JASWANT SUGAR MILLS LIMITED vs Punjab National Bank and Anr.

COMPLAINT was filed alleging that the complainant Company was maintaining account with Kesar Ganj branch, Meerut city of the Punjab National Bank -opposite party since 1948. Complainant had three important units i.e. Sugar Unit, Straw Board Unit and Pootha Farm and Orchard unit in addition to other units. For recovery of certain Government dues a Receiver was appointed by the Collector, Meerut under Section 286A of the U.P. Zamindari Abolition and Land Reforms Act on 3.1.1977 on all the assets of the Company. On 28.10.1984 under U.P. Sugar Undertaking (Acquisition) Act, 1971 as amended in 1984, the sugar unit of complainant was acquired by the Government and was vested in U.P. State Sugar Corporation Ltd., an Undertaking of the Government of Uttar Pradesh. The General Manager of U.P. State Sugar Corporation Ltd. was appointed as General Manager of the Sugar Unit as also Receiver to manage and look after the other properties of the complainant. The complainant had purchased many FDRs from the opposite party Bank. On 9.6.1982 complainant got prepared FDR No. 653 of 82 of Rs. 4,01,100 having the maturity date as 9.6.1985 and maturity value as Rs. 5,34,971.50. It further got prepared FDR No. 279 of 91 of an amount of Rs. 6,91,149.43 on 9.11.1991. It was further alleged that Collector, Meerut in exercise of the powers under said U.P. Zamindari Abolition and Land Reforms Act removed the Receiver on 18.12.1995 and directed the handing over of all the properties back to the complainant. Receiver however did not handed over all the properties back to the complainant. It was stated that after removal of Receiver, the complainant asked the opposite party -Bank to supply complete statement of accounts including that of the FDRs. On perusal of the statement of accounts supplied by the Bank for the first time in the last week of October/first week of November, 1996, the complainant learnt that said FDR No. 653 of 82 was erroneously encashed and adjusted into some account not belonging to the Company Similarly, FDR No. 279 of 91 was wrongly encashed on 13.11.1991 and amount thereof was adjusted in some loan account not relating to the complainant. Amount of FDR No. 653 of 82 along with interest would come to Rs. 51,70,643. Amount of FDR No. 279 of 1991 along with interest would work out to Rs. 42,90,000. Alleging deficiency in service on the part of opposite party -Bank, direction was sought to be passed to the Bank to pay aggregate amount of Rs. 74,60,643 of both the FDRs along with further interest and pay amount of Rs. 25.00 lakh as compensation to the complainant.

OPPOSITE party -Bank contested the complaint by filing written version. It was not in dispute that sugar unit of the complainant was acquired by the Government on 28.10.1984 under the U.P. Sugar Undertaking (Acquisition) Act, 1971 as amended in 1984 and it was vested in U.P. State Sugar Corporation Ltd. and General Manager of U.P. State Sugar Corporation Ltd. was appointed as General Manager of the sugar unit. He was also appointed as Receiver in respect of the properties of the complainant and to manage its affairs as alleged. It was stated that various FDRs in the name of complainant were presented by the Receiver from time -to -time after giving valid discharge and acting on the instructions given, the Bank either renewed the FDRs or made payment thereof. On 9.11.1991 the General Manager of the sugar unit in compliance of Registrar of Allahabad High Court''s order, by the letter No. 3 -996 dated 2.11.1991 requested the opposite party''s said branch to issue a draft of Rs. 18,20,114.57 in favour of Registrar, Allahabad High Court out of the proceeds of the following two FDRs in the name of the complainant. (In Rs. ) FDR No. and date Date of Maturity Maturity Value (1) 581/86 9.6.91 12,30,521.60 dt. 17.9.86 (2) 139/91 23.6.91 12,02,832.70 dt. 4.1.90 Total: 24,33,354.30 Interest accrued on the above amount from the Dates of maturity till 9.11.91 77,909.70 Grand Total: 25,11,264.00

This amount was utilized as under: (i) Draft favouring Registrar, High Court of Judicature at Allahabad. 18,20,114.57 (ii) FDR No. 279/91 dt. 9.11.91 in favour of Jaswant Sugar Mills Ltd. (this FDR was also to be under Bank lien) 6,91,149.43 Total: 25,11,264.00

IT was pleaded that in respect of FDR No. 279 of 91 the complainant filed a complaint before the Collector, Meerut, inter alia, alleging that this FDR was erroneously encashed to the account of U.P. State Sugar Corporation Ltd. by the Receiver. On 16.7.1995, the Collector, Meerut called for the report from the bank. An application was moved by the complainant to the Collector, Meerut seeking direction to the Receiver to reimburse/pay amount of said FDR Rs. 6,91,149.43 along with interest. Collector again called for the report from the Bank. By the order dated 29.8.1987, the Collector, Meerut came to the conclusion that Receiver had wrongly encashed the above FDR to the account of U.P. State Sugar Corporation Ltd. to which it was not entitled to and, therefore, directed the Receiver to reimburse/ pay the said amount to the complainant. It was alleged that in view of this order, the complainant cannot file complaint against the OP -Bank seeking reimbursement of the amount of the said FDR, on ground of deficiency in service. It was further alleged that the records of the year 1982 have long been destroyed and the OP -Bank could not lay hand on that record. It can not be explained that as to how the proceeds of FDR No. 653 of 82 was utilized. Complaint was alleged to be barred by limitation. Complainant filed rejoinder to the written version filed by the opposite party. It was alleged that Receiver had not give any instruction to the opposite party -Bank to encash the FDRs in question and to credit the proceeds thereof to the account of U.P. State Sugar Corporation Ltd. Further no such instructions alleged to have been given, have been filed by the opposite party. It was reiterated that it was only on receipt of the statement of accounts for the period from 1981 to 1995 in the month of Nov, 1996 that the complainant became aware of the two FDRs in question. Opposite party -Bank repeatedly assured the complainant that it was investigating into the matter and the complaint filed in the month of October 1998 is within limitation.

ON the application filed by complainant, U.P. State Sugar Corporation Ltd., Meerut was allowed to be impleaded as a party. Vide order dated 9.8.2002 pursuant to the notice issued in the complaint, U.P. State Sugar Corporation Ltd. filed the written version dated 13.10.2004. It was, inter alia pleaded that the answering opposite party had no knowledge of the alleged pre -mature encashing of the FDRs and it is for the opposite party -Bank to answer how and whose instructions the same had been encashed.

WE have heard Mr. T.K. Ganju for the complainant, Mr. S.K. Pruthi for OP No. 1 and Mr. Manoj Kr. Sharma for opposite party No. 2.

PURSUANT to the order dated 2.7.2009, the complainant has filed the copies of two orders dated 23.9.1998 and 23.10.1998 passed by the Collector, Meerut in case No. 30 of 1995, M/s. Jaswant Sugar Mills v. State and Ors. Copy of the order dated 12.1.1999 dismissing Civil Misc. Writ Petition No. 304 of 1999, U.P. State Sugar Corporation Ltd. v. Collector, Meerut and Ors., by the Allahabad High Court has also been handed over by the complainant''s Counsel.

SAID two orders dated 23.9.1998 and 23.10.1998 against which Civil Misc. Writ Petition No. 304 of 1999 was dismissed, arose out of the proceedings seeking implementation of the order dated 29.8.1987 whereby General Manager of U.P. State Sugar Corporation Ltd. who was also the Receiver, was ordered to return/pay to the complainant the maturity amount of Rs. 6,91,149.43 of FDR No. 279 of 1991.

IN the present complaint, the complainant seeking refund of the amounts of two FDR Nos. 279 of 91 and 653 of 1982. Since Collector, Meerut has already made the order dated 29.8.1987 for return of the amount of FDR No. 279 of 1991 by U.P. State Sugar Corporation Ltd. to the complainant, no order need be passed in respect of this FDR. Dispute centers around the refund of the amount of FDR No. 653 of 1982 alongwith interest. It was contended by Mr. Pruthi for the opposite party -Bank that FDR No. 581 of 1986 dated 17.9.1986 was prepared out of the proceeds of FDR No. 653 of 1982 and amount of FDR No. 581 of 1986 together with amount of FDR No. 139 of 1991 dated 4.1.1990 was utilized in preparing a draft in favour of the Registrar, Allahabad High Court of Rs. 18,20,114.57 and preparing FDR No. 279 of 1991 dated 9.11.1991 of Rs. 6,91,149.43 as also been pleaded in para No. 12 of the written version. To appreciate this submission, para No. 23 of the written version need be reproduced and the same reads thus: "Para 23 of the complaint so far it relates to the letter dated 15.5.1997 written by the complainant Bank to the Head Office of the opposite party, is matter of record and the same was duly acknowledged. The records of the year 1982 have long been destroyed and the opposite party could not lay upon its hand on the said records and as such it cannot be explained as to how the proceedings of the FDR No. 653 of 1982 were utilized by the Receiver."

Issuance of FDR No. 653 of 82 is admitted by the opposite party. There is time -gap of more than a year between the maturity date of FDR No. 653 of 1982 and preparation of FDR No. 581 of 1986. Complainant has not adduced any cogent evidence in regard to proceeds of FDR No. 653 of 1982 having been utilized for preparing FDR No. 581 of 1986 nor has it filed any instruction in writing from the Receiver to adjust the amount of FDR No. 653 of 1982 for preparing FDR No. 581 of 1886. Considering the stand taken in said para 23 and the said facts, the submission in regard to proceeds of FDR No. 653 of 1982 having been adjusted towards FDR No. 581 of 1986 deserves to be repelled being without any merit. Bank was deficient in service in not paying the amount of FDR No. 653 of 1982 along with interest accruing thereon to the complainant. Liability in respect of the amount of the said FDR can not be legally fastened against U.P. State Sugar Corporation Ltd. Complainant who was deprived of the use of money of the said FDR during all these years is entitled to interest which in the facts and circumstances of case, we quantify @ 10% p.a. on maturity value of FDR of Rs. 4,01,100 from 10.6.1985.

PLEA taken by the opposite party -Bank of the complaint being barred by limitation is to be mentioned to be rejected as the complainant Co. became aware of the amount of FDR No. 653 of 1982 not being paid from the statement of accounts supplied by the Bank in November, 1996 and the Bank thereafter assuring the complainant that it was looking into the matter uptill 19.3.1998.

ACCORDINGL Y , complaint is partly allowed with cost of Rs. 25,000 against the opposite party -Bank. Bank is directed to pay amount of the FDR in question of Rs. 4,01,100 with interest @ 10% p.a. (simple) from 10.6.1985 till realization. Complaint against the U.P. State Sugar Corporation Ltd. is dismissed. Complaint partly allowed.