NAINA SEMI CONDUCTOR LTD. vs ANDHRA BANK FINANCIAL SERVICES LTD.

M/s. Naina Semi Conductors Limited, hereinafter referred to as the complainant, is a Company duly registered under the Companies Act and the present complaint has been filed through Mr. Rakesh Kumar Dhawan, Finance Manager/ Principal Officer of the Company, duly authorised by a Resolution of the Board of Directors. M/s. Andhra Bank Finance Services Limited, opposite party-I is a limited Company and is a subsidiary of Andhra Bank, arrayed as oppo-site party-2, which is a nationalised Bank. The case of the complainant is that on 26.8.1992, the complainant deposited a sum of Rs. 25,00,000/(Rupees twenty-five lacs) at Branch Office at Delhi of opposite party-I by a pay Order, payable at Dena Bank, Lodhi Road, New Delhi. This was an inter-corporate deposit for a fixed period of 90 days and it was to carry interest @ 21% per annum. The amount became payable on 25.11.1992. Prior to the date of maturity, on 1.10.1992 the opposite party-I wrote to the complainant that it would not be able to keep the commitment of repayment of the amount together with the interest in terms of the fixed deposit receipt for the reasons explained therein. According to the complainant, the difficulties pointed out by opposite party-I had no relevance as far as the entitlement of the complainant was concerned. The complainant, therefore, pressed for the payment of the amount together with the interest by writing a number of letters. In February, 1993 the Vice-President of the opposite Party1, Shri Rajan Mishra informed the complainant that they were willing to release the principal amount of Rs. 25.00 lacs provided the complainant agreed to forego its claim of interest on the ICD and give a certificate in full and final dis-charge of the obligation under the ICD. The complainant was in dire need of money. The opposite party was in a dominant position and in the circumstances and under coercion, the complainant agreed and accordingly the principal amount was paid on 19.2.1993. The complainant gave a receipt in full and final discharge of the liability. The case of the complainant is that its consent had been obtained by coercion and undue influence and opposite party-I was liable to pay interest @ 21% for the period of deposit i.e. 26.8.1992 to 25.11.1992 in terms of the ICD and further interest @ 24%, from 26.11.1992 till 19.2.1993 besides interest on the aforesaid amount of interest till date of filing the present complaint. Legal Notice dated 1.2.1994 was served on oppo-site party-I and the present complaint filed on 15.3.1994.

IN the written statement filed by opposite party-I it was stated that neither opposite party-1 had any branch office in Delhi at the time of filing the complaint nor any part of the cause of action had accrued and this Commission had no territorial jurisdiction. It was further stated that the complainant was not a ''consumer'' as defined in the Consumer Protection Act. It was further stated that opposite party-I was not a Banking Company as it has no Banking Licence. IN fact, opposite party-I was a financial Company accepting deposits and re-investing the same. Most of the investments made by opposite party-I was with M/s. Fair Growth Financial Services Limited against securities. It was discovered that some of the securities deposited by M/s. Fair Growth Financial Services Limited were forged. There was a Security Scam which necessitated the promulgation of an Ordinance by the Central Government called the Special Court (Trial of Offences relating to Transactions in Securities) Ordinance, 1992 (Ordinance No. 10 of 1992). The Ordinance was replaced by an Act of Parliament under similar title being Act No.27 of l992 w.e.f. 18.8.1992 under the Ordinance as well as the Act, the opposite party-I was prevented from discharging its duties of disposing of the securities deposited by M/s. Fair Growth Financial Services Limited and, therefore, it was unable to keep up its commitment to repay the amount to the complainant. Opposite party-I framed certain schemes to repay the amount of those depositers whose deposits were comparatively small and under that scheme offered to the complainant that in case it was ready to give up its claim for interest, keeping in view the financial constraints and legal difficulties, the principal amount could be repaid. The complainant accepted the offer vide its letter dated 18.2.1993 and accordingly the principal amount was paid to the complainant and its unqualified discharge in full and final settlement of ICD in question was obtained. It was also stated that the offer was made through letters and the same was accepted through letter written by the complainant. The deal was between two corporate bodies and not between individuals and there was no question of any undue influence or coercion. It was also pleaded that after the due date the deposit receipt having not been renewed, there was no question of payment of interest. The opposite party also stated that as pleaded by the complainant if the facts constituted offence of criminal breach of trust or misappropriation, the Com- mission had no jurisdiction and the complainant should be left to have his remedy according to the law in the appropriate Forum. A rejoinder was filed on behalf of the complainant. We have heard Mr. Arun Batta, Advocate for the complainant and Mr. S.L. Gupta, Advocate for the opposite party-I and have carefully gone through the records.

The first question which arises for consideration is whether this Commission has territorial jurisdiction in this case. It is not disputed that at the time of making the deposit, opposite party-I had a Branch Office at N-27, Connaught Place, New Delhi and the deposit was made with that Branch through Pay Order, dated 26.8.1992 drawn on Dena Bank, Lodhi Road, New Delhi. It is of no consequence that later on the said branch office was closed. Part of the cause of action accrued within the territorial limits of this Commission and, therefore, the Commission had jurisdiction.

THE next question is whether the complainant is covered under the definition of ''Consumer''. According to opposite party''s own showing, it was a financial Company accepting deposit of payment on interest. THE case is directly covered by decision of the National Commission in Neela Vasant Raje v. Amogh Industries and Others, 1986-94 CONSUMER 446. We, therefore, hold that the complainant is covered under the definition of Consumer. We have very carefully gone through the correspondence which took place between the complainant and the opposite party-I with regard to encashment of ICD in question. Letter annexed as ''Annexure-N'' at page 34 of the paper book dated February 1993, is crucial, it was written by Managing Director of Complainant Company to the Managing Director of opposite party-I. The letter deserves to be reproduced in extenso which is as follows : February 18,1993 "Managing Director Andhra Bank Financial Services Ltd., 6-3-653, Pioneer House, Somajiquda, Hyderabad-500 482 (A.P.) Sub. : Release of ICD amount for Rs. 25 lacs. Dear Sir, We have been informed by the Vice President ABFSL, Shri Rajan Misra regarding your offer to release our ICD No. 157 for Rs. 25 lacs (Rupees twenty-five lacs only) immediately provided we undertake to forego our claim of interest on above ICD and accept the amount of Rs. 25 lacs in full and final settlement of above ICD. We hereby convey our acceptance to your above offer and we undertake to forego our claim of interest of above ICD No. 157 dated 27.8.1992 for Rs. 25 lacs in case the above amount of Rs. 25 lacs is released in New Delhi latest by 25th February, 1993. We also further undertake that this would be in full and final settlement of above ICD No. 157 dated 27.8.1992. The ICD receipt duly discharged would be handed-over to your Delhi office on receipt of the above amount of Rs. 25 lacs. Thanking you, Yours faithfully, for Naina Semiconductor Limited sd/- (Kapil Mohan Mehta Managing Director"

THERE is no dispute that opposite party I paid a sum of Rs.25.00 lacs on l9.2.1993. Shortly thereafter the complainant raised demand for interest through its letter dated 3.3.1993. The aforesaid offer of the repayment of the principal amount was made by opposite party-I through letter. The complainant was free to accept the offer or reject the same. The complainant expressed its willingness to forego claim for interest in view of the circumstances explained by opposite party-I and be contented with receiving the principal amount. The complainant conveyed its willingness in no uncertain terms in its aforesaid letter dated 18.2.1993. The receipt of the principal amount, therefore, operated as full and final discharge of the liability of opposite Party1, The complainant is clearly estopped from going back on the agreement giving up its claim for interest. We find no merit in the claim preferred by the complainant. Mr. Batta took us through the correspondence in order to show that the security scam had come to light in June, 1992 and opposite party-I was aware of the same. According to Mr. Batta, opposite party was also aware that some of the securities furnished by M/s. Fair Growth Financial Services Limited were forged and inspite of that knowledge, opposite party-I prompted the complainant to make a deposit on 26.8.1992. Mr. Batta was asked to refer to the material to show that opposite party-I was aware of the fact that some of the securities deposited by Fair Growth Financial Services Ltd. were forged on or before the making of the ICD by them. All that Mr. Batta could do was to invite our attention to letter dated 1.10.1992 (page 23 of the paper book) and to the various dates mentioned therein. A careful perusal of this letter shows that it was as a result of the inspection of Reserve Bank of India and further developments which related back to June, 1992 that it was found that some of the securities deposited by Fair Growth Financial Services Limited with opposite party-I were forged. In other words, there was nothing established on record that opposite party-I was aware that securities deposited with it by M/s. Fair Growth Financial Services Limited were forged. Mr. Batta was unable to refer us to any provision of the Ordinance aforesaid to show that it contained any reference to either opposite party-I or the investment made by it. Ultimately Mr. Batta practically abandoned the argument. In our considered view, the facts which are not disputed do not disclose any coercion or undue influence and there is no question of relegating the complainant to a civil suit. We find no deficiency in service on the part of the opposite party-I. The complaint, therefore, fails and the same is dismissed leaving the parties to bear their own costs. A copy of the order be conveyed to the parties. Complaint dismissed.