JUGAL KISHORE DHANDHANIA vs Federal Bank Ltd

THIS is a petition of complaint under Section 17 of the Consumer Protection Act, 1986. The petitioner''s case is that he intended to purchase some old ornaments for the marriage of his daughter and for this purpose approached the Federal Bank Ltd. (opposite parties 1 and 2, hereinafter referred to as the O.P. Bank) who advertised to sell some old ornaments kept in their custody. Accordingly a pay order of Rs. 3,25,000/-, from the United Bank of India in favour of the O.P. Bank was handed over to them with the arrangement that the Bank would deduct the price of the gold ornaments from the said amount and refund the balance by a cheque. As per arrangement one day''s interest on the purchase value of the ornaments was also deducted from the amount as the pay order was cashed on the following day i.e., on 16.3.97. On 19.3.96 the complainant went to the New Market Branch of the O.P. Bank to take delivery of the four lots of ornaments purchased by him and to get refund of the excess amount payable to him. It has been alleged that the first lot of Account No. CC 18 of 1992 of the Bhowanipur Branch was weighed in front of the complainant but strangely enough the same weighed more than the weight declared in the advertisement i.e., 328.50 gms. instead of 327 gms., but the complainant was assured complacently that no extra price would be demanded for the excess weight found on weighment. THIS gave rise to a suspicion in the mind of the complainant about the purity of the gold. He began to inspect the ornaments more closely and found that one of the bangles was actually made of copper with a very thin layer of gold. The complainant wanted to inspect all the lots before bidding for the same, but was disallowed by the Bank Authorities.

THE complainant being confused declined to purchase the lots, but was compelled to purchase the same without inspection. THE total price of the ornaments purchased was Rs. 2,35,727/- but complainant was refunded an amount of Rs. 88,128/- only after deducting the price of the ornaments, one day''s interest of Rs. 145/- and another amount of Rs. 1000/- which was retained as a precautionary measure. The complainant decided not to take delivery of the ornaments without proper inspection and for this purpose had prolonged negotiation with the O.P. Bank. The O.P. Bank after insistent demand, agreed to have the ornaments tested by M/s. B. Motiram of New Market. But on a discussion with M/s. B. Motiram the complainant came to know that similar bangles were shown to them by the O.P. Bank for testing and it was found that they were made of copper with gold plated layer. He thereafter insisted that without an inspection by his own tester he would not take delivery of the ornaments. After much persuasion the Bank Authority agreed to the proposal but actually did not allow such inspection when the complainant brought his own tester M/s. Rajani Laboratory and Refinery of 10, Nalini Seth Road, Calcutta-7.

On 1.4.96 the complainant filed a written complaint with the O.C., Taltala Police Station who advised him to approach the C.B.I. Accordingly a complaint was lodged with the Supdt. of Police II, C.B.I. The C.B.I, took initial step to investigate the matter, but ultimately they regretted their inability to proceed with the same on the grounds that the Federal Bank was not a Nationalised Bank and that the transaction being held between two private parties the C.B.I, had no role in the matter.

THE O.P. Bank emphatically refused to give delivery of the ornaments after inspection of the same by the complainant''s expert. At the long run they suggested that the sale price be taken refund of and the ornaments be released. This was followed by some correspondence from the complainant''s side and at last the O.P. Bank decided to resell the ornaments in a further auction by a fresh advertisement. THE instant complaint was thereafter filed by the complainant making a total claim of Rs. 8,15,033.00 including the price of the ornaments, interest, cost and a compensation of Rs. 5,000,00/- for loss and injury suffered by the complainant. The case is contested by the O.P. Bank by filing a written objection. It admits the complainant''s version of the case that an auction of the ornaments took place on the basis of a prior advertisement and that the complainant auction-purchased the same by making payment as stated in the petition of complaint. Their contention, however, is that the complainant refused to take delivery of the ornaments after the purchase and demanded the testing of the same before taking delivery. The Bank''s further contention is that the complainant inspected the ornaments before taking part in the auction and that his further demand for a fresh testing was unreasonable. Still as a gesture of goodwill the Bank was agreeable to refund the bid money without any interest but the complainant did not respond to the proposal and instead filed this complaint. The Bank has defended its action of re-auctioning the ornaments after a fresh advertisement and stated that as the complainant did not take part in the second auction he has no further cause to agitate before the Commission. The Bank denies the alleged deficiency in the goods or service on its part and denies all other material allegations including the claim of compensation for alleged loss or injury.

THE point for determination is if the complainant is entitled to the amount of compensation as prayed for. DECISION The admitted position is that there was an auction of the ornaments as stated in the petition of complaint of the basis of a previous advertisement published in the newspaper. Admittedly, also the same were auction-purchased by the complainant by making the highest bid. The complainant, however, complains that he was suspicious about the genuineness of the purchased ornaments as in certain bangle it was detected that there was electroplating of gold on copper. The deficiency in goods, if any, could not, however, be ascertained as the ornaments were subsequently reauctioned and sold to another person. The grievance of the complainant is that he had as of right made a demand for proper testing of the ornaments before taking delivery and although the demand was acceded to at the first instance ultimately the Bank refused to allow any such testing. There were a number of correspondence over this matter, which have been produced before the Commission. The version of the O.P. Bank, however, is that under the condition of the notice for auction the Bank was not responsible for the quality or fineness of the ornaments and that the Bank had not committed any irregularity by refusing the complainant to have the ornaments tested before delivery. Condition No. 7 of the notice of the Gold Auction of 1996 on the basis of which the ornaments were auctioned in this case is as follows: "Bank will not certify the quality or fineness of the ornaments put to auction. Bidders should satisfy themselves about the quality and fineness of the ornaments. No dispute regarding the quality or fineness of the ornaments auctioned will be entertained by the-Bank at any time."

From the above condition it would appear that the Bank did not take the responsibility of certifying the quality or fineness of the ornaments and the same was shifted to the relevant bidder. The question is when and how can such satisfaction be achieved by a bidder? A quality or fineness may be ascertained by a visual inspection but the genuineness of the goods sold cannot be ascertained except by a proper testing. It cannot be presumed that the bidders were individually allowed to test the genuineness of the ornaments to be auctioned before the auction was actually held. The sum and substance of the defence of the Bank is that the bidders are not allowed to have the ornaments tested before the delivery of the same to them. The complainant has referred to the provisions of Section 41 of the Sale of Goods Act, 1930 in support of his right of inspection. The said section reads as follows: "Section 41. Buyer''s right of examining the goods-(1) Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract."

It should be remembered that the goods auctioned in this case were valuable ones. It cannot be expected that any inferior metal should be sold at the price of a gold. So the reasonable right of inspection cannot be denied to an auction-purchaser on any plea. We do not see anything in the conditions set forth in the notice for auction taking away the right of a bidder of a reasonable inspection of the materials, which were declared to be made of gold. It, therefore, must be held that the Bank had no right to prevent the bidder from availing a reasonable opportunity of examining the ornaments before the sale was complete.

IN any case although the Bank denied the right of inspection of the ornaments by the bidder before delivery as per latter''s request, the Bank ultimately resold the same by a fresh auction. We have to determine the validity of this auction of the Bank before examining the complainant''s claim in this case. Condition No. (6) of the notice of Gold Auction, 1996 provides that in case the bidder does not take delivery of the gold ornaments by remitting full amount of the auction the amount of cheque/cash deposited towards security deposit will be forfeited. Obviously, in this case the full amount of the bid was paid and appropriated by the Bank. As a matter of fact a fairly higher amount was deposited by the bidder and the excess amount was refunded to him by deducting the bid money and other charges. IN such circumstances when was the property in goods transferred to the purchaser ? Sub-section (1) of Section 19 of the Sale of Goods Act, 1930 provides that where there is a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. IN this case some specific ascertained goods in a deliverable state were sold by auction by accepting the full price and the intention of the parties was obviously that the property in the goods shall stand transferred as soon as the price was appropriated by the Bank. The protest of the bidder that the sale was not complete until a proper opportunity of testing the goods was granted to them was negatived by the Bank. Obviously, therefore, the Bank accepted the sale on the basis of a concluded contract and in that case the property in the goods must have been transferred to the purchaser. The retention of the ornaments by the seller after the property vested in the purchaser must be as a trustee. By making a second auction and appropriating the sale proceeds thereof the Bank has obviously sold another''s property without his consent. If the second bid was for a higher amount the profit cannot be appropriated by the Bank. The proper course on the part of the Bank ought to have been to give a notice to the purchaser that unless the purchased goods were taken delivery of by a certain date, it would be disposed of in a certain manner. Even then the sale proceeds could not be appropriated by the Bank, there was an implied trust on the part of the Bank in such a case and to do otherwise is to commit a breach of trust.

THE complainant has, however, not demanded the refund of the sale proceeds but has claimed compensation. As regards the claim for compensation for business loss, there is, however, no evidence indicating the loss. THE Bank, however, is obviously guilty of negligence in not dealing with the transaction in accordance with the law and they are liable to pay compensation for the loss sustained by the complainant on account of the retention of the money and for mental agony. In the absence of any special damage we hold that the complainant is entitled to a compensation by way of interest @ 18% p.a. from the date of depositing the bid money until payment and also a cost of Rs. 5,000/(Five thousand) for this case. THE case is accordingly allowed with the direction that the opposite Parties do refund the amount of Rs. 2,36,872/- (Rupees two lakhs thirty six thousand eight hundred seventy two only) with an interest @ 18% p.a from 15th March, 1996 until payment and a cost of Rs. 5,000/- (Five thousand only) to the complainant within one month from the date of communication of this order. Complaint allowed with costs.