MENAKA TRAVELS PVT. LTD. vs DEPUTY GENERAL MANAGER, S.B.I.

THE complainant who appeared in person submitted that he was a Travel agent and was enjoying credit limits with State Bank of India, Hyderabad main branch from the year 1986. He obtained a Bank guarantee on 8.1.1993 for a sum of Rs. 3.5. lakhs in favour of Manager, Air India, Hyderabad. Although according to the complainant Air India did not ask for Bank guarantee, pursuant to his request, the State Bank of India issued a Bank guarantee on 5.1. 1993 in favour of Air India for a sum of Rs. 3.5 lakhs. While so, the Air India informed the State Bank of India on 20.1.1993 by a letter bearing the same date whereby they invoked the Bank guarantee and demanded payment of the amount.

IT is the case of the opposite party i.e., State Bank of India that as the complainant is his customer, they informed him on telephone on 20.1.93 about the invoking of the Bank guarantee by Air India. Immediately thereafter the complainant on the same day i.e. on 20.1.93 wrote a letter to the Manager, State Bank of India enclosing therein original Bank guarantee document No. 38/67 for a sum of Rs. 3.5 lakhs for cancellation and requested for transfer of the money to his current account. He again wrote a letter on 21.1.1993 to the Assistant General Manager stating that he handed over the Bank guarantee for cancellation on 20.1.1993. But he also stated "if the guarantee is invoked by Air India we will be getting compensation as they owe us lot of refunds. In circumstances, we prefer you to pay rather than paying directly to Air India. We are also aware that if the guarantee is invoked, our future dealings will effect if the reason is not convincing to you." He also mentioned that he has filed a suit for damages in Court for Rs. 4.80 lakhs against passport office. But the Bank informed the complainant on 22.1.1993 itself stating that Air India have revoked the captioned guarantee relating to 3.50 lakhs and that they have informed the same to the complainant telephonically. In these circumstances they have debited the bank guarantee amount to his cash credit account. From the aforesaid facts, it is clear that the complainant himself approached the State Bank of India for giving a Bank guarantee in favour of Air India for a sum of Rs. 3.50 lakhs and that they have issued Bank guarantee on 8.1.1993. From the recitals in the guarantee, the period of guarantee is till 7.1.1994 with an option to Air India to raise a claim before 7.2.1994, under the terms and conditions of the guarantee, on revocation of the Bank guarantee by Air India the State Bank of India is bound to pay the amount without any demur. Therefore according to the conditions raised by the Counsel for the State Bank of India that they have no option but to pay the amount on invocation of the Bank guarantee.

It is submitted by the complainant appearing in person that the original Bank guarantee was not produced by Air India and that therefore the Bank should not have paid the amount to Air India on the revocation of the Bank guarantee. But even according to the complainant he is admitted that he approached the Bank for giving a Bank guarantee for a sum of Rs. 3.50 lakhs in favour of Air India and such a Bank guarantee was given on 8.1.1993 is also not in dispute. Since the Bank guarantee is extended upto 7.2.1994 evidently the Bank should not cancel the Bank guarantee once given in favour of Air India Since the Air India invoked the Bank guarantee they paid the amount. It is also submitted that there is a kind of collusion and breach of trust. But these are the matters to be decided in a Civil Court. Since we find that there is no deficiency of service on the part of State Bank of India, we have no hesitation in dismissing the complaint.

IN the result, the complaint is dismissed. No costs. Complaint dismissed.