State Consumer Disputes Redressal Commission
Guru Teg Bahadur Khalsa College vs Punjab & Sind Bank on 12 July, 2007
IN THE STATE COMMISSION:DELHI IN THE STATE COMMISSION: DELHI (Constituted under Section 9 of The Consumer Protection Act, 1986) Date of Decision: 12.07.2007 Complaint No.-349/98. Sh.Guru Teg Bahadur Khalsa College . . . Complainant (Morning) through University of Delhi. Mr. Amrit Pal Singh Delhi-11 0007. Advocate Versus Punjab & Sind Bank. Opposite Party Extension Counter (X-918), SGTB Khalsa College, University Campus, Delhi. Head Office Bank House 21, Rajendra Place, New Delhi-110018. 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) Complainant is a prominent college of Delhi and is situated in the area of University of Delhi. On the allegation of illegal detention of money in the account of the complainant that it opened with the OP-Bank under the title Teachers Provident Fund Account, complainant-College has sought direction to the OP-Bank to reimburse the wrongful gain of Rs. 17,88,042/- earned by it upto date of filing of this complaint and Rs. 2,00,000/- as compensation for mental agony and harassment and cost of Rs. 33,000/-.
2. Allegations of the complainant, in brief, are that the complainant is maintaining amongst others, a Savings Bank Account No. 187, apart from the various Fixed Deposit Accounts from time to time, with the OP at its Extension Counter at the College pertaining to the provident fund of the staff of the College titled Teachers Provident Fund Account.
3. That as per rules and regulations of Delhi University, all the bank accounts of the complainant-college are to be operated under the joint signatures of the Principal and the Bursar of the college or alternatively the Principal and the Treasurer of the Governing Body.
4. That the OP was accordingly honouring all cheques and documents issued under the joint signatures of the Principal and the Bursar or alternatively the Principal and the Treasurer prior to 10-09-1994 on which date it refused to accept and honour renewal instructions pertaining to FDR NO. 856720 which matured that day with the maturity amount of Rs. 8,93,040/- on the false pretext that the then Bursar Dr. Jagat Jit Singh was not the authorized signatory, as purported to have been communicated to the OP by Bakshi Jagdev Singh a new nominee on the Governing Body of the complainant-College and proclaiming to be its Chairman, despite a letter given to it by the complainant-College on 08-09-1994 (annexure A) along with the copy of the letter of the University dated 11-08-1994 (Annexure B), stating therein that the University had categorically expressed its inability to consider giving approval to the new nominations by the Delhi Sigh Gurdwara Management Committee on the Governing Body of the complainant-College till such time that an injunction against the University granted in suit No. 490/89, pending in the High Court of Delhi, is got vacated.
Consequently, the earlier nominations communicated by the complainant college to the OP-Bank on 29-06-1994 stood cancelled and withdrawn. Thereafter, on 10-09-1994 the then Principal of the complainant college also wrote to the OP-Bank reiterating that Dr. Jagat Jit Singh continues to function as the domestic Bursar and further that all cheques presented to the bank under the joint signatures of the Principal and Dr. Jagat Jit Singh as Bursar are to be entertained and processed as before entirely at the risk and responsibility of the Principal himself. But despite this the FDR renewal instruction was not honoured on 10-09-1994 as stated above. On the contrary, the OP-Bank reiterated its above fallacious stand in its letter NO. 878 dated 19-09-1994 and later on in its letter of reply dated 26-09-1994 which was written in response to the complainants letter No. Acctt./3120 dated 20-09-1994.
5. Further that on 27/28th September, 1994, the OP-Bank refused to accept and honour the salary statement of the college staff for the month of September, 1994 on the same false pretext that the salary statement was not signed by the authorized signatures. It transpired later onthat the OP was acting in this iniquitous manner at the behest of its then Executive Director and presently Chairman, Mr. S.S. Kohli, acting in concert and collusion with Bakshi Jagdev Singh and Ch. Basant Singh, all three of whom were illegally claiming themselves to be the Member, the Chairman and the Treasurer respectively of the College Governing Body despite the fact that the appointment of all the above three persons to the Government Body of the complainant-College was not approved by the University in view of the injunction issued by the Honble High Court of Delhi in suit No. 490/89. But on 8th October, 1994 the OP bank upon receipt of copy of another letter of the University dated 07-10-1994 relented from its earlier position and accepted and honoured the same very salary statement which was signed by the same very two signatories who were earlier held by it.
6. Further the OP-bank did not have the authority to de-recognise the then Bursar as the authorized signatory nor was it expected to act in a partisan manner as betrayed by the tone and tenor of its letter dated 12-11-1994 nor was it supposed to take cognizance of dictates from unauthorized quarters such as from Bakshi Jagdev Singh or Ch. Basant Singh, illegally proclaiming themselves to be the Chairman and Treasurer respectively of the college Governing Body especially when the University had specifically refused to approve their names, amongst others for appointment to the Governing Body of the complainant college vide its letter No. DR(CB)/94/17942 dated 11-08-1994 in view of the injunction granted by the Honble High Court of Delhi in Suit No. 490/89.
7. That in the meanwhile on 04-01-1995, after obtaining the ex-parte interim directions from the Honble High Court of Delhi on 30-12-1994 to the effect that the OP-bank would duly honour all cheques submitted under the joint signatures of the then Principal and the then Bursar in the account maintained with the OP in the name of the complainant-college, the complainant-college encashed a total of 33 FDRs, which was holding back after their respective maturities on different dates between September, 1994 to December, 1994. The total principal amount of the said FDRs was Rs. 1,92,27,761/- and the total maturity amount of the same at their respective maturity dates was Rs. 2,19,81,505/-. But these FDRs were neither accepted for renewal when presented to the OP-Bank or their respective maturity dates nor were these allowed to be encashed. Out of these FDRs on 06-12-1994 vide its covering letter No. Accts./P&SB/3750 for encashment totaling Rs. 1,93,95,240/- (maturity values) for the purpose of investing the proceeds of the same in the UTI scheme of 13 % p.a. interest which was closing on 07-12-1994. The complainant also issued two cheques for Rs. 1,00,00,000/- and Rs. 90,00,000/- in favour of UTI but the same were dishonoured by the OP.
8. That on 04-01-1995 OP finally made the payment of these 33 FDRs pursuant to the ex-parte interim direction of the High Court, it only paid the maturity amount of Rs. 2,19,81,505/- while totally ignoring the period that these FDRs were withheld illegally over and above their respective due dates by the OP without renewing or paying them, as instructed by the complainant from time to time.
9. That after a lot of squabbling over the issue running over for almost 27 months finally partly accepted its liability against the complainants claim on 16-07-1997 in respect of 27 FDRs only and that too for only 29 days beginning 06-12-1994 without mentioning clearly the basis or method on which it based its calculations. Thus a sum of Rs. 1,15,627.83 was credited by the OP to the saving bank A/c No. 187 of the complainant on 16-07-1997.
10. That by 04-01-1995, when the maturity proceeds of the said 33 FDRs were finally paid, the OP-Bank had presumably earned a sum of Rs. 9,23,096/- by illegally withholding the said FDRs beyond their maturity dates for varying periods, and deploying the maturity proceeds of the same to cause a wrongful gain to itself of this amount at the expenses of the complainant-College. Thus finally on 16-07-1997 the OP-Bank in a tacit admission of its liability towards the claims of the complainant-college, paid a paltry sum of Rs. 1,15,627.83 as per its own arbitrary and whimsical treatment and calculations against the sum of Rs. 15,50,444/- and therefore the OP-Bank still held illegally the wrongful gain of Rs. 14,34,816/-. This continuing wrongful gain after 16-07-1997 adds upto a total outstanding of Rs. 17,99,042/-, till the date of filing of this complaint i.e. 16-10-1998. Thus the OP-bank is retaining wrongful gains out of the funds belonging to the complainant-College and these facts brings out a case of deficiency in service on the part of OP-Bank.
11. While absolving itself from the charge of deficiency in service, the OP pleaded that there was dispute between Gurudwara Prabandhak Managing Committee and the college authorities whereby they stated that the Bursar appointed by them cannot work as Barsar and only the Principal and the Treasurer of the College were allowed to operate the amount. The said fact was informed to the college authority and they were requested to send the cheque duly signed by the Principal and the Treasurer vide letter dated 26-06-1994. Thereafter the complainant did not send the cheques under the signatures of Principal and the Treasurer as per account record, who are the authorized persons in operating the account. Since the dispute was not settled between both the authorities hence the bank filed an inter-pleader suit before the District Court seeking clarification regarding operation of the account. Since there was settlement between the parties and the writ filed by the complainant was withdrawn, the inter-pleader suit was withdrawn by the OP-Bank and thereafter the complainant was allowed to operate the account.
12. In refutation, complainant re-iterated and held the OP Bank guilty for deficiency in service.
13. We have heard the counsel for the parties at length and accorded careful consideration to the material on the record and find that there was no official communication by the college authorities that the Bursar was not the authorized person to sign the cheques. Moreover, regulation 4(2) of Chapter VII of University Ordinance XVIII provides that the Principal shall appoint a Bursar who shall be a member of the teaching staff and who shall assist the Principal in the maintenance of accounts in the day-to-day financial affairs of the College. The Principal and Bursar shall jointly operate the Bank account within the budget estimates relating to maintenance grant items duly approved by the Governing Body.
14. After according careful consideration to the rival claims of the parties and contentions for the counsel for the parties, we find that it was due to some internal dispute in the college that the problem arose as to who was authorized person to operate the account. It is not understandable as to on what basis the OP-Bank refused to honour the cheques issued by the Bursar and the Principal in spite of there being no intimation received by the bank from the Principal of the college as to the incompetence or authority of Bursar to operate the account jointly with the Principal. However, in view of the fact that the inter-se dispute of the college assumed so much proportion that the dispute landed in the High Court and it was by way of interim directions of the High Court that the OP bank was directed to honour the cheques signed by the Principal and the Bursar.
15. In the normal course banks are not supposed to introduce personal knowledge as to the authority of the person to operate the bank account if the person has been in the past operating it. But to be on the safer side and as an abundant precaution if the bank receives information from concerned quarters that there is some dispute going on in the organization as to the authority of one of the persons to sign the cheques on behalf of the organization the bank may exercise precaution in not honoring the cheques so as to obviate future legal implications that may result in litigation against the bank itself.
16. The banks are custodian of the money of the account holders and as and when they receive some communication from the authorized person as to the persons who are competent to operatze the account the bank is required to continue with past practice. However, in the instant case there was no communication sent to the OP bank not to honour the cheques signed by the Bursar along with the Principal. It appears that due to some inter-se litigation between the parties that might have been brought to the notice by one of the warring groups that the bank exercised extra precaution.
17. If at all the OP bank can be held guilty for deficiency in service, it is only that it should not have declined to honour the cheques signed by the Principal and Bursar unless there was a communication from the Principal to the effect that such cheques should not be honoured and only such cheques be honoured which are signed by the Principal and the Treasurer.
Since this impasse continued only for a short period from 10.9.94 to 04.1.95, we in the given facts and circumstances of the case and taking over-all view of the matter particularly the inter-se dispute of the college and the litigation they were involved in and there being no malafide on the part of the bank not to entertain the cheques signed by the Principal and Bursar, we deem that a lump sum compensation of Rs.
50,000/- would meet the ends of justice.
18. Payment shall be made within one month from the date of this order.
19. Complaint is disposed of in aforesaid terms.
20. Copy of order, as per statutory requirement, be forwarded to the parties and to the concerned District Forum and thereafter file be consigned to record.
21. FDR/Bank Guarantee, if any, be released under proper receipt.
(Justice J.D. Kapoor) President (Rumnita Mittal) Member HK (M)