CANARA BANK vs Sujag India Pvt Ltd

APPELLANT Canara Bank has challenged the order of Delhi State Consumer Disputes Redressal Commission in Complaint Case No.C -208/2000. The Complaint was filed M/s. Sujag India Pvt. Ltd. for alleged negligence and deficiency of service resulting in delivery of a consignment of woollen carpets to a foreign buyer without payment. Following relief was sought by the Complainant against the Appellant/OP, Canara Bank "a) The respondent bank may kindly be directed to pay a sum of U.S$ 32, 257/62 (equivalent to Indian Rs.14,42,560 -00p i.e. Rs. Fourteen lakhs, forty two thousand, five hundred sixty only) to the complainant (calculated at the rate of 1 U.S. Doller equal to Rs.44.72)

b) The respondent may further be directed to pay interest @ 24% p.a on the said amount towards the loss of interest accrued to the applicant due to negligence and lapse on part of the respondent bank;

c) The respondent may be directed to pay an amount of Rs.5 Lakhs to the complainant towards the mental agony and trauma suffered by the complainant''s directors and employees, loss of business and reputation.

d) Cost of the case be awarded to the complainant:"

THE Complaint has been allowed by the State Commission, which has made the following award in favour of the Complainant. "19. On account of having suffered loss, the complaint is allowed in the following terms: - OP shall pay cost of consignment in Indian currency of Rs.14,42,560/ -. OP shall also pay Rs.50,000/ - as lump sum compensation for the mental agony and harassment suffered by the complainant due to the deficiency in service on the part of the OP. This shall include cost of litigation also.

Payment shall be made within one month from the date of receipt of this order."

APPEAL against the above order has been filed with delay of 47 days, which has been condoned by this Commission, subject of payment of costs of Rs.5000/ -, which was paid on 13.8.2013. The records of the appeal have been carefully perused and the counsel of the two sides have been heard. Mr. Pradeep Dewan, Senior Advocate assisted by Mr. Shashank Khurana, Advocate, on behalf of the Appellant Canara Bank and Mr. Sanjay Gupta, Advocate, on behalf of the Respondent/Complainant, Sujag Pvt. Ltd, have been heard. Written arguments filed by the two sides have also been perused. The matter arose out of export of woollen carpets by the respondent/complainant to a buyer in the USA. The consignment was priced at US $32,257.62 and payment for the same was to be routed through the buyer''s bank (National Bank) in the USA to complainant''s bank (Canara Bank) in India. Accordingly, all relevant documents were sent to Canara Bank, allegedly with a specific written instruction that documents be delivered against payment only. But, appellant/Canara Bank sent the same to the buyer''s Bank with a contrary instruction viz. Deliver document against acceptance. Resultantly, the foreign buyer got the documents without making any payment for the goods.

REFERRING to the covering letter with which the documents were sent to the OP/Bank, the Consumer Complaint filed before the State Commission states "It will not be out of place to mention here that in the said covering letter dated 16.1.1997 and all other documents, it was specifically mentioned that DOUCMENTS BE DELIVERED AGAINST PAYMENT ONLY. These documents were duly received by the respondent bank for onward transmission to the drawee/buyer''s bank, i.e. Nations Bank N.A U.S.A.

That inspite of the complainant''s specific and clear instructions to the respondent bank to negotiate the documents against payment only, the respondent bank sent negligently wrong instructions to the drawee/buyer''s bank TO DELIVER THE DOCUMENTS AGAINST ACCEPTANCE ONLY. Due to negligence on the part of the respondent bank, the bank of the Drawee/Buyer delivered the documents pertaining to the said export to the said buyer against acceptance only without receiving any payment from the said buyer, resulting in pecuniary losses amounting to U.S. $ 32, 257/62 to the complainant."

IN its Written Submission before the State Commission, OP/Canara Bank claimed that it had acted as per instructions in the covering letter but stated that "5. The Complainant was casual in approach while dealing with foreign buyer. Further the 2 sets of forwarding letter (i.e. the instructions letter (NF -1669) of Bill were given to the complainant before sending it to foreign Bank. The complainant after due perusal of the same returned back one copy duly acknowledged consented. The complainant should have pointed then and there in case of any discrepancy was there. Now, the complaint is barred by the law of estoppel.

The contents of para 6 are wrong and denied. It is incorrect to submit that the instruction of the complainant company to deliver the document was against payment. That the instruction on foreign bill was as followed: - Rs. U.S. $ 32257.62 At 90 days D.P. Sight The answering Respondent conveyed the instruction for payment on the forwarding documents (NF -1669)of the said foreign bill, 90 days sight. It seems Complainant is not well versed with transactions related to the foreign bills. That as per uniform Rules for collection of commercial papers URC 522."

The contents of para 7 are wrong and denied. The documents were sent as per instruction of the complainant company which was 90 days D.P . Sight which means payment was to be made 90 days after acceptance of documents. It is further denied that the answering Respondent is negligent. Rather Complainant it self had not taken due care required under prudent foreign transactions."

THE State Commission has observed that in its Rejoinder, the Complainant has denied the claim of the OP/Bank that two sets of documents were given to the complainant and got confirmed by it, before being sent to the foreign Bank. Thus, the core issue for decision before the State Commission was whether the OP/Bank had acted contrary to the written instructions of the Complainant. If yes, was the action taken by it had prior concurrence of the latter. The finding reached in the impugned order is clear. It is "18. Parties are governed by the terms of contract. In the instant case instructions were clear. The 90 days DO sight means delivery of documents within 90 days on payment only. Even if we accept that the complainant had vide letter dated 24th September 1997 requested the OP -Bank to keep the matter in abeyance as they were in the process of receiving payment from the drawee still the fact remains that the drawee of the bill was to make payment within 90 days of the acceptance of the documents. Though the complainant has denied having received two sets of forwarding letters given by the OP before sending the same to the foreign bank. This circumstance is of utmost significance as both in the foreign documentary bill for collection covering letter dated 16th January 1997 and letter dated 15th January 1997 the complainant had clearly instructed the OP -Bank to deliver the documents against payment only. By not collecting payments against delivery of documents, we hold the OP guilty for deficiency in service and for breach of contract. Deficiency as defined by section 2(1)(g) of the Consumer Protection Act, 1986 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."

THE position on the first part is clear from the documents on record. Complainant''s letter of 16.1.1997 addressed to Canara Bank, Kashmere Gate, Delhi, carries a clear instruction to deliver documents on Payment. Learned counsel for the appellant/Bank fairly conceded that the instruction is clear and unequivocal. It is equally clear from the letter of 27.1.1997 addressed by Canara Bank, Sarojini House Building, New Delhi to the foreign buyer''s Bank in the USA, that it advised the latter to ''Deliver documents against Acceptance.'' Both letters are produced as part of the documents submitted by the Appellant/Bank. Therefore, it gets established by documentary evidence that action taken by OP/Bank was contrary to the instruction of 16.1.1997.

THIS brings us to the next part of the core issue viz. did the action taken by Canara Bank to change the payment instruction, have prior consent/concurrence of the Complainant/respondent? Learned counsel for the appellant/Canara Bank could not point to any correspondence between 16th and 21st January 1997 which could support the claim made in the above mentioned pleadings of the OP/Bank before the State Commission, to the effect that the modification was not only agreed by the complainant but also acknowledged/consented to in writing.

THE State Commission has very appropriately pointed out that the above claim of the OP/Bank has been denied by the complainant/respondent in its rejoinder. The complainant did not accept that the letter of 27.1.1997 was sent by Canara Bank to it in two sets, and was duly acknowledged by it, returning one copy to the Bank, before the latter sent it to the foreign buyer''s Bank in the USA. There is no evidence of any evidence led by the OP/Bank in this behalf.

THE Memorandum of Appeal too has failed to bring out any evidence in support of the claim of having acted with prior consent/concurrence of the complainant. On the contrary, it has attempted to obfuscate the issued by rising the following grounds "A. For that the ld. State Commission erred in ignoring from consideration and not appreciating in correct perspective that the respondent had acquiesced to the delivery instructions given in the covering schedule dated 27.1.1997 by not raising any objection to the instructions given therein to its corresponding bank for collection of the bill.

B. For that the ld. State Commission erred in not seriously discussion, much less appreciating the plea taken by the appellants that respondent was debarred by the principles of waiver and estoppel from questioning the instructions given in the covering schedule at a later date despite fully knowing the collecting instructions given by the appellant bank to the corresponding bank.

C. Inasmuch as the respondent waited the expiry of the 90 days period for payment of bill of exchange by its foreign buyers, the respondent had apparently accepted and agreed to the collection bills being delivered to the foreign buyer merely on his acceptance giving the foreign buyer 90 days usance period for payment of the bill."

THERE is no merit in these contentions. The inescapable conclusion is that the appellant/Bank has acted contrary to specific instructions of its client/complainant, which is a clear deficiency of service within the meaning of Section 2(1)(g) of the Consumer Protection Act, 1986. The release of consignment without payment and the consequent non payment by the foreign buyer are direct outcome of violation of the client''s instructions by the Bank. Challenge to the impugned order on merits must therefore fail.

COMING next to the plea of limitation raised by Canara Bank, it has been contended that the cause of action arose in 1997 but the consumer complaint was filed in 2000. In this context, the following averment in the affidavit of evidence filed by Sri M C Gupta, Manager, Canara Bank before the State Commission has a significant bearing on the question of limitation. "I further say when Answering Respondent had pointed out that it the proceeds of the foreign bill were not received immediately the matter would be referred to RBI in respondent to this complainant vide its letter dated 24.9.1997 requested to the Respondent Bank should kept in abeyance as they are receiving the payment from the drawee (PEC). I say vide letter dated 1.6.1998 the complainant assured to the respondent that they have taken up the matter with the foreign buyer (PEC) and complainant is expecting during the month and had expressed its high appreciation for Respondent bank and further requested for keeping the matter is pending."

IT is clearly indicative of the fact that the appellant Bank was aware of its liability for securing payment from the foreign buyer. It was a liability that would continue till payment was received. In other words, the cause of action would continue. In this behalf, the impugned order refers to a letter of 14.8.2000 addressed by the OP/Bank to the complainant/respondent. Secondly, the cause of action had arisen in 1997 i.e. prior to the Amendment of 15.3.2002 which has introduced Section 24 -A into the Consumer Protection Act, 1986. Learned counsel for the respondent/complainant has righty argued that the period of limitation would therefore, be as it obtained before introduction of Section 24 -A. It would be three years and not two. Therefore, the State Commission was right in rejecting the plea of limitation.

IN the result, it is held that the impugned order is based on correct appreciation of the evidence on record and does not call for any intervention of this Commission. Consequently, First Appeal No. 496 of 2008 is held to be devoid of merit and is dismissed for the same reason. No costs.