligence on the part of the foreign Bank. The Commission seems to have read too much in these three documents to discard the other cogent evidence, documentary and oral, brought on its record. The sequence of these letters, i.e, document "C" dated 15th July, 1996; document "B" dated 27th July, 1996 and document "A" dated 26th October, 1996, lends credence to the submission of learned counsel for the appellant-Bank that these were aimed at rendering help to the respondent. Whether this ought to have been done or not, we are not concerned with in this appeal. It be seen that in the document marked "B" a case is sought to be made out for the respondent that it wanted to divert the goods to some other buyer in the area and was in the process of doing so. This document and the other communications, including document "C", as observed above, were enclosed with the document "A", addressed to the International Chamber of Commerce, telling them that the foreign Bank was supposed to pay the cost of documents, interest and demurrage. It appears that, in order to enable the International Chamber of Commerce to intervene in the matter, the appellant-Bank was required to send a fee of US$ 1000. In this connection, the Bank Officer approached the respondent vide communication dated 16.9.1997 "R9" which the respondent refused to pay. Their refusal was for obvious reasons as, by that time, the goods in question were with them since long.
20. In view of the above, we are not convinced that these three documents constitute an admission on the part of the appellant-Bank that the documentary bill was purchased by the appellant-Bank.
21. Great stress was laid on the action of the appellant-Bank in crediting the amount of Rs. 12.50 lacs into the ACC account of the respondent, to contend that this was, in fact, the value of the documentary bill purchased by the appellant-Bank and that the same could not be recovered from the respondent. We proceed to examine this aspect of the matter. In this regard, the Commission has recorded as under:
"...It is not material that the credit was given after 11 days. The fact of the matter is that had the OP taken responsibility of collection only, the amount of proceeds could not be credited to the complainant's account before collection and this could not be debited to the FDBP".
It is the admitted case of the parties that the respondent has been enjoying the Packing Credit Limit, i.e., Pre-shipment facility, and Post-shipment facility afforded to it by the appellant-Bank. In the complaint before the Commission, in paragraph 3 of the complaint, the respondent has wrongly termed the Post-shipment Limit as "Bill Purchase Limit". Under the Pre-shipment Credit Scheme, advances are granted in respect of shipments expected to be made within a period not exceeding 180 days from the date of the advance. Under the Post-shipment Credit facility, there are options available to the exporter as well as to the Bank, depending upon the instructions of the exporter and acceptance of the Bank. Instructions of the exporter or the customer are the pre-requisite to any such transaction. This is so because there is an embargo on Banks to examine documents in order to obtain instructions. That means, a Bank can neither impress upon nor suggest an instruction. Whatever the instructions be, those have to be from the customer himself. If the customer instructs to purchase the documentary bills, endorses the same and the Bank accepts the same, the purchase is complete. In that case, the documentary bills are immediately discounted by the banker without waiting for its collection and full credit for the entire amount of the document, so presented, minus the discount, is given to the customer and the banker becomes the purchaser and the holder thereof for full value. The credit so made into the account of the customer is not subject to any interest, since it becomes his money, of course, against the security of the "collection" and that of the exporter himself under the terms of the agreement. The second option available to the customer is to present the documents with instruction to send the same to the foreign Bank for collection. In that case, discount does not take place. The Bank is entitled only to a commission which may even be chargeable from the foreign buyer. In such a case, if the customer is already allowed a Post-shipment Credit facility, the Bank, at his request, may credit into his account an amount equivalent to, or less than, the value of the documentary bills so despatched for collection to the foreign Bank. This transaction is called as "Advance against Collection". Further, whereas in the case of purchase of these documentary bills, the value thereof has to be simultaneously credited into the account of the customer, in the case of "Advance against Collection" that is not so. The concept of "Purchase of Documentary Bills" is a transaction wholly opposed to the concept of "Documentary Bills on Collection basis". As held by the Supreme Court in Corporation Bank v. Navin J. Shah (supra), a banker discounts a bill as opposed to taking it for collection or as security for advances.
22. In the present case, the respondent, in terms of its letter dated 24th April, 1996, requested the appellant-Bank for sanction of advance of Rs. 27.00 lacs against "bills 002754 of 96 of US$ 44555.48 and 002757/96 US$ 3819.60". The letter bill, mentioned above, is the one out of which the present controversy has arisen. This letter, annexed as "R6" with the reply of the appellant-Bank, is admitted by Muhammad Yasin, one of the partners of the respondent. The appellant-Bank, acting on the request so made, on 24th April, 1996 itself, credited an amount of Rs. 12.50 lacs into the account of the respondent as Credit against Collection. In that view, the "Documents on Collection" were taken as security against the aforesaid advance. The observation of the Commission made in paragraph 14 of the impugned judgment that, "there is no advance against presumed collections" runs counter to the very spirit of the credit facilities, admittedly, enjoyed by the respondent. It is stated in the memo of the appeal that, this amount of Rs. 12.50 lacs represented only 96.13% of the value of the bill forwarded for collection. It is not the case of the respondent that the discount rate at the time was so high as to constitute 3.87% of the total value of the bill, which would come to US$ 147.81. This is simply incredible; the discount rate could not have been so high, especially in view of the fact that in instruction 15 of the Collection Memo, which we have already noticed, the appellant-Bank has shown its charges only US$ 40 in all. The Commission in paragraph 24 of the impugned judgment has further observed as under:
"The case of the complainants before us is that the documents under D. P. Scheme were purchased by OP and credit to the tune of Rs. 12.50 lacs was given in his current account in the Indian currency after deducting the commission. The credit was given on 24th April, 1996 though the documents were purchased on 12.4.1996 and the time in between was taken to scrutinise the papers in normal course of business."
The observations are ex-facie against record; the documents were despatched by the appellant-Bank on 12th April, 1996 itself, therefore, there was no occasion for them to scrutinise the papers, that too, in normal course. Be that as it may, there was also an interest of 13% chargeable and, in fact, charged, from the respondent on this amount. This fact is neither disputed nor any grievance is made about it. Had it been a purchase, there was not need for the respondent to ask for loan against the bill. The amount would have been instantaneously credited into their account and, that too, without being subjected to any interest. Therefore, by no standards, it can be said that the amount was credited into the account of the respondent as being the discounted value of the bill. The amount in question, i.e., Rs. 12.50 lacs, was a loan against collection, sanctioned and advanced at the request of the respondent.
23. As to the argument that the aforesaid amount of Rs. 12.50 lacs could not be recovered from the respondent, it would suffice to say that given the nature of the credit facilities in question, under the relevant agreements between the appellant-Bank and the respondent, governing these facilities, the appellant-Bank, in such a situation, always reserves the authority to reverse the entries in respect of the credit so made against a documentary bill, be it simply a bill for collection without purchase or otherwise. This is so because the exporter's security to the amount so credited subsists all the time under the agreement. In a documentary bill, sent for collection, the Bankers credit the amount of the exporter subject to the condition that, in case the payment does not come forth, the credit would stand reversed even without notice. In this case, however, it is the specific case of the appellant-Bank that the reversion of the credit was made only when the respondent failed to return the amount, despite the fact that they were required to do so. In that view of the matter, the appellant-Bank was within powers to reverse the entries and the reversion of the credit does not amount to illegal or unfair trade practice, as is contended.
24. To put the nut into the shell, none of the tests laid down by the Apex Court in Corporation Bank v. Navin J. Shah (Supra) are satisfied in this case to constitute the transaction in question as a purchase. In that vies of the matter, we do not find that there was any purchase of the documentary bill by the appellant-Bank.
25. Now we proceed to determine the second question (supra), i.e., whether the foreign Bank is an agent, i.e., a correspondent Bank of the appellant-Bank?
26. The Commission in paragraph 14 of the impugned judgment has record that, "OP insists that Riyadh Bank is not its Agent despite its own notification dated 16.8.1984 where it is so recognised at serial No. 108". Further, in paragraph 25 of its judgment, the Commission has observed as under:
"The plea of the OP that Riyadh Bank was the choice of the complainant is totally wrong as evidenced by the list of foreign correspondent banks issued by OP under its own No. FEDCO/CD/84-375 dated 16.8.1984 placed on our records by the complainant and suppressed by the OP. It is thus apparent that, OP has made an effort to suppress this fact from us and this lie was spoken only to cover up its negligence. The claim of the OP that they have no business with Riyadh Bank, therefore, shakes the very foundation of its defence."
Proceeding on the aforesaid posits, the Commission recorded as under:
"In Export business, exporter has to depend on his bank. Since OP had no branch of its own in Riyadh, he was asked to draw the bill on Riyadh Bank which is now proved to be the correspondent bank of OP, though an attempt was made to deny this fact."
Similar observations are made in the judgment at various places. In paragraph 34 it is concluded that, "if Riyadh Bank, as an agent has misconducted itself, the OP which is the master cannot avoid responsibility".
27. In order to find out whether the foreign Bank, i.e., Riyadh Bank, A1 Sitteen Str. Branch, Riyadh, KSA, is an agent or correspondent Bank of the appellant-Bank, we need not work hard. The Commission has rightly made reference to letter dated 16th August, 1984 issued by the appellant-Bank, whereby it has circulated the revised list of foreign correspondent Banks. We have been taken through the list by Mr. Shah, learned counsel for the appellant-Bank. At S. No. 108, referred to, and relied upon, by the Commission to frame its opinion, the name of Bank mentioned is as under :
"Riyadh Bank, Head Office, P.O. Box No. 1047, Jiddah, Saudi Arabia"
The documents in question were sent for collection to :
"Riyadh Bank, A1 Sitteen Str. Branch, Riyadh, KSA."
The two Banks are not the same. The correspondent Bank of the appellant Bank is situated in Jeddah whereas the foreign Bank, to which the documents were sent for collection, is located in Riyadh. It is a matter of common knowledge that, generally, banking business is conducted by a Banking institution at different places in a particular area or country. Banking institutions throughout the world have their offices, popularly, known as "Branch Offices" which may be spread through the length and breadth of that area or country. Each such Branch Office is authorised to deal with the business and have its own clients and customers. If a person operates an account, or has business dealings or relations, with a particular Branch Office of a Banking institution, he does not become the client or customer of all the Branch Offices of that particular Banking institution. In this particular case, the appellant-Bank has its business relations with the Branch office of the Riyadh Bank located at Jeddah, not the one located in Riyadh. We feel that, since both the Branch Offices start with the name "Riyadh Bank", the two have been confused to mean one and the same Branch Office, or that, if one Branch Office is an agent, then every Branch of that Banking Inscitution is bound by the same relations. But that is not the case. Only such Branch Office is bound by the correspondent relations, with whom such relations are established, and demand for the locally manufactured goods in that area may be a determinative factor to establish such relations.
In fact, the circular letter, dated 16th August, 1984, referred to by the Commission, which we have also mentioned above; also reveals that such foreign exchange relations are not made by the appellant-Bank with the Banking Institutions as such to cover and govern all their Branch Offices, but with specific Branch Offices. Correspondent Bank means a Branch Office of a Banking Institution in a particular country or area having business relations with the Branch Office of another Banking institution in another country or area. Such a relationship may have come into existence on the basis of an understanding between the two Banking Institutions, but that does not cover or govern all their respective Branch Offices. Such relations are limited to those specified Branch Offices only. Besides, foreign exchange business may not be conducted by every Branch Office of a Banking Institution. In the present case, the named foreign Bank is not a correspondent Bank of the appellant-Bank and, therefore, not an agent of the appellant-Bank,
28. In view of the above, all the observations made and findings arrived at by the Commission on posit that the foreign Bank is an agent of the appellant Bank, are not sustainable.
29. Though the matter should end here yet, since arguments were advanced on other ancillary, but important aspects involved in the matter, we would like to deal with those aspects as well. The Commission in the concluding part of the judgment has recorded as under:
"The result is that there is ample proof regarding the purchase of the documents and in our view the reversal of credit, given to the complaint as purchase proceeds was unwarranted and unjustified. Even if we assume that the OP had only undertaken to collect the proceeds of the bill, we find that there has been negligence by the OP in as much as the bill was released by its Agent in favour of the buyer without payment. Indeed, there are conditions incorporated sin the right side of the bill that the bank will not accept any responsibility for neglect, default etc. But this condition in our view only applies to the bills drawn on DA basis, meaning thereby bills on acceptance. Since in this document on the left side column the bill has specifically been mentioned as document against payment' the other conditions in the bill are not applicable to this case."
At the out-set, since we have come to the conclusion that the foreign Bank is not a correspondent Bank or agent of the appellant-Bank, this conclusion of the Commission should fall on that count alone. However, there are other reasons also on which this finding cannot sustain.
30. The "Collection" business at the international level is governed by a set of Rules, known as Uniform Rules for Collection (ICC No. 522). These Rules have been framed by the International Chamber of Commerce and the parties hereto, including the foreign Bank, are governed by these Rules. Mr. Z. A. Shah, learned counsel for the appellant-Bank, has produced before us a photocopy of the said Rules from Nabhi's Foreign Exchange Manual (Appendix 43. 11). Apart from other things, these Rules provide for the liabilities and responsibilities of the transacting parties. Articles 9 and 10 thereof under the caption "Liabilities and Responsibilities" are quoted hereunder:
"Article 9. Good Faith and Reasonable Care.-Banks will act in good faith and exercise reasonable care.
Article 10. Documents vs. Goods / Services Performances.-
(a) Goods should not be dispatched directly to the address of a bank or consigned to or to the order of a bank without prior agreement on the part of that bank.
Nevertheless, in the event that goods are despatched directly to the address of a bank or consigned to or to the order of a bank for release to a drawee against payment or acceptance or upon other terms and conditions without prior agreement on the part of that bank, such bank shall have no obligation to take delivery of the goods, which remain at the risk and responsibility of the party despatching the
(b) Banks have no obligation to take any action in respect of the goods to which a documentary collection relates including storage and insurance of the goods even when specific instructions are given to do so. Banks will only take such action, if, when, and to the extent that they agree to do so in each case. Notwithstanding the provisions of sub-Article 1 (c), this rule applies even in the absence of any specific advice to this effect by the collecting bank.
(c) Nevertheless, in the case that banks take action for the protection of the goods, whether instructed or not, they assume no liability or responsibility with a regard to the fate and/or condition of the goods and/or for and acts and/or omissions on the part of any third parties entrusted with the custody and/or protection of the goods. However, the collecting bank must advise without delay the bank from which the collection instruction was received of any such action taken.
(d) Any charges and/or expenses incurred by banks in connection with any action taken to protect the goods will be for the account of the party from whom they received the collection.
(e) (i) Notwithstanding the provisions of sub-Article 19 (a), where the goods are consigned to or to the order of the collecting bank and the drawee has honoured the collection by payment, acceptance or other terms and conditions, and the collecting bank arranges for the release of the goods, the remitting bank shall be deemed to have authorised the collecting bank to do so;
(ii) Where a collecting bank on the instructions of the remitting bank or in terms of sub-Article 10(e)(i), arranges for the release of the goods, the remitting bank shall indemnify such collecting bank for all damages and expenses incurred." (underlining supplied) Apart from the above, these Rules also carry a disclaimer quoted hereunder "Article 11. Disclaimer for acts of an instructed party.-
(a) Banks utilising the services of another bank or other Banks for the purpose of giving effect to the instructions of the principle, do so for the account and at the risk of such principal,
(b) Banks assume no liability or responsibility should the instructions they transmit not be carried out even if they have themselves taken the initiative in the choice of such other bank(s).
(c) A party instructing another party to perform services shall be bound by and liable to indemnify the instructed party against all obligations and responsibilities imposed by foreign laws and usages."
"Collection", in terms of the aforesaid Rules, means the handling of documents by Banks in accordance with the instructions received from the customer. A Bank is to act only upon the instructions given in such collection documents or a communication presenting such documents. Bank is not to examine documents in order to obtain instructions. Banks cannot also thrust or impose their own instructions on behalf of the customer. It is so because a Bank in such a transaction does not incur any liability for any act, neglect, default, failure of any correspondent, agent or sub-agent or loss or delays accruing in the course of transmission of such documents. The conditions, to which reference is made by the Commission and which are carried in the customer's copy of Collection Memo, are in tune and in accordance with the aforesaid Rules. Therefore, the same cannot be brushed aside or demeaned in their spirit or application. The observation that these conditions were not applicable is, as such, not sustainable. It appears to us that these Rules were not brought to the notice of the Commission at the time of hearing of the complaint.
31. It was next argued that the foreign Bank has acted in total disregard of the instructions inasmuch as it delivered the documents to the buyer without payment and, being an agent of the appellant Bank, the appellant Bank is liable for the same. In fact, there is a finding recorded on this score by the Commission against the appellant-Bank. Though we have already concluded that the foreign Bank was not an agent or correspondent Bank of the appellant-Bank, yet, since the argument has been advanced, we proceed to deal with it.
32. The Commission has already laboured to describe the terms "DA", i.e., "Delivery on Acceptance", and "DP" i.e., "Delivery on Payment". We are not concerned here with the term "Delivery on Acceptance", since the instruction conveyed was "Delivery on Payment". Broadly speaking, in a transaction of "Collection" on "Delivery on Payment" basis, the goods are consigned to the buyer and title documents thereof are sent to a Bank, conveniently accessible to the buyer. The timing of the arrival of the goods and the documents is more or less synchronized to avoid huge demurrages. There is a possibility of two eventualities : first, that the buyer makes the payment to the foreign Bank, collects the title documents and retrieves the goods; second, for any reason, he may not be willing to take the goods, he will not turn up before the Bank or may refuse to make payment and/or to take title documents. In that case, the foreign Bank will convey the refusal of the buyer to the remitting bank and return the documents. The obligation of the foreign Bank comes to an end. Since the goods are consigned in the name of the buyer, he is obliged to approach the shipping agency and authorise them to re-export the goods to its origin, without actually being allowed to touch the goods. In that eventuality, he has to pay the demurrages till then as also the freight for re-shipment. But when goods are consigned to the foreign Bank and a similar eventuality arises, what options are left with the Bank. It be borne in mind here that Banks do not deal in goods, nor are they directly concerned with them and, in fact, there is a strict embargo on doing so. Therefore, it is not their liability to protect or preserve the goods.
The options available to the foreign Bank are to convey the refusal, return the documents to the remitting Bank and let the goods rot for sixty days. Sixty days after the arrival of the goods at the warehouse of the shipping agency or the Customs Office, these goods are put to auction by the warehouse authorities of the shipping agency. The auction money can be a mere pittance and then the sixty days demurrages are deductible from the auction money. In the present case, all the relative documents, on the refusal of the drawee, were returned by the foreign Bank to the appellant-Bank on 5th June, 1996. Since the goods were consigned to the foreign Bank, an impermissible act on the part of the respondent, and the buyer having refused to take the delivery of documents on payment, the goods were lying at the warehouse of the shipping agency. They were sure to meet the above described fate. However, in order to save the interests of the respondent, the foreign Bank, oh 16th June, 1996, addressed a letter to the Saudi Airlines, King Khalid International Airport, Cargo Section, Riyadh, expressing no objection in handing over to M/S Mohandis Ahmad Saleh, A1-Wakil, the delivery of the goods in question" for the purpose of re-export of the goods to the source".
M/s Mohandis Ahmad Saleh, A1-Wakil, in turn, authorises a licensed customs clearance agent "to complete all formalities, submit documents and pay the fees". The goods were in this manner re-exported without actually being touched. The return invoice contains the same specifications of the goods as the original invoice contained. The consigneor is shown to be the foreign Bank and the consignee the respondent. The goods are shown to have been shipped on 17th June, 1996 and arrival date at Delhi, IGI Airport, is 20th June, 1996. On 21st June, 1996, the Manager Imports, AIR India, IGI Airport, intimates the respondent about the arrival of the cargo. They do not retrieve the goods. Consequently, notice dated 17th July, 1996 is issued to them by the aforesaid Manager, reminding them that the goods would be put to auction within two months of arrival. We have noticed that the foreign Bank was caught in a chain of correspondence by the appellant-Bank, which is borne out from the numerous letters and communications placed on record of the paper book of this appeal we have been taken through. One is disgusted to notice that, despite unambiguous and repeated clarifications, supported by reasonable justifications given in this behalf by the foreign Bank, they have been engaged in an unnecessary and attritional correspondence, containing unpalatable, unprofessional and impudent language, attributing baseless imputations, by the appellant Bank's concerned Manager and, that too, at the instance of the respondent (refer, letter dated 6th July, 1996 addressed by the respondent to the appellant-Bank's concerned Manager). This surely is not in consonance with the international business etiquettes. Be that as it may, the foreign Bank has repeatedly indicated that the goods were not allowed to be handed over to or actually touched by any person, muchless the buyer. In view of the above details and discussions, we do not find that any fault has been committed by the foreign Bank or any internationally recognised rule on the subject has been violated by them. Therefore, no negligence can be attributed to the foreign Bank.
33. An argument is put across that the dispute falls out side the purview of the provisions of the Consumer Protection Act. In this behalf, it may be observed that, since the respondent had directly sent the goods to the address of the foreign Bank, the transaction was against norms, practice and collection rules. The issues that would, therefore, arise are whether such a transaction was valid? And, if not, whether any liability can be fastened on account of the alleged lapses in a transaction which was, ab-initio, against the internationally recognised law? And then an ancillary third question arises, i.e., whether such questions could be gone into and determined in summary proceedings under the Consumer Protection Act? We are not going to express our opinion on these issues in this appeal. The reason being, that we have already concluded our opinion on the impugned judgment, therefore, determination of these issues would be merely of academic interest; and secondly, arguments on these questions were not advanced thread bare by the learned counsel. These questions would be determined in an appropriate case.
34. There is yet another stariling facet of this whole matter relating to the false nature of the complaint. It would be pertinent to mention here that the complaint was filed by the respondent somewhere around 11th November, 1997 where, in paragraph 8, he stated as under:
"8. That in view of the above loss and injury suffered by them the complainant seeks the relief of compensation to the extent of Rs. 20,50,000 on account of the price of the bill purchased by the Bank (Rs. 12,50,000), loss of business profits @ 40% per annum on account of agony suffered by them at Rs. 1,00,000".
The complaint has been made in a way to mischievously give out that the goods in question were never returned back to, or received by, them after the same were consigned by them. The impugned judgment and order was passed by the Commission on 4th September, 1998 and the appeal was presented by the appellant-Bank before this Court on 5.10.1998. On 24.4.2002, the appellant-Bank through its General Manager, Central Office, Srinagar, addressed a communication to Shri Krishna Kant, Commissioner of Customs, Air Cargo unit, New Customs House, I.G.I. Airport, New Delhi, enquiring from him about the fate of the consignment re-exported by the foreign Bank. In response, the Additional General Manager, Cargo, Airports Authority of India under the cover of his letter dated 14th March, 2001 enclosed photocopies of the gate-pass relevant to the consignment and delivery certificate thereof. These two communications alongwith the photocopies of the gate pass as also the delivery certificate were produced before this Court by Mr. Shah, learned counsel for the appellant Bank, at the hearing of this appeal. The gate-pass is dated 21st of December, 1996 and contains, inter alia, the following details:
Flight No. SV/760 Flight date 20.06.96 No. of PKGS 25 Weight 1460 Total No. of Pkgs to be delivered 25
These details conform to specifications given in the original shipment documents as well as the re-export shipment documents. Further, on the reverse of the gate pass, there is a receipt dated 23rd December, 1996 of SIKKAS KWICK HANDLING SERVICE, PVT LTD, NEW DELHI, that is, the same handling agency which had originally shipped the goods for Saudi Arabia on behalf of the respondent on 8th April, 1996. This demonstrates that, the respondent wholly suppressed this fact from the Commission till the end, despite the fact that the complaint was filed eleven months after the goods were retrieved by them. This speaks volumes about the conduct of the respondent. They had gone to the Commission not only with a false complaint, but with unclean hands. Though, this fact could have been gathered by the Commission from the documents "R1" to "R11" produced by the appellant-Bank before the Commission but, unfortunately, the Commission held all those documents as manipulated and discarded them en bloc. The Commission, instead, proceeded on the premise that the goods were tampered with by the buyer and, in paragraph 33 of the judgment observed, "in this state of things, the complainants had full justification in refusing to take delivery back....". On the one hand the respondent had retrieved the goods and, we have no doubt, in their original good condition, on the other hand they, suppressing this fact, claimed price of these goods to the tune of Rs. 12,50,000 in the complaint. The premise, on which the Commission proceeded, that the respondent had refused to take the delivery of the goods back, is thus totally incorrect. In fact, this was never the case set up by the respondent in the complaint before the Commission. The complaint itself, being false, was not maintainable.
35. As a necessary corollary to the aforesaid fact, the falsehood of the respondent, that the documentary bill in question was purchased by the appellant-Bank, is proved beyond doubt. If the bill in question was purchased by the appellant-Bank, how the respondent could get the goods retrieved from the Cargo section of the Airport at Delhi title documents whereof stood allegedly transferred to the appellant Bank. Mr Jan learned counsel for the respondent, argued that these communications could not he taken on record, or relied upon, since the same were produced at the hearing of the case. We are not convinced. There is nothing new in these communications which could be said to be not within the knowledge of the respondent. The gate-pass, the delivery order and the goods have been with them eleven months prior to the filing of the complaint and they have the temerity, not only to withhold all this from the Commission and this Court, but also to file a false complaint. They cannot claim any kind of prejudice, whatsoever, on this count, since all these things were within their knowledge prior to the filing of the complaint before the Commission. We are also convinced that the respondent knowingly, deliberately and intentionally filed a false complaint; therefore, the respondent is also liable to pay costs.
36. In view of all what has been discussed and said above the impugned Judgment is set-aside and the appeal is allowed with costs of Rs. 5,000. The amount deposited by the appellant-Bank in pursuance of the impugned judgment and order is directed to be released in their favour.