State Consumer Disputes Redressal Commission
Coastal Projects Pvt. Ltd. vs State Bank Of India on 26 December, 2014
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, UTTARAKHAND, DEHRADUN
CONSUMER COMPLAINT NO. 07 /2008
Coastal Projects Pvt. Ltd.
Regd. office: 237, 2nd Floor, Bapujee Nagar, Bhubaneshwar
Head office: G-02, Elite Heights Apts, Asif Avenue
Raj Bhavan Road, Somajiguda, Hyderabad
Delhi office: Flat No. 504-505, 32-33, Kushal Bazaar Building
Nehru Place, New Delhi
Through its DGM Sh. Vivek Kumar
..........Complainant
Versus
State Bank of India
Bhatwari Branch, District Uttarkashi
Through its Branch Manager
......Opposite Party
Ms. Anupama Gautam, Learned Counsel for the Complainant
Mr. Surendra Parashar, Learned Counsel for the Opposite Party
Coram: Hon'ble Mr. Justice B.C. Kandpal, President
Mr. D.K. Tyagi, H.J.S., Member
Mrs. Veena Sharma, Member
Dated: 26/12/2014
ORDER
(Per: Mr. D.K. Tyagi, Member):
The Coastal Projects Pvt. Ltd. (hereinafter to be referred as "Complainant") through its DGM-Sh. Vivek Kumar, has filed this consumer complaint before this Commission under Section 12 read with Section 18 of the Consumer Protection Act, 1986, against the opposite party-State Bank of India, Bhatwari Branch for compensation of Rs. 64,85,442/- (Rupees Sixty Four Lacs Eighty Five Thousands and Four Hundred Fourty Two only) for deficiency in service on account of dishonour of cheques and Rs. 10,00,000/- (Rupees Ten Lacs only) as damages.2
2. Briefly stated, the facts of the case are that the complainant is a company duly registered under Companies Act, 1956 having registered office at 237, 2nd Floor, Bapujee Nagar, Bhubaneshwar and its Head office at G-02, Elite Heights Aparts, Asif Avenue, Raj Bhawan Road, Somajigauda, Hyderabad and Regional office at Flat No. 504-505, 32- 33, Kushal Bazaar Building, Nehru Place, New Delhi. The complainant was carrying on construction of Hydro Electric Project at Bhatwari, District Uttarkashi during the year 2006-07. For this the material etc. was purchased from time to time and the payments were made by the authorized person of the company through the account of the company for which a cheque book containing cheque Nos. 548701 to 548725 pertaining to account No. 01000015025 was issued to the then AGM, Sh. H.K. Singh, who was the authorized person. Sh. H.K. Singh was handling cash for the said project up to 03.05.2007. Financial powers being exercised by Sh. H.K. Singh were found to be misused and to check the said misuse, the said account was called upon for closure and the closure was duly informed the opposite party vide letter dated 27.04.2007, which was received by the bank at 10.45 A.M. on 03.05.2007. At the time when the opposite party bank was called to close the said account, no condition was imposed upon the complainant by the bank. It was informed by the opposite party that the said account was closed on 04.05.2007 itself. The complainant was shocked to receive verbal information from the opposite party that one Sh. Puneet Garg had purposely lately presented the cheque Nos. 548718 and 548719 both purported to be antedated for Rs. 32,42,721/- and Rs. 77,000/- respectively and the same were unlawfully accepted and returned as bounced on account of insufficient funds, whereas the opposite party knew fully well that the account No. 01000015025 was closed more than five months back. Sh. Puneet Garg has not only issued cheque bounce notice, he even filed criminal complaint against the complainant, its Managing Director, its Executive Director and other officials which is 3 registered as Complaint No. 892 of 2007; Puneet Garg vs. Coastal Projects pending in the Court of Judicial Magistrate, Rishkesh. Sh. Puneet Garg has also issued another notice to the complainant under Companies Act and he had threatened to create reputational hazard. Receiving of cheques even after closure of account and endorsing insufficient funds of closed account is deficiency in service committed by the opposite party, which has led the complainant into criminal proceedings and also threat of proceedings under Companies Act, all because of the deficiency in service committed by the opposite party. The complainant is the "consumer" of the opposite party and as such this Commission has jurisdiction to hear and decide the matter. The cause of action has arisen to the complainant on the date when the account No. 01000015025 was obtained and then on 03.05.2007, when the opposite was called upon to close the said account, then on the date the cheque Nos. 548718 and 548719 pertaining to the said account were accepted in the closed account and then on the date the said cheques were returned with the endorsement of insufficient funds, whereas there was no account in operation with the opposite party and continues ever since then.
3. The opposite party has filed written statement/objections. In the written statement it is stated that para No. 2 of the consumer complaint only the issuing of cheque book is admitted and rest of the para is not admitted. In reply of para No. 3 of the consumer complaint, it is only admitted that the alleged account of the complainant was closed and rest of the part is not admitted. That para Nos. 5 to 8 of the consumer complaint are wrong and not admitted. That para No. 9 of the consumer complaint is absolutely wrong and is not admitted. It is absolutely wrong to say that the complainant is a "consumer" of the opposite party. The State Commission has no jurisdiction to hear or decide the matter raised by the complainant. That para Nos. 10 and 11 are also wrong and not admitted. The complainant is not entitled to any relief. In the additional 4 pleas of the written statement, the opposite party bank has stated that it is absolutely wrong to say that the opposite party ever gave any verbal information to the complainant as is stated in para No. 5 of the complaint. To the best knowledge of the opposite party the alleged two cheques were not presented by any Sh. Puneet Garg. The cheques were received in collection from another bank and therefore, there was no question of opposite party giving the alleged oral information to the complainant as is mentioned in para No. 5 of the complaint. That the cheques in question were presented to the opposite party through another bank for collecting the amount of the cheques. The opposite party could not have refused to receive the cheques presented through a banker. The only way open to the opposite party was to accept the cheque and if the opposite party was unable to pay the amount of the cheque to the collecting bank, for any reason whatsoever, to return the cheque with its memo citing the reason for not honouring the cheque. No record is kept in the bank of the reason for which a particular cheque is returned. The reason for returning a cheque can be verified from the memo accompanying the returned cheque. Where a cheque is returned for reason either that there were no sufficient funds or that the account on which the cheque was drawn was closed the consequences as far as Section 138 of Negotiable Instrument Act is concerned, are the same. The account No. 01000015025 on which the alleged cheques were issued stood closed at the time when the alleged cheques were presented to the opposite party. The relationship of banker (service provider) and customer did not exist between the opposite party and the complainant since much before the date on which the cheques were allegedly returned. That the complainant is not a "consumer" of the opposite party. That even otherwise the complainant is a commercial establishment. It had opended the account with the opposite party for carrying out its commercial transactions and for this reason also the complainant is not a "consumer". There has been no deficiency in the 5 service of the opposite party bank. The consumer complaint is legally not maintainable. The nature of the case is such that it cannot be tried under Consumer Protection Act, 1986, as huge amount of documentary and oral evidence shall have to be recorded. The complaiant has filed the frivolous complaint with ulterior motives without any cause of action having arisen to it. Therefore, the consumer complaint is liable to be dismissed with costs.
4. The complainant has filed an affidavit of Sh. Vivek Kumar, DGM, Coastal Projects Pvt. Ltd., who has deposed that he is the Power of Attorney holder of the company (Paper No. 4). The complainant has filed a letter dated 27.04.2007 and Board resolution dated 27.04.2007 (Paper Nos. 6 & 7); notice under Section 138 and 141 of The Negotiable Instruments Act, 1881 issued against the complainant (Paper Nos. 8 to
11); notice under Section 433/434 of Companies Act, 1956 (Paper Nos. 12 & 13); certified copy of the Complaint No. 892 of 2007 (Puneet Garg vs. Costal Project Pvt. Ltd.) under Section 138 N.I. Act (Paper Nos. 14-
20) and Summon on the Complaint No. 892 of 2007 against the Managing Director of complainant (Paper No. 21). The complainant has also filed an affidavit of Sh. Vivek Kumar, Sr. D.G.M., Coastal Projects Pvt. Ltd., Dehradun as evidence (Paper Nos. 36 to 39); certified copy of cheque dated 03.05.2007 (Paper No. 55); certificed copy of Bank Memo dated 27.09.2007 of UTI Bank (Paper No. 57) and certified copy of Bank Memo dated 26.09.2007 (Paper No. 59). The complainant also filed written arguments at Paper Nos. 67 & 68.
5. The opposite party Bank has filed an affidavit of Sh. N.K. Nami, Branch Manager, State Bank of India, Bhatwari Branch, Uttarkashi (Paper Nos. 40-50). The bank has also filed written arguments which are at Paper Nos. 69-71.
66. We have heard learned counsel for the parties and have also gone through the documentary evidences as well as the written arguments advanced by them.
7. Learned counsel for the complainant has submitted that the account No. 01000015025 maintained by the opposite party bank, which was operated by Sh. H.K. Singh on behalf of the complainant company, was closed on 28.04.2007 and on closure of the said account Sh. H.K. Singh resigned on 03.05.2007. Sh. H.K. Singh, the then AGM of the complainant, after his resignation had issued cheque Nos. 548718 and 548719, whereas the above account was closed about four months back. The opposite party bank was suitably informed of closure on 27.04.2007 itself. Subsequently one Sh. Puneet Garg had presented the cheque No. 548718 and cheque No. 548719 of amount of Rs. 32,42,721/- and Rs. 77,000/- respectively to the opposite party bank and the same were accepted by the bank and returned as bounced on account of insufficient funds by the bank. On that basis Sh. Puneet Garg issued a notice and criminal complaint under Section 138 of N.I. Act against the Director and other officials of complainant, which was registered as complaint No. 892 of 2007; Puneet Garg vs. Coastal Project at Judicial Magistrate, Rishikesh. Prior to filing of the complaint, a notice on behalf of Sh. Puneet Garg was also sent to the complainant and in this complaint, summoning was done by the Court of Judicial Magistrate. Learned counsel has submitted that the opposite party bank was well aware of the closure of account No. 01000015025, even then received the cheques and endorsed insufficient funds, which led to criminal proceedings against the company and its employees. The opposite party bank hence committed deificency in service provided to the complainant. In case the opposite party bank had refused to receive the cheque, the unwarranted litigation would not have been imposed on the complainant. Learned counsel for the complainant submitted that the litigation is pending upto the Hon'ble Apex Court, as on date. The opposite party 7 bank in its written arguments duly admits of closure of the account No. 01000015025 as such could not have received or accepted cheque, nor could have endorsed about bouncing cheque. Learned counsel further submitted that the complainant has been a "consumer" of the opposite party bank. The complainant's account was maintained by the opposite party bank, but at the time of dishonour of the cheque, no account was maintained by the opposite party bank and as such the information of account closed was supposed to be communicated and not insufficient funds. Cheque wrongfully dishonoured. Any act of the opposite party beyond the instruction of the complainant is deficiency in service.
8. Per contra to the submissions raised by the learned counsel for the complainant, learned counsel for the opposite party bank has submitted that the complainant is a Commercial Establishment-A Private Limited Company and is carrying on the business of construction of Hydro Electric Project and the bank account was used only for commercial transaction, as the payments regarding the material purchased for construction of the project was made through the bank account in question. Therefore, the complainant was not a "consumer" of the opposite party bank at the material time. Learned counsel submitted that the complainant had closed the account in question much before the date on which the cheque was presented to the bank for encashment. The relationship of a banker (service provider) and customer did not exist between the parties on the date of presentation and dishonour of the cheque. No consideration, fee or charges were paid or were to be paid by the complainant to the opposite party and no service was provided by the opposite party to the complainant. Learned counsel has submitted that the alleged cheques were presented through another bank (UTI Bank) and not by any Puneet Garg. The dishonour of a cheque with the endorsement "A/c Closed" means that the cheque has been dishonoured for "Insufficient Funds". The consumer complaint filed by the 8 complainant is sheer abuse of process of law. He also submitted that since no service was provided by the opposite party bank to the complainant, there can be no question of any deficiency in service or negligence.
9. Learned counsel for the complainant has relied upon the following citations:-
1. The Indian Overseas Bank vs. Sh. Durgesh Khuller and Another; 1996(2) CPC.
2. Raj Kumar Khurana vs. State of (N.C.T. of Delhi) and another; 2009(78) AIC 46 (SC).
3. Prashant Kumar Nag vs. ICICI Bank Ltd.;
II (2010) CPJ 5.
4. Canara Bank vs. Arjun Dass; II (2010) CPJ 534.
10. In the case of The Indian Overseas Bank vs. Sh. Durgesh Khuller and Another (supra), it was held by the State Consumer Commission, Punjab:Chandigarh that in case of complainants application for allotment of plot stood rejected as the cheque accompanying it was wrongfully dishonoured by the bank. The complainant was deprived of a chance of participating in the draw of lots of allotment of plots. The complainant suffered mental harassment on this account. Compensation not permissible on speculative loss. However, appellant bank was rightly directed to pay Rs. 5,000/- to complainant for rendering deficiency in service. With due respect to the State Commission, this ruling is not applicable in this case. Moreover, the State Commission has not ordered to pay any compensation of any speculative loss. In the case of Raj Kumar Khurana vs. State of (N.C.T. of Delhi) and another (supra), the Hon'ble Apex Court has held that if the cheque is dishonoured by the bank on the ground that its drawer reported the cheque lost would not bring the matter within 9 mischief of Section 138 of the Act. But with due respect, this ruling is also not applicable in the instant case. In the case of Prashant Kumar Nag vs. ICICI Bank Ltd. (supra), the Chattisgarh State Commission, Raipur has held that the savings account was closed on 15.09.2006 and non-transactional charges demanded in December, 2006. Account duly closed by paying closer charges and other dues, then there was no occasion for bank to keep account surviving and demand further charges. Deficiency in service proved. But with due respect to the State Commission, Chhattisgarh, Raipur, this ruling is also not applicable in this case. In the case of Canara Bank vs. Arjun Dass (supra), account destroyed by bank on the ground of non-operation. Directions neither issued by RBI nor mandatory. The Bank cannot close account without intimation. Act of bank dishonest, deficiency in service proved. With due respect to the State Commission, this ruling is not applicable in the instant case.
11. Learned counsel for the opposite party bank has cited following decisions in support of his contention:-
1. Shushma Goel vs. Punjab National Bank; II (2011) CPJ 270 (NC).
2. Sanjay Agro Industries Ltd. vs. UHBVN Ltd.
& Anr.; IV (2011) CPJ 333 (NC).
3. Prakasan vs. Vasudevan; IV (2009) BC 174.
4. NEPC Micon Ltd. and others vs. Magma Leasing Ltd.; AIR 1999 S.C. 1952.
12. In the case of Shushma Goel vs. Punjab National Bank (supra), the Hon'ble National Commission has held that the complaint relates to operation of bank account maintained by commercial organization for commercial purpose, then the complainant is not a consumer. In the case of Sanjay Agro Industries Ltd. vs. UHBVN Ltd. & Anr. (supra), the Hon'ble National Commission has held that 10 the complainant being a commercial entity and having availed service of Nigam purely for commercial purpose was not a consumer and the order passed by the State Commission was upheld. In the case of Prakasan vs. Vasudevan (supra), the Hon'ble Kerala High Court has held that in case of Section 138 of N.I. Act, 1881 and dishonour of cheque, account closed would mean that cheque is returned as unpaid on the ground that amount of money standing to the credit of that account is insufficient to honour the cheque. Offence under Section 138 of N.I. Act made out. In the case of NEPC Micon Ltd. and others vs. Magma Leasing Ltd. (supra), the Hon'ble Apex Court has held that return of cheque by bank with endorsement "account closed", is offence by drawer of cheque as envisaged in Section 138 of N.I. Act. In this case the Hon'ble Apex Court has interpreted the statutes and legislative intent that reading Section 138 and 140 together, it would be clear that dishonour of the cheque by a bank on the ground that account is closed would be covered by the phrase "the amount of money standing to the credit of that account is insufficient to honour the cheque". The expression "the amount of money standing to the credit of that account is insufficient to honour the cheque" is a genus of which the expression "that account being closed" is Species.
13. From the perusal of the citations and submissions raised by learned counsel for the parties, it is clear that the citations given by learned counsel for the complainant are not applicable in this case, whereas the citations given by the learned counsel for the opposite party bank are applicable. Admittedly, the complainant is a company carrying on construction of Hydro Electric Project and Sh. H.K. Singh was the authorized person for purchase of material and payments etc. through the account No. 01000015025, for which a cheque-book was issued by the opposite party to the then employee and AGM Sh. H.K. Singh. This shows that the complainant-company was doing commercial activities and for that purpose account was opened by the complainant in the 11 opposite party bank for commercial purpose. Therefore, the complainant is not a consumer. Moreover, the complainant has applied to the opposite party bank for the closure of said account on 27.04.2007 and for that purpose a Board Resolution was passed. The complainant sent a letter to the opposite party bank, which was received on 03.05.2007 and the said account was closed by the opposite party bank on 04.05.2007. Therefore, since the account of the complainant was closed on 04.05.2007, the complainant was no more customer of the opposite party bank (service provider). There is no relation between the complainant and the opposite party bank, as customer and banker, hence, the complainant is not a consumer of the opposite party bank. As held by the Hon'ble Kerala High Court in the case Prakasan vs. Vasudevan (supra) and also in the case of NEPC Micon Ltd. and others (supra), the Hon'ble Apex Court held that account is closed would be covered by the phrase "the amount of money standing to the credit of that account is insufficient to honour the cheque". On 04.05.2007, account of the complainant was closed and an authorized person of the company Sh. H.K. Singh had issued two cheques in favour of Sh. Puneet Garg, who presented these cheques to the UTI Bank, Bharat Bazar, 16 Adarsh Gram, Dehradun Road, Rishikesh for collection of money from the opposite party bank. As the said account was closed on 04.05.2007, the opposite party bank returned these two cheques to the UTI Bank, Rishikesh with the endorsement on memo that the cheques are dishonoured because of insufficient fund in the said account. There was no occasion to give any verbal information by the opposite party bank to the complainant, as the cheques were not presented by Sh. Puneet Garg to the opposite party bank, rather cheques were received from other bank for collection. The above noted citations of the Hon'ble Kerala High Court and Hon'ble Apex Court clearly indicate that the account No. 01000015025 closed would mean the amount of money standing to the credit of that account is insufficient to honour the cheque. In this 12 way, the dishonour of cheque with the endorsement "account closed"
means that the cheque has been dishonour for insufficient funds. After closure of the account on 04.05.2007, the relationship of the bank (service provider) and the customer did not exist between the parties on the date of presentation and dishonour of the cheques. No consideration, fee or charges were paid by the complainant to the opposite party bank in any manner and no service was provided by the opposite party bank to the complainant. Therefore, the complainant is neither the customer nor the consumer of the opposite party bank.
14. For the reasons aforesaid, we are of the view that the complainant has failed to prove its case against the opposite party bank, hence the consumer complaint filed by the complainant is liable to be dismissed.
15. The consumer complaint is dismissed. No order as to costs.
(MRS. VEENA SHARMA) (D.K. TYAGI) (JUSTICE B.C. KANDPAL)