NARAIN STEEL TRADERS vs Central Bank of India

THE failure of the agency arrangement between the Bank of Rajasthan Ltd., and Central Bank of India and FORTIORARI, the delayed payments of the bank demand drafts of various amounts at different times issued by the Bank of Rajasthan Ltd. drawn on Central Bank of India, in short, is the subject-matter of the present complaint.

THE complainant-concern has filed the present complaint u/Sec. 17(a)(i) of the Consumer Protection Act, 1986 (briefly ''the COPRA'') before this Commission, alleging that it supplies steel to different firms all over the country. Often the payments for the goods supplied by it are made through demand drafts. One party in Rajasthan sent a demand draft of Rs. 17,362/- to the complainant-concern, issued by respondent-1, THE Bank of Rajasthan Ltd., Branch Office, Jodhpur and drawn on Central Bank of India, Branch Office, Mandi Gobindgarh, respondent-1. THE complainant deposited the said demand draft with Punjab and Sind Bank, Kura Majra. It was returned by Central Bank of India, Mandi Gobindgarh, vide Annexure P3 dated 6-3-1991 with the remarks "Exceed Arrangements". Hence, the said demand draft was bounced. Similar are the allegations regarding the bouncing of other demand drafts of various amounts of different dates issued by respondent-3 Bank drawn on respondent-1 Bank. On notice, being issued, the opposite-parties have filed separate written statements containing their respective versions. In the written statement filed on behalf of respondent- 1 Bank, it was admitted that demand draft of Rs. 17,362/- issued by the Bank of Rajasthan Ltd., was returned unpaid vide memo dated 6-3-91 due to oversight by the dealing official. Regarding the other demand drafts, it has been alleged that on the date on which they were presented for encashment, the corresponding value of the drafts had not been received by respondent-1 Bank and the draft issued exceeded the overdraft limit, sanctioned by it for respondents-2 and 3 Bank and they were paid immediately on receipt of the amount from respondent-1.

In the written statement filed on behalf of respondents-2 and 3, Bank, it has been stated that respondent-2 Bank has no branch of its own at Mandi Gobindgarh. The arrangement had been made with respondent-1 Bank through its branch at Sansar Chandra Road, Jaipur on agency basis for honouring the drafts issued by the replying Bank from time to time. As and when drafts are issued by respondent-3 Bank drawn on respondent-1, the like amounts are remitted to its branch at Sansar Chandra Road, Jaipur through tolegraphic transfer (TT). However, to meet an emergent situation, overdraft limit of Rs. 5 lacs has been made with respondent-1 Bank. In the present case, demand drafts were issued on the request of different parties in Rajasthan, payable by respondent-1 Bank under proper arrangement and limit. If at all, some of the demand drafts were dishonoured by respondent-1 Bank, then the answering respondent-3 Bank is not at fault and respondent-1 Bank is liable.

AFTER hearing the learned Counsel for the parties, the emerging undisputed facts are that 5 demand drafts, details whereof are given hereinafter, had been issued by respondent-3 Bank drawn on respondent-1 Bank. The demand draft of Rs. 17,362/- has been admitted by respondent-1 Bank not to have been paid on 6-3-1991 by oversight. 2 demand drafts of the value of Rs. 1,45,838/- and 32,950/- were presented for encashment to respondent-1 Bank. The same were returned on 15-4-1991 to the complainant-concern with the remarks that the same "exceed arrangements" and on the receipt of the amount, payments thereof were fully made to the complaint-concern on 18-4-1991. Demand draft of Rs. 1,22,232/- was presented for encashment on 6-4-92, but it exceeded the arrangement and therefore, was retturned the same day. It was again presented for encashment on 10-4-92, but for the same reason it was returned unpaid. It was paid on 16-4-1992. Demand draft of Rs. 2,06,052/- was presented for encashment on 25-2-92 and it was returned unpaid, as it exceeded the arrangements. It was again presented for encashment on 27-2-92 and returned again for the same reason. It was paid %n 29-2-92 when presented again for encashment. It is not disputed by any of the parties that respondent-1 Bank allowed overdraft limit of Rs. 3 lacs to respondents-2 and 3 to be availed of by them at respondent-1 Bank. The arrangement was that upto a limit of Rs. 3 lacs if respondents-2 and 3 issued any draft drawn on respondent-1 Bank, the same would be honoured in case the same did not exceed the overdraft limit. It is further admitted that the overdraft limit was enhanced to Rs. 5 lacs on 25-5-1991. It has been categorically stated in the written statement filed by respondents-2 and 3 in the form of affidavit, that on the date the demand drafts in question were issued by respondent-3, the same day the amount was remitted to respondent-1 Bank at its Sansar Chandra Road Branch, Jodhpur and it has been made so clear vide Annexure R2/1 to the written statement. The averments made by respondents-2 and 3 qua the corresponding payments have not been denied by respondent-1 Bank in any form. Rather, it could not be seriously disputed at the bar by the learned Counsel respondent-1 Bank. As said above, the overdraft limit sanctioned by respondent-1 in favour of respondent-3 before 25-9-91 was Rs. 3 lacs only. A bare perusal of paragraphs 4 and 5 of the written statement of respondents-2 and 3 indicates that at the time of issuance of the demand drafts of Rs. 1,45,838/- and Rs. 32,950/- and on the date of their presentation, i.e. 15-4-91 by the complainant to respondent-1, the debit balance of respondent-3 with respondent-1 was more than the sanctioned overdraft limit of Rs. 3 lacs. Respondents-1 and 3 are at variance regarding the availability of the permissible overdraft limit at the time of presentation of demand drafts of Rs. 1,22,232/- and Rs. 2,06,052/-. Neither the complainant nor any of the respondent-banks has shown any light to this Commission regarding the date of draft of Rs. 17,362/-which was presented for encashment by the complainant to respondent-1 on 6-3-91 and the same is admitted to have been returned unpaid by oversight by respondent-1.

BE it may, the negligence and deficiency of service on the part of both the opposite - Banks are writ large. It is elementary knowledge that demand drafts are issued on the deposit of cash with the concerned Bank and in business dealings, the demand drafts are treated for all intents and purposes at par with cash and the necessary commission/amount is deposited with the concerned Bank for the issurance thereof. It is a sorry state of affairs that instead of feeling sorry to the complainant and recompensate it in any way, the opposite parties are vying with one another to add salt to the wound of the complainant by contesting the present complaint and have sought to shift the responsibility from each other. Negligence on the part of Central Bank of India is obvious and explicit. The deposit of the corresponding amount at the time of issuance of demand draft by respondent-3 with Central Bank of India, Branch Office, Sansar Chandra Road, Jodhpur is proved. In spite of deposit of the amounts, demand drafts repeatedly had been dishonoured by respondent-1. Equally liable is the Bank of Rajasthan Ltd. Respondent-3 has issued the demand drafts of various amounts on various dates without accurately ensuring the arrangement of remittance of the amounts to Central Bank of India, Branch Office, Mandi Gobindgarh where these were to be presented for collection. The exact loss caused to the complainant on account of dishonouring of the various demand drafts in question and on account of delayed payment, can neither be proved nor measured with arithmetical precision. There can be no straight jacket formula for calculating and granting compensation. Nor has the complainant chosen to place before us any cogent and convincing evidence supported by documents to show the exact loss caused to it. Regard being given to the human affairs and commercial dealings, we unhesitatingly come to the logical conclusion that unavoidable inconvenience, sufferings, humiliation, harassment, mental loss and agony and somewhat loss in business dealings must have been caused. It looms large that the respondent-Banks had treated the complainant in somewhat cavalier from their duty and had treated the complainant in unjust manner and for no fault of his, the complainant has been deprived of the benefit of the amount due to him in time and the respondent-Banks had proved to be deficient in discharging the service, paving the way for the redressal by the COPRA. Callousness, casualness and carelessness on the part of the opposite-Banks are writ large and require no further description. Both the Banks have contributed to create embarassment for the complainant and the scales of justice demand that except for the demand draft of Rs. 17,362/- for which respondent-1 Bank is exclusively liable, for the remaining demand drafts, the respondent-Banks should apportion amongst themselves the loss caused to the complainant equally and accordingly they are equally held responsible. Keeping in view the totality of the circumstances and facts placed before us, we are of the view that the interest of justice would be met if respondent-1 pays a compensation of Rs. 3,000/- which includes the costs of this litigation to the complainant for the demand draft of Rs. 17,362/-. For the remaining 4 demand drafts, the respondent-Banks are directed to pay a compensation of Rs. 5,000/- for each demand draft for the wrongful action and for rendering deficient service to the complainant, which in total comes out to be Rs. 20,000/- and this compensation includes the costs of the present litigation. We order accordingly.

TO put things beyond any doubt, we express that for compensation of Rs. 20,000/-, including the costs, both Central Bank of India and the Rajasthan Bank Ltd. are equally liable and their liability is joint and several. In addition to Rs. 20,000/-, the complainant would be entitled to interest at the maximum rate which respondent-1 is charging from its loanee in any scheme on the delayed payment of 4 demand drafts other than demand draft of Rs. 17,362/- and interest also would be paid by both the Bank in equal shares from the date of presentation of each demand draft with respondent-1 till its honour. We have been informed at the bar that for avoidance of recurrence of lapse of the like nature, both the Banks had taken the necessary precaution and action for future.

TO be fair to Sh. K.K. Gupta, learned Counsel for respondents-2 & 3-Bank, he has raised strenuous and specious primal jurisdictional plea, turning out to be a plea of frustration that there is no contract/transaction of any sort between the said Bank and the complainant and it cannot hold the Bank liable for any act whatsoever. Demand drafts were issued to different parties in Rajasthan, who, in turn, had sent those drafts to the complainant in lieu of payment and in case the demand drafts are dishnoured, the complainant can hold the parties responsible under the provisions of the Negotiable Instruments Act and not the issuing-Bank. The learned Counsel has placed reliance on PNB Finance & Industries Ltd. v. Bank of India & Anr., II (1993) CPJ 148 (NC); M/s. Vishwa Jyoti Printers v. M/s. Molins of India, I (1992) CPJ 167 (NC)=1992 CPC 380 and Devakanta Khataki & Ors. v. State Bank of India, III (1992) CPJ 16 (NC)=1993 CPC 466. We are afraid to countenance the plea of the learned Counsel. The Legislature has put the things beyond any shadow of doubt by putting the beneficiary of services in the inclusive definition of the term "consumer'''' as given u/Sec. 2(1)(d) of the COPRA. It needs no great erudition to hold that the definition of the term "consumer" casts the net very wide and transcends the narrow concept. The consumer of services includes not only the hirer of services for consideration, but also any beneficiary of such services, provided that he is availing the services with the approval of the hirer. This is necessary to protect the interest of the user of services, because under the general principles of law of contract such user cannot sue the provider of services on the ground of ''privity of contract''. The rule of ''privity'' provides that only parties to the contract can sue and not a stranger. Thus, under the law of contract only the hirer of the services can sue and not the user thereof. But now such a user or beneficiary may seek relief against the deficient services under the COPRA. A plain reading of the aforesaid definition clause (ii) which specifically pertains to the hiring of services, would make it manifest that the statute visualises two distinct categories of "consumer" thereby. Inevitably, the first one is the original consumer who hires such services for a consideration. The definition, however, does not stop at that. It proceeds further to bring within its ambit a second category also, namely, any beneficiary of such services, when these are availed with the approval of the original consumer. The definition is, thus, an inclusive an extensive one. Designedly it brings within its scope not only the person who has the privity of contract with the person hiring out the services, but also subsequent beneficiaries thereof, even though the latter may not be a party to the original contract or have a direct nexus herewith. In the true spirit of consumerism, the COPRA has not confined itself to the original hirer alone, but equally extended it to the subsequent beneficiaries of the services as well.

We have gone through the judgments relied upon by Sh. Gupta and find that the same even do not remotely advance the case of the Bank in any manner. So far as the case PNB Finance & Industries Ltd., (supra) is concerned, it relates to a demand draft lost in transit and is a case based on its own facts. The case Vishiwa Jyoti Printers (supra), by no stretch of imagination can be of any assistance to the Bank. The case Devakanta Kakati & Ors., (supra), in fact, somewhat supports the case of the complainant-concern.

CONSEQUENTLY, the contention raised by Sh. Gupta cannot be sustained. The contention raised is directly contrary to the definition of the term "consumer" and the plea raised by the learned Counsel pales into insignificance under the teeth of the comprehensive definition. For the reasons recorded above, we allow the present complaint in the terms indicated above. However, we order that our directions be complied with within two months from the receipt of a copy of this order. Otherwise, the natural consequences implicit under the COPRA would follow.

THE office is directed to inform the learned Counsel for the parties about the decision of the case forthwith. Complaint allowed.