National Consumer Disputes Redressal
Union Bank Of India And Ors. vs Surana Bangles on 15 February, 2006
ORDER
K.S. Gupta, J. (Presiding Member)
1. These appeals are directed against the common order dated 15.10.1999 of Consumer Disputes Redressal Commission Maharashtra State, Mumbai whereby appellants/opposite parties were directed to pay Rs. 9,61,195 towards interest and Rs. 25,000 towards loss of reputation in Complaint Case No. 21/98, Rs. 4,40,428 being the maturity value of FDR of the amount of Rs. 3,10,000 as an 22.11.1997 with 13% interest and cost of Rs. 20,000 in Complaint Case No. 22/98 to the respondent/complainant.
2. Facts giving rise to both the appeals lie in a narrow compass. Respondent is a manufacturer, exporter and importer of plastic, aluminium, brass bangles, imitation jewellery and handicraft articles and was having a current account with Kalbadevi branch of appellant bank. Remittance of US $ 1,00,000 equivalent to Rs. 31.31 lakhs in Indian Currency received from M.K.B. of Singapore was credited in that current account under certificate of Foreign Inward Remittance on 7.10.1993. Respondent exported goods from time to time against the said remittance which fact was confirmed by Foreign Exchange branch of the appellant on 26.10.1993, 17.11.1993, 10.12.1993, 23.12.1993, 10.1.1994 and 18.1.1994. It was alleged that by the letter dated 6.6.1994 appellant bank informed the respondent that above remittance did not pertain to it but to M/s. D.L. Tanumal Pvt. Ltd. Mistake in crediting remittance to respondent's account was stated to have occurred on account of wrong generation of data in the Nostro Account. On persuasion of appellant, the respondent repaid the said amount in instalments by November, 1996. To secure the last instalment of US $ 10,000 the respondent gave FDR of Rs. 3,10,000 on 22.11.1995, the maturity value whereof was Rs. 4,40,428 as on 22.11.1997. This FDR had been renewed for a further period upto 2001. It was alleged that appellant bank claimed an amount of Rs. 9,61,195 towards interest for utilization of the said amount from 1993 till November, 1996 from the respondent. Thereupon Complaint Case Nos. 21/98 and 22/98 were filed by the respondent which were contested by the appellants. It was alleged that respondent is responsible for repaying the amount which was a mistaken credit in its current account. Respondent delayed repayment for 3/4 years utilized the money for business and was, thus, liable to pay interest.
3. We have heard Mr. Muneesh Malhotra for appellant, and Ms. Parvinder Khatra for respondent.
4. It is not in dispute that amount of Rs. 31.31 lakh then equivalent of US $ 1,00,000 received from M.K.B. of Singapore was credited in the current account of respondent on 7.10.1993 and respondent exported goods between 26.10.1993 to 18.1.1994 against that amount. It is also not in dispute that by the letter dated 6.6.1994 appellant bank intimated the respondent that said remittance actually pertaining to M/s. D.L. Tanumal Pvt. Ltd. by mistake was credited in its current account as a result of wrong generation of data in Nostro Account. In para No. 8 of Memo of Appeal(s), the respondent is shown to have paid US $ 10,000 on 17.11.1994, US $ 10,000 on 13.12.1994, US $ 10,000 on 12.1.1995, US $ 10,000 on 15.2.1995, US $ 10,000 on 16.3.2005, US $ 10,000 on 12.4.1995, US $ 9,985 on 6.6.1995, US $ 9,985 on 13.7.1995, US $ 9,985 on 16.8.1995 and US $ 9,980 on 29.11.1996, totaling US $ 99,935. It is admitted case of the parties that to secure payment of last instalment the respondent gave FDR of Rs. 3,10,000 on 22.11.1995, the maturity value where of was Rs. 4,40,428 as on 22.11.1997 to the appellant bank. In complaint case No. 22/98 the relief claimed was that the bank be directed to refund the maturity value of said FDR with inerest and not to charge any interest as claimed by the Bank. Copy of the order dated 1.7.2002 in O.A. No. 1469/2000 passed by Mumbai Debts Recovery Tribunal filed by appellant on 7.7.2005 would show that an award of Rs. 12,05,397 with further interest had been passed ex parte against the respondent and its partners who failed to put in appearance despite being duly served with notices. During course of arguments, it was pointed out by Mr. Malhotra that the application filed for setting aside the award has been dismissed for default. Award has, thus, attained finality. Controversy between the parties in these appeals centres around the liability of respondent to pay interest of Rs. 9,61,195 for utilization of money mistakenly credited in its current account till the amount was repaid, entitlement of the respondent to Rs. 25,000 towards injury to reputation and Rs. 4,40,428 being the maturity value of FDR of Rs. 3,10,000 with interest.
5. Decision in S. Kotrabasappa v. The Indian Bank AIR 1987 Karnataka 236 arose out of a suit filed by the respondent bank against the appellant/defendant for recovery of Rs. 1 lakh plus Rs. 33,438.75 as interest etc. It was, inter alia, alleged by the respondent that appellant was maintaining account with it and on 14.6.1980 the bank received TT (Telegraphic Transfer) advice from their R.S. Puram, Coimbatore Branch to credit to the account of appellant a sum of Rs. 1 lakh which was credited and drawn by the appellant the same day. On receipt of confirmation telegram on 21.6.1980 by mistake a further sum of Rs. 1 lakh was credited to the account of appellant, bonafidely believing that it was another T.T. advice. Appellant taking unfair advantage of the mistaken credit transfer, withdrew the said amount on 21.6.1980. It was alleged that after nearly two years the respondent was informed that there was wrong credit on 21.6.1980. Therefore, it approached the appellant on 13.7.1982 and explained the circumstances under which payment was made without receipt of T.T. on 21.6.1980. Since appellant failed to repay the said amount, suit was filed which was decreed by the Trial Court. While upholding the judgment of Court below the Karnataka High Court held that in case of mistaken credit in the account of a person by bank the person utilizing the amount is bound to repay/return money in view of Section 72 of the Contract Act with interest under Clause (b) of Sub section (2) of Section 4 of the Interest Act, 1978.
6. Decision of Karnataka High Court was followed in Noshir S. Jail v. Punjab National Bank I (2000) BC 349, by Madhya Pradesh High Court.
7. Applying the ratio of said two decisions to the facts of present case the respondent is not entitled to Rs. 9,61,195 towards interest to be paid to the appellant bank as ordered by the State Commission.
8. On award of Rs. 25,000 towards injury to reputation the discussion towards the end of para 11 of the order under appeal needs be reproduced:
Although no actual injury or loss has been established but we do believe that the reputation of the complainant must have harmed." People would approach him hesitantly and this we believe that in the business world is a serious damage to the reputation. In absence of accurate evidence, we quantify this damage at Rs. 25,000.
9. Credited amount being Rs. 31.30 lakh the respondent in all probabilities may be knowing that it could not pertain to it still it choose to utilize it. Under Section 72 of the Contract Act the respondent was bound to repay/return the said amount. There was no question of the reputation of respondent being injured on requiring to return the amount by the bank. Moreover, no evidence was led in support of alleged injury to reputation by the respondent. Order of the State Commission awarding demage of Rs. 25,000, thus cannot be legally sustained.
10. Coming to refund of aforesaid amount of F.D.R. with interest, only the decision in Syndicate Bank v. Vijay Kumar and Ors. I (1992) BC 324 (SC) : (1992) 2 SCC 330 - need be noticed. Para No. 6 of the judgment which is material is reproduced as under:
In Halsbury's Laws of England, 2nd Edn., Vol. 20, p. 552, para 695, lien is defined as follows :
Lien in its primary sense is a right in one man to retain that which is in his possession belonging to another until certain demands of the person in possession are satisfied. In this primary sense it is given by law and not by contract.
In Chalmers on Bills of Exchange, 13th Edn., p.91 the meaning of "Banker's lien" is given as follows:
A banker's lien on negotiable securities has been judicially defined as 'an implied pledge'. A banker has, in the absence of agreement to the contrary, alien on all bills received from a customer in the ordinary course of banking business in respect of any balance that may be due from such customer.
In Chitty on Contract, 26th Edn., p.389, para 3032 the Banker's lien is explained as under:
Extent of lien.--By mercantile custom the banker has a general lien over all forms of commercial paper deposited by or on behalf of a customer in the ordinary course of banking business. The custom does not extend to valuables lodged for the purpose of safe custody and may in any event be displaced by either an express contract or circumstances which show an implied agreement inconsistent with the lien....
The lien is applicable to negotiable instruments which are...remitted to the banker from the customer for the purpose of collection. When collection has been made the proceeds may be used by the banker in reduction of the customer's debit balance unless other earmarked.
In Paget's Law of Banking, 8th Edn., p. 498 a passage reads as under :
The Banker's lien Apart from any specific security, the banker can look to his general lien as a protection against loss on loan or overdraft or other credit facility. The general lien of bankers is part of law merchant and judicially recognized as such.
In Brandao V. Barneet, it was stated as under All ER p. 722-H Bankers, most undoubtedly, have a general lien on all securities deposited with them, as bankers, by a customer, unless there be an express contract, or circumstances that show an implied contract, inconsistent with lien.
The above passage go to show that by mercantile system the bank has a general lien over all forms of securities or negotiable instruments deposited by or on behalf of the customer in the ordinary course of banking business and that the general lien is a valuable right of the banker judicially recognized and in the absence of an agreement to the contrary, a banker has a general lien over such securities or bills received from a customer in the ordinary course of banking business and has a right to use the proceeds in respect of any balance that may be due from the customer by way of reduction of customer's debit balance. Such a lien is also applicable to negotiable instruments including FDRs which are remitted to the Bank by the customer for the purpose of collection. There is no gainsaying that such a lien extends to FDRs also which are deposited by the customer.
(emphasis supplied)
11. Applying the said ratio the appellant bank must be held to be having general lien over the maturity amount of aforesaid F.D.R. of Rs, 3,10,000.
12. Decisions in R.K. Agencies Ltd. v. Central Bank of India , Union Bank of India v. K.V. Venugopalan ; and Brahmayya & Co. v. K.P. Thangavelu Nadar and Ors. AIR 1956 Madras 570 relied upon by Ms. Khatra are of no assistance to the respondent. Order of State Commission directing refund of the amount of above FDR with interest being legally erroneous deserves to be set aside.
13. For the forgoing discussion, both the appeals are allowed and order dated 15.10.1999 is set aside and complaints dismissed with cost of Rs. 10,000 to the appellant bank.