B.M. GANDHI AND SONS vs Bank of India

WE have carefully perused the pleadings in this complaint filed by both the parties, as also heard the learned Advocates for the parties. (For brevity''s sake parties hereinafter are referred to as complainant and O.P. Bank)

FEW relevant facts : Complainants, which is a share broking concern had its Current Account with the O.P. in its branch at Stock Exchange, Fort, Mumbai. On 1.10.1996, complainant deposited two cheques of Rs. 5 lakhs and Rs. 8 lakhs aggregating to Rs. 13 lakhs drawn by one BNP Securities on their Banker M/s. Dena Bank of its Marine Lines Branch in favour of the complainants. Complainants deposited the said cheques with the O.P. Bank on 1.10.1996 in their Current Account for clearance. According to the complainants and which is so stated in the complaint itself, the clearance pertaining to the said cheques was to be processed as High Value Clearance cheques. It is averred by the complainants that they were entitled to the credit of the amounts of the said cheques by the Bank of the very day the same were deposited and also entitled to withdraw the amount in cash on the same day of deposit.

It is noticed that on the same day complainants withdrew the entire amount of Rs. 13 lakhs under the said cheques from the O.P. Bank and it is to be stated and pertinently the O.P. Bank also allowed the complainants to withdraw the full amount under the said cheques although the same were not cleared and fate known then.

IT appears that on 4.10.1996 the O.P. Bank informed the complainants about the bouncing of the said cheques by Dena Bank. Eventually the Bank debited the amount into the Current Account of the complainants as there was adverse balance into the account of the complainants as a result of return of the cheques uncleared. It is to be stated that this is the whole gamut of the basis of the complaint herein. The complainants have asserted, that notwithstanding the return of the cheques, the O.P. Bank was not justified in debiting the amount in their account.

THERE is a good deal of correspondence which came to be exchanged between the parties thereafter, which forms part of the complaint. Short point for consideration before us is whether the complainant satisfactorily proves the O.P. Bank being deficient in rendering service. To be precise, deficiency in service alleged by the complainant against the O.P. Bank is that once having credited the amount under the cheques and allowed to withdraw the amount on the very day, the cheques were deposited by the complainant, the Bank was not entitled to debit the amount of the cheques notwithstanding bouncing of the said cheques. It is further asserted, in justification of the grievance as above that in fact O.P. Bank was not justified in accepting the returned cheques from drawer Bank, i.e. Dena Bank. O.P. Bank has filed the written statement and they have denied they being deficient as alleged by the complainants.

IT is asserted that the complainants were their old clients and in the course of business, as a customer and client, they were given facilities or rather concession by the Bank keeping in mind their business relationships. IT is asserted that since undisputedly the cheques deposited by the complainants were bounced and no credit was received, the Bank had no other option, but to debit the account, as the account of the complainant ran into adverse balance which was not permissible to be so kept in the circumstances. Following points would arise for consideration : 1. Whether complainants prove that the O.P. Bank is deficient in rendering services vis-a-vis negotiation of two cheques for aggregate sum of Rs. 13 lakhs ? 2. Whether complainants are entitled to claim damages as also other amounts claimed in the complaint ? 3. What reliefs ? Our findings on the aforesaid issues are as under : 1. No. 2. In view of findings of point No. 1 does not survive. 3. As per order. Reasons : 1. We take both the point Nos. 1 and 2 together to avoid overlapping discussion thereon.

WE have already adverted to hereinabove the factual aspects as involved in the matter herein and, therefore, there needs no further dilation over the same. As is the case, the complainants have alleged deficiency in service on the part of the O.P. Bank. To appreciate the same, we have to see what constitutes deficiency in service as defined under Consumer Protection Act, 1986. For that matter, Section 2(1)(g) of Consumer Protection Act, 1986 which defines deficiency as ...: "(g) ''Deficiency'' means any fault, imperfection, shortcoming or inadequacy in the quality, 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".

(Underline supplied) It would thus be noticed that to constitute deficiency, there has to be certain lapses, fault, imperfection, shortcoming, inadequacy, etc. in the nature and manner of performance required to be maintained by or under any law for the time being in force, etc.

Second requirement is whether parties were in contractual obligation existing between them.

WE straightaway asked the learned Advocate appearing for the complainant that whether there are specific rules and regulations with regard to "High Value Clearance Cheques" as is sought to be asserted by and on behalf of the complainants and we have not been shown any such rules in that respect. What is more, we also queried the learned Advocate for the O.P. Bank about existence of regulations or guidelines issued by the Reserve Bank of India, permitting the depositor of the cheque to withdraw the amounts under such deposited cheques, as is the case herein, even before their clearance by the drawer bank and result or fate has become known to the negotiating Bank, like O.P. Bank, and it was stated that there exists no such rules or guidelines. It is to be stated that in the banking business and operation, there is well settled procedure with regard to clearance of the cheques. Cheque is undisputedly a negotiable instrument (Refer Section 2 of Negotiable Instruments Act, 1881) and the use of the cheque in a business has to be in accordance with the provisions as contained under Negotiable Instruments Act and Banking practice.

THE Privy Council, in its earliest judgment in the case of the THE Punjab National Bank Ltd. v. THE Bank of Baroda Ltd., reported in 48 CWN 810, has luminously laid down that a Cheque, though a bill of exchange, is of a special type which in the ordinary course is never accepted. If drawer Bank (i.e. in the case herein Dena Bank) dishonours the cheque by non-acceptance, then Bank holding the cheque, which is called holder-in-due course, (like the O.P. Bank herein) as between itself and the drawer, has no right to require or compel acceptance by the drawer Bank. THE said judgment clarifies that the role to be played by the collecting Bank, like the O.P. herein, is being of an agent of its customer depositing the cheque. In support of this, the said judgment makes reference to well known treaties on the subject, viz. (i) "Bills of Exchange Act" by Chalmurs and (ii) "Law of Banking" by Paget. In such situation, contention of the complainant that O.P. Bank ought to have compelled the drawer Bank (i.e. Dena Bank) to accept the said cheques and make the payment to say the least, is absurd proportion and cannot be accepted as such. This position has been considered by the Calcutta High Court in the case of United Bank of India v. A.T. Ali Hussain & Co., reported in AIR 1978 Cal. 169, holding that if holder Bank, like O.P. herein pays the amount to the payee like the complainant herein, by its mistake or carelessness, it will be entitled to recover the same from payee, observing that the equitable principles disfavour unjust enrichment. It is necessary to note that the complainants got a sum of Rs. 13 lakhs from O.P. Bank, admittedly against the deposit of cheques of Rs. 13 lakhs, which they received from other party, and which were eventually dishonoured. It is necessary to reiterate to constitute deficiency in service, the party alleging deficiency and claiming relief on the basis thereof, must prove invention of any legally protected interest and it must be coupled with negligence. In the case herein, there is no denial of the fact that the O.P. as Collecting Bank has promptly forwarded the cheques for clearance to the drawer Bank and that being so, it cannot be held being deficient in services (Refer Corporation Bank v. Navin J. Shah, I (2000) CPJ 13 (SC)=II (2000) SLT 140=AIR 2000 SC 304. It clearly emerges from the undisputed facts that drawer Dena Bank had not honoured the cheques in question and secondly O.P. Bank did not receive the credit thereof which they had already parted with by obliging the complainant in certain mysterious circumstances about which we do not want to comment.

IN such situation, Bank of INdia, rectified its mistake by debiting the amount in question into the account of the complainant, which it was legitimately entitled to do. IN our view, the same cannot be termed O.P. Bank having done anything wrong or there would be any lapse as envisaged under Section 2(1)(g) of Consumer Protection Act, 1986 to constitute deficiency as such.

THERE is one curious fact, which we would also like to mention, namely total inaction on the part of the complainant to take any action against the drawer of the cheques i.e. BNB Securities, after knowing of the fact that the said cheques were returned unpaid and they i.e. complainants having already withdrawn the amount in cash from the O.P. Bank. This is, despite the fact that the O.P. Bank vide their communication dated 6.12.1996 to the complainant have specifically highlighted this aspect and we reproduce what Bank has insisted the complainants to do. "Incidentally, we would like to know whether you had taken up the matter with the drawer of the cheques M/s. BNP Securities to whom you had delivered the shares/securities presuming that the cheques were paid and the deal is concluded. As the cheques were returned unpaid, in all fairness M/s. BNP Securities should have returned the shares/securities to you or should have made appropriate financial arrangements to honour cheques issue to you. We are sure that your goodselves and your clients M/s. B.N.P. Securities are well aware that return of cheques for financial reasons can be treated as cognizable/criminal offence."

It is pertinent to note that complainants have kept guarded silent over the same and this is to be judged in the circumstances and context that the cheques to the extent of Rs. 13 lakhs given to them by the parties were dishonoured and yet the complainant did not think it necessary and prudent to proceed against the said party which conduct is revealing.

INSTEAD, they have thought it wise to file this complaint, against the O.P. - Collecting Bank, alleging deficiency in service, by taking recourse to the beneficial provisions of the Statute viz. Consumer Protection Act, 1986. The other important factors militating against the complainants and as such reflective upon their conduct would require brief advertence. As noticed, complainant who is a Share Broking concern, is very much aware what is a banking business. It withdrew the cash from the O.P. Bank to the extent of Rs. 13 lakhs on the very day cheques were deposited by it and even before receipt of the amount thereunder by the O.P. Bank. In normal course, complainants should have known such withdrawal was not permissible. They also knew that eventually cheques which they deposited got bounced and the O.P. Bank did not receive the credit thereunder from the drawer Bank.

DESPITE this, why the complainants have reacted to all these events is important to note. It is not necessary to detail the consequences of return of the cheques. Complainants had so many remedies available as Payee of the said cheques because of the bouncing of the cheques, Sections 138 to 142 of Negotiable Instruments Act provide a remedy in such situation, which includes even the criminal prosecution against the drawer of the cheques. However, nothing of the sort has been done by the complainants. Furthermore, no material is made available to show that the drawer of the cheques have made the payment in legitimate dealings or business contract. For that matter, no affidavit of the drawers or any evidence has been made available. This raises a doubt, legitimate one, about the very nature of the issuance of the cheques, etc. There is further aspect to be noted is in the context of grievance of deficiency in service. The question of deficiency in service would arise in the event of there being a kind of service to be rendered by the party like the O.P. Bank herein under the Law or contract and, as such, has to be legitimate dealing. As noticed earlier, the manner in which the moneys have been withdrawn on the basis of uncleared cheques was not permissible under the rules, nor it can be justified under healthy banking practice as such. That being so, the case of the complainant of deficient in service requires to be rejected outright.

BEFORE concluding, we are constrained to observe the manner in which the officials of the O.P. Bank have conducted or rather reacted to the entire scenario. In the first instance, it is really curious and baffling as to how the O.P. Bank released and parted with sum of Rs. 13 lakhs on the basis of uncleared cheques. Having so parted with and subsequent events that followed, we are constrained to state that such serious matter has not been taken with seriousness it required and deserved. In any event, such conduct of the officials of the O.P. Bank cannot be said to be of those officials of prudent Bank. It is, however, for the O.P. Bank to consider the gravity of the entire matter and take necessary steps to curb such pernicious practice and such impermissible under any Law or the Rules. ORDER 1. Complaint stands dismissed. 2. No order as to costs. 3. Copies of the order herein to be furnished to the parties as also to the Governor, Reserve Bank of India. Complaint dismissed.