State Consumer Disputes Redressal Commission
M/S Basai Steels Pvt. Ltd., vs State Bank Of Bikanir & Jaipur on 19 January, 2011
BEFORE THE A
BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT
HYDERABAD.
C.C.No.24 OF 2007
Between:
M/s Basai Steels Pvt. Ltd.,
rep. by its authorized signatory
Mr.Gopal Agarwal S/o Nathmal Agarwal
Shop No.A-23/5 & 6, APIE, Balanagar
Hyderabad. Complainant
A
N D
State Bank of Bikanir & Jaipur
rep. by its Branch Manager,
Shivajinagar Branch,
Secunderabad
Opposite
Party
Counsel for the Complainant Sri
D.Madhava Rao
Counsel for the Opposite party Sri Ashok Ram Kumar
QUORUM: SRI SYED ABDULLAH, HONBLE MEMBER.
AND SRI R.LAKSHMINARASIMHA RAO HONBLE MEMBER WEDNESDAY, THE NINETEENTH DAY OF JANUARY, TWO THOUSAND ELEVAN Oral Order (As per Sri R.Lakshminarasimha Rao, Honble Member) ***
1. The complaint is filed under Section 17 of the Consumer Protection Act,1986 seeking direction to State Bank of Bikaner and Jaipur, shivajinagar branch, Hyderabad to refund an amount of `7,73,716/-
said to have been excessively collected towards LC charges with interest@ 24% p.a. besides an amount of `25,000/- towards compensation and `60,000/- towards damages
2. The averments of the complaint are that the complainant company is engaged in manufacture, processes, retainer, smelters, makers, molders, converters, finishers, re-rollers, importers, exporters in all kinds of non-ferrous metals. The opposite party bank sanctioned credit facility to the complainant company and charged for the transactions relating to working capital facility which was extended from time to time till 31-12-2005. The opposite party bank had charged twice while at the time of opening letter of credit of `200.00 lakh and at the time of closure of Letter of Credit facility during March,2003 to March ,2004 and collected an excess amount of `7,73,716/-. The opposite party had not refunded the excessive amount collected.
3. The opposite party addressed letter in March, 2003 to M/s SAIL not to supply material against cheque to the complainant company as a result of which the complainant lost the advantage of paying the amount through cheque where it had 6 to 7 days of time to arrange the amount covered under the cheque and was compelled to pay the amount to M/s SAIL through pay orders. As a result of the advice of the opposite party bank, the supply of material and consequently the sales of products of the complainant company were affected, the complainant became irregular in payment of over draft facility, the opposite party imposed penal charges on the amount due and the complainant suffered loss to the tune of `25 lakh. The weekly and annual turnover of the business of the complainant company is Rs.3 crores and `150 crores respectively. The complainant made a representation to the Banking Ombudsman seeking for refund of the excessively paid LC charges. The Ombudsman rejected the claim on the premise of lack of pecuniary jurisdiction.
4. The opposite party bank resisted the claim by filing counter and contending that the complainant having been doing business in iron and steel is not a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act. The complaint in regard to excess charging charges for the Letter of Credit is to be filed under Banking Ombudsman Scheme and not under the provisions of the Consumer Protection Act. The matter of collecting charges for Letter of Credit, overcharging of charges, illegal advice by the bank to M/s SAIL, financial loss to the extent of `25 lakh and compensation for loss of business image and consequential mental agony valued at `60 lakh require detailed evidence and cannot be decided in summary proceedings. The opposite party bank had sanctioned working capital limit from 10-12-2002 with a period of validity of 12 months and the limit was enhanced from initial `300.00 lakh to `515.00 lakh in 2003 to `600.00 lakh in the year,2004.
5. The facilities were extended subject to charges by way of interest, commission, exchange rates. The opposite party levied charges for issuance of letters of credit, amendment of letter of credit, acceptance of the bills under letter of credit, retiring of bills received under letter of credit on due date as per normal banking practice and in accordance with the guidelines of Reserve Bank of India. The opposite party informed in advance through letters dated 1-11-2003 and 16-10-2004 in regard to the levy of charges and the rate thereof. There had been no excess of levy of charges. In accordance with notification dated 16-09-2001, the opposite party had levied collection charges as LC opening and retiring charges.
6. The Auditor rejected the allegation of overcharging at the rate of 0.60% and the result of the Auditors Report was intimated to the complainant company. It is the responsibility of the opposite party to see as to whether the complainant observes the financial discipline as on many occasions the complainant had failed to adhere to the banking principles and issued cheque without any balance in its account. The opposite party is a stranger to the transactions between the purchaser or supplier and the complainant. The opposite party advised the complainant to maintain its financial discipline and not to overdraw the account in order to avail smooth transaction facility. The complainants cash credit facility remained irregular since beginning. The opposite party is not aware of any letter purported to have been written to M/s SAIL.
7. Mr.Gopal Agarwal, the authorized signatory of the complainant company has filed his affidavit and the documents, ExA1 to A8. Mr.Vilas Dattaram Tawde, the Manager of the opposite party bank has filed his affidavit
8. The counsel for the opposite party has filed written arguments.
9. The points for considerations are:
i) Whether the matter involves complex questions of fact and requires elaborate evidence?
ii) Whether the complainant is a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act?
iii) Whether there was any deficiency of service on the part of the opposite party?
iv) To what relief?
10. POINTS NO 1 & 2: The complainant company is the account holder of the opposite party bank. The two directors of the complainant company, Mrs.Pushpa Agarwal and Mr.Piyush Agarwal passed resolution on 26th March,2007 authorizing the authorized signatory of the company, Mr.Gopal Agarwal to file affidavit, adduce evidence, appeal, revision and review to protect the interest of the company. The opposite party has not disputed the authority of Mr.Gopal Agarwal representing the complainant company and filing the complainant. The opposite party has questioned the maintainability of the complaint on two counts, the complaint involves complex questions of facts which cannot be decided in summary proceedings and secondly, the transactions involved the commercial purpose which deters the complainant from clutching the jurisdiction of this Commission.
11. Before adverting to the facts of the case,it is essential to refer to Section 2(1) (d) of the Consumer Protection Act,1986 after its amendment by Act 62 of 2002 w.e.f.15th March,2003. Section 2(1) (d) of the Consumer Protection Act,1986 reads as under:
consumer means any person who-
(i) Buys any goods for a consideration which has been paid or promised or partly paid and partly promised , or under any system of deferred payment and includes any user of such consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) [hires or avails of ] any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who [hires or avails of ] the services for consideration paid or promised , or partly paid and partly promised , or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person [but does not include a person who avails of such services for any commercial purpose] [Explanation];- For the purpose of this clause, commercial purpose does not include use by a person of goods bought and used by him and services availed by him exclusively for the purpose of earning his livelihood by means of self employment].
12. The complainant availed credit facility for a period of 12 months w.e.f.30th October, 2003 on the terms and conditions mentioned in the sanction letter dated 1st November, 2003. The material terms of the sanction letter are that the stock-in trade, finalized goods, Book-Debts and other current assets of the complaint company were to be hypothecated to the opposite party as primary security besides the immovable property to be offered as collateral security. The complainant company would pay commission as prescribed by the opposite party bank. The opposite party would release the LCs directly in favour of SAIL. The complainant company in its letter dated 13th July, 2006 referred to the nature of use of LCs obtained from the bank as under
As you are kindly aware our company was enjoying working capital limits with you out of which ILC limit was Rs.200.00 lakh. All the facilities were fully secured by mortgage of properties. This LC facility was being utilized for purchase of required raw-materials from SAIL and all the transactions that took place during that period were utilized for purchase of steel from M/s SAIL.
13. The purpose of availing L.C.by the complainant company is for purchase of raw materials from M/s SAIL and the raw material is purchased for processing, molding and other types of manufacturing nature which is done obliviously with profit motive. Section 2(1)(d) of Consumer Protection Act excludes any dispute involving commercial purpose from the jurisdiction of Consumer Forum, in the instant case, the State Commission. The complainant company has not explained how its case fall within the ambit of explanation appended to clause (ii) of sub-section (d) of Section (2) of the Consumer Protection Act.
14. We will proceed assuming for a while that this Commission has jurisdiction to try the compliant. The complainant states that the opposite party bank had collected charges twice, at the time of opening and closing the L.C. The complainant has stated that the opposite party bank addressed letter to M/s SAIL not to accept cheque issued by the complainant company and ever since the complainant was compelled to issue pay order to obtain raw material from M/s SAIL. The grievance of the complainant is that prior to this incident, it used to issue cheque to M/s SAIL and gain time for 6 to 7 days to deposit the amount in its account by the date of transmission of the cheque by the banker of M/s SAIL to the complainants banker and due to the advice rendered by the opposite party bank, the complainant had to make payment by way of submitting pay order. M/s SAIL is not made party to the proceedings. The opposite party has stated that it has not issued any letter to M/s SAIL. The complainant claims that it had incurred loss to the tune of `50 lakh. In its representation to the Banking Ombudsman the complainant referred to the loss it sustained in the following terms:
Further, due to Banks complaint against our company, advising them not to accept cheques, our principal suppliers, M/s SAIL stopped accepting the cheques against which we used to get the steel material immediately. Due to the above said illegal advice of accepting of our cheques, we have suffered loss to the tune of Rs.50.00 lakh, as thereafter the SAIL has started to issue the Delivery Orders only after clearance of the cheque proceeds. Except the said financial loss of `50.00 lakh, our companys reputation and good will was adversely affected and SAIL started to put up some more conditions on our transactions. This has not only spoiled our credibility with M/s SAIL but also the progress of our business.
15. The issue involves the loss said to have been incurred by the complainant company besides the inconvenience purportedly faced by the complainant in view of conditions said to have been imposed by M/s SAIL. In addition to these aspects, the complainant stated that it has lost reputation and good will on account of purported letter of the opposite party bank and claimed relief on this count. Therefore, the issue has larger dimensions than projected by the complainant company. These facts are complex in nature and require elaborate evidence for fair adjudication of the matter which is not possible in summary proceedings, for M/s SAIL has to be made party and evidence in regard to loss of `50.00 lakh stated to have been incurred by the complainant and the loss of its reputation and good will as also the imposition of conditions by M/s SAIL and the impact of the letter purportedly issued by the complainant on the relations between the opposite party and the complainant and those between M/s SAIL and the complainant. The learned counsel for the opposite party has relied upon the decision In Synco Industries vs State Bank of Bikaner and jaipur reported in AIR 2002 SC. In that case the Supreme Court was dealing with jurisdiction of consumer forum in relation to the complex issue involved in the subject matter. It was held;
Given the nature of the claim in the complaint and the prayer for damages in the sum of Fifteen Crores and for an additional sum of Rs.15 lacs for covering the cost of travelling and other expenses incurred by the appellant, it is oblivious that very detailed evidence has to be led in, both to prove the claim and thereafter the damages and the expenses. It is therefore, in any event not an appropriate case to be heard and disposed of in a summary fashion. The national commission was right in giving the appellant the liberty to move the civil court.
16. The decision is squarely applicable to the facts of the case. For the foregoing reasons, we are inclined to accept the contention of the opposite party that the complainant company can seek redressal of its grievance before civil court.
17. POINT NO3: In view of discussion under points no.1 and 2 and in the light of finding that the complainant company has to file the complaint elsewhere, this point need no consideration nor discussion.
18. POINT NO4: In the result, the complaint is dismissed. In the circumstances of the case, there shall be no order as to costs.
Sd/-
MEMBER Sd/-
MEMBER Dt.19.01.2011 KMK* //APPENDIX OF EVIDENCE// WITNESSES EXAMINED NIL DOCUMENTS FILED For complainants Ex.A1 Extract of resolution Board of Directors dt.26.3.2007 Ex.A2 Letter to opposite party Bank dated 13.7.2006 Ex.A3 List showing excess amount collected by O.P. Ex.A4 Letter of opposite party dated 26.3.2004 Ex.A5 Letter to the opposite party by the complainant dated 25.7.2005 Ex.A6 Representation to Banks Ombudsman Ex.A7 Letter from Banks Ombudsman dt.27.11.2006 Ex.A8 Statement of Account of complainant For opposite party NIL Sd/-
MEMBER Sd/-
MEMBER