State Consumer Disputes Redressal Commission
Jag Par Securities Ltd. vs Punjab National Bank on 8 February, 2007
C-30/98 IN THE STATE COMMISSION:DELHI (Constituted under Section 9 of The Consumer Protection Act, 1986) Date of Decision: 08-02-2007 Complaint Case No. 30/1998 M/s. Jag Par SecuritiesLtd. B-126, Subhadra Colony, Sarai Rohilla, Delhi 110035. . . . Complainant Versus 1. Punjab National Bank, Shastri Nagar, Delhi 110052. 2. Mr. O.P. Madan, Sr. Branch Manager, Punjab National Bank, Shastri Nagar, Delhi 110052. 3. Mr. Sunil Rastogi, M/s. Shakti Consultants, 116-C, Block-BW, Shalimar Bagh, Delhi 110052. . . . Opposite Parties CORAM: Justice J.D. Kapoor, President Ms. Rumnita Mittal, Member
1. Whether Reporters of local newspapers be allowed to see the judgment?
2. To be referred to the Reporter or not?
Justice J.D. Kapoor (Oral)
1. Having allowed the encashment of original Cash Order in favour of OP-3, despite instructions to stop payment and issuance of duplicate cash order by the O.P Bank, the complainant has filed the instant complainant claiming the following reliefs :-
(i) direct OP-1 to produce all correspondence, statements of account and other documents pertaining to the original Cash Order No. 467/96 and the duplicate Cash Order,
(ii) pass appropriate orders awarding punishment to OP-2 for misconduct in discharging his duties as Bank Manager and for not safeguarding the interest of the complainant as a customer of the OP-1
(iii) direct the OP-1 to refund Rs. 3Lac, the amount of the cash order alongwith the interest @ 24% p.a. from 23-03-1996 till January, 1998, amounting to Rs. 1,32,000/- and further damages, for causing loss of business and harassment and mental agony, amounting to Rs. 3.25 Lacs.
2. The relevant facts of the case, in brief, are that the complainant had been maintaining a current A/c No. 3059 with the OP-1 since 20.04.95. The complainant and the OP-3 entered into an agreement on 19.03.96 regarding transaction of shares on spot basis and as per the agreement the complainant was required to get a Cash Order of Rs. 3 lacs and the OP-3 was to handover the shares of the equal value on the spot at the time of delivery of the shares on 20.03.96. Complainant got issued from OP-1 a Cash Order No. 467/96 dated 20.03.96 amounting to Rs. 3 lacs in favour of O.P.3 - M/s Shakti Consultants for the purpose of purchasing shares on on the spot basis. On 20.03.96 around 3 p.m. Mr. Sunil Rastogi, OP-3 visited the office of the complainant and inquired about the payment in respect of the deal of shares as agreed between the complainant and OP-3.
3. The complainant informed O.P.3 that the Cash Order had been made in favour of the OP-3 and in good faith showed the said Cash Order to O.P. 3 and kept it in his drawer. The complainant thereafter left his room for a while and O.P.3 was left alone in the office. After some time O.P.3 also left the office and promised the complainant that he would be able to finalise the deal only the next day, and not on that very day i.e. 20.03.96 as per the agreement. Around 7 p.m. on the same day (20.03.96) the complainant found that the cash order was missing from his drawer and approached the OP-1 in the early hours of 21.3.96 and informed through letter dated 21.03.96 about the loss/misplacement of cash order and requested for stopping the payment of the cash order in question favouring OP-3.
4. On 21.03.96 itself the complainant also informed OP-3 and sought his advice and was asked to approach OP-1 for the cancellation of the said cash order and get duplicate cash order issued in favour of the OP-3 for getting the deal matured. On the suggestion of OP-3 the complainant applied vide his letter dated 21.03.96 for issuance of the duplicate cash order favouring O.P.3. OP-1 issued a duplicate cash order in lieu of the original / lost cash order to the complainant on 21.03.96 favouring OP-3 after completion of all the formalities by the complainant as per the banking requirements and practice for the issuance of a duplicate cash order.
5. The complainant was informed by the OP-3 in writing vide his letter dated 21.03.96 expressing his inability to mature the deal of selling of shares on on the spot basis and asked the complainant to get the duplicate cash order cancelled and get the proceeds credited to his account. In the said letter OP-3 further stated that since the original cash order had been lost by the complainant and its payment was stopped by the OP-1, the duplicate cash order issued on 21.3.96 may be cancelled and the proceeds be credited in the account of the complainant. The complainant lodged a formal complaint with the Sarai Rohilla Police Station regarding the loss of the original cash order No. 467/96 favouring the OP-3. Later on, an FIR NO. 227/96 was registered and a final report by the Police.
6. The complainant on 22.03.96 approached OP-1 and enquired about the letter dated. 22.3.96 for the cancellation of the duplicate cash order and also about the letter dated 21.03.96 of OP-3 in which the OP-3 had clearly stated that the proceeds be credited to the account of the complainant after canceling the duplicate cash order. However, on the same day, to the shock and surprise of the complainant the original cash order was presented by OP-3 to OP-1 for clearance.
The complainant approached OP-2 and brought the entire facts before him and pleaded that the payment of the original cash order be stopped as a fraud has been committed by the OP-3 on the complainant. The conduct of the OP-3 was contrary to his stand taken in the letter dated 21.03.96. OP-2, for the reasons best known to him and O.P.1 overlooked the objections of the complainant and cleared the original cash order for payment to OP-3.
7. That OP-1 failed in discharging its legal responsibilities to the complainant as it did not take necessary steps not to clear the disputed original cash order of 20.3.96 for payment. The original cash order could not have been cleared for payment as the complainant had fulfilled all the formalities as per the banking requirements for the issue of duplicate cash order and stopping payment of the original lost cash order. OP-1 took full note of this fact that the original cash order was lost on 22.03.96 and the complainant had also apprised the OP-2 of the contentions of O.P.3 as per his letter dated 21.03.96. The OP-1 & 2 ignored the contents of this letter which was submitted to the bank at the time of cancellation of the duplicate cash order dated 21.03.96 and also the OP-1 ignored the fact that it was the issuing as well as the drawee bank and thus had full control over the payment/clearance of the said order. That the OP-1 & 2 inspite of having knowledge of the letter from the beneficiary (OP-3) and having full control over the cash order cleared the original cash order for payment contrary to the contention of the complainant.
Therefore the OP-1 & 2 had grossly neglected in their duties/obligations in serving the complainant and failed to protect the interest of the complainant by not stopping the payment of the original cash order which amounts to deficiency in service towards the complainant.
8. OP-1 & 2 while denying the allegations have contended that the complainant had represented that the said original cash order No. 467/96 was lost in transit while in reality the said cash order No.467/96 was handed over by the complainant to the payee i.e. OP-3 who presented the same through his bank i.e. the Dena Bank which came for payment to the OP-1 through bank clearing on 22.3.96 and thus the OP-1 had to make the payment of the said cash order No. 467/96 as per bank Rules in discharge of their obligations. Further that if the cash order/draft is presented by the payee/beneficiary, the bank cannot stop the payment unless the same is presented by a stranger. The complainant approached the OP-1 and requested for preparation of duplicate cash order in favour of the same beneficiary and, therefore, the OP-1 being a bank, believed the statement made by complainant of missing the original cash order No. 467/96 for Rs. 3,00,000/- and for preparation of the duplicate one in the same amount in favour of the same beneficiary, on furnishing Indemnity Bond and other documents as per Bank Rules. The complainant was informed that in such circumstances, the earlier cash order cannot be cancelled unless the same is surrendered to the issuing bank i.e. OP-1 and in the circumstances the request for cancellation was of no consequence. However, the OP-1 issued a duplicate cash order in favour of OP-3 at the request of the complainant for Rs. 3,00,000/- which was presented by the OP-3 to the OP-1 through bank clearing.
9. Further that original cash order No. 467/96 was handed over to the OP-3 by the complainant who presented the same for payment through bank clearing but subsequently the complainant concocted a false story of missing or loss of the original one, just to defraud OP-1. The alleged letter dated 21.03.96 appears to be false and fabricated one because OP-3, on the one hand, had presented the said cash order No. 467/96 for payment through Dena Bank through bank clearing which was made on 22.03.96 on the presentation of the said cash order No. 467/96 while, on the other hand, the letter dated 21.03.96 is one day prior to the said letter dated i.e. 22.03.96, which clearly shows that the letter dated 21.03.96 is not signed and presented by OP-3 who himself was getting payment of the said cash order No. 467/96 through bank clearing which clearly shows that this letter dated 21.03.96 was fabricated in collusion with the complainant and OP-3 as an after thought.
10. As is apparent from the aforesaid conspectus of facts and rival contentions, the complainant apprehended that O.P.3 had taken away the draft in his absence from his drawer and on coming to know about it he immediately informed O.P.1 Bank vide letter dated 21-03-1996 for stopping payment of the draft. In spite of this the draft was encashed on the next date by O.P. 3. The plea being taken by O.P.1 Bank is that since the draft was in favour of O.P.3 who was the beneficiary of the instrument, O.P.1 Bank was not obliged to stop the payment of draft issued in favour of O.P.3 as it was neither a cheque issued by the complainant nor any such instrument which was not encashable by the person in whose favour it has been issued.
11. It appears that the O.P.1 Bank did not act upon the letter dated 21-03-1996 and cleared the draft in favour of O.P.3. It also appears that the duplicate draft was issued as the original draft was lost and, therefore, the transaction of shares could not be effected between O.P.3 and the complainant and when the complainant told O.P.3 to come and collect the draft on the next date he informed the complainant that he was not in a position to mature the deal on 21-03-1996 for selling shares on on the spot basis and, therefore, the duplicate draft issued in his favour be cancelled.
12. The whole gamut and complexities of facts revolve around the letter dated 21-03-1996 to stop payment of the draft but the draft was got encashed on 22-03-1996 by O.P.3. Since there is distinction between a cheque issued by a party which normally is account payee cheque in such type of transactions and a draft in favour of a party to whom payment is to be made. Thus, the letter dated 21-03-1996 given by the complainant might not have either found entry in the record of O.P.1 Bank pertaining to the drafts as draft is as good as cash whereas the encashment of cheque takes some time and is subject to realization.
Therefore, the O.P.1 Bank cannot be held guilty for deficiency in service nor can it be held guilty for having conspired with O.P.3 in encashing the draft as no such allegation was made against the staff of O.P. Bank nor was any report made with the police nor was any such investigation conducted nor was any finding of conspiracy or fraud on the part of O.P. 1 Bank was given by the police.
13. It appears that O.P.3 has played fraud upon the complainant as he first asked him to prepare a duplicate draft and when he got it prepared and asked him to come and complete the deal, O.P.3 backed out by saying that he was not able to mature the deal and therefore the duplicate draft be got cancelled. O.P.3 had already got the draft encashed before the complainant contacted the O.P. Bank for stopping payment. Thus, the fraud on the part of O.P.3 is writ large. However, O.P.1 also has to be held guilty for not making entry in the register in respect of draft issued by it in favour of the party who deposited this draft in his own account with the bank and for this limited deficiency or short coming, the bank has to be made liable to certain extent to pay compensation to the complainant.
14. Reliance has been placed by the O.P. Bank on Ravinder Singh Bhadora V/s State Bank of Indore, M.P. (I) 1993 BC 61 (DB), wherein it was held that the difference between a demand draft and cheque is that a demand draft is of course a bill of exchange drawn by a bank on another bank or by itself on its branch and is a negotiable instrument.. To check the difference between it and a cheque consist largely in two facts. Firstly, it can be drawn only by a bank upon another bank and not by a private individual as in the case of cheques. Secondly, it cannot so easily be countermanded as a cheque, either by the person purchasing it as by the drawer of a cheque or by the Bank to which it is presented That is why demand drafts have been held not to be cheques.
15. In our view, as regards the acts of omission and commission on the part of the O.P. Bank, these have to be independently ascertained on the anvil of definition of deficiency as defined by Sec. 2(1)(g) of the Consumer Protection Act, 1986, which means:-
any fault, imperfection, shortcoming or inadequacy in the quantity, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.
16. Thus, if a person who has got prepared a draft from a particular bank and instructs the bank not to make payment of the draft, the bank is bound to make a note of it and cannot ignore this fact as the parties can fall apart as to the transaction in respect of which the draft was got prepared.
17. In the given facts and circumstances of the case, we allow the complaint in the following terms:-
i) O.P.1 shall pay Rs. 10,000/- to the complainant for the aforesaid limited deficiency in service.
ii) O.P.3 shall pay the draft amount of Rs. 3,00,000/- to the complainant with interest @9% from the date of filing of the complaint till the date of this order.
iii) We award Rs. 10,000/- as cost of litigation which shall be shared by O.P. 1 and O.P.3.
The aforesaid payments shall be made within one month from the date of receipt of this order.
18. The complaint is disposed of in above terms. Copy of order, as per statutory requirement, be forwarded to the parties and thereafter the file be consigned to record.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member HK