Patna Cooperative Bank Ltd vs Hasmukh B Shah

THE present revision petition arises out of an order of the Consumer Disputes Redressal Commission, Maharashtra State, whereby the order of the District Forum was reversed and the petitioner Bank was ordered to pay Rs. 25,000/ - being the amount of Fixed Deposit Receipts together with 15% interest thereon from 16.6.1987 till the date of payment. THE facts given rise to the dispute in brief are as under : One Navinchandra B. Shah had placed in Fixed Deposit with the petitioner the following FDRs. FDR Date of Name of Amount Due No. issue the Payee Rs. Date 1867 13.10.1984 N.B. Shah 5,000/ - 13.10.1989 1868 -do - -do - 5,000/ - -do - 1869 -do - -do - 5,000/ - -do - 1870 -do - -do - 5,000/ - -do - 1871 -do - -do - 5,000/ - -do - THE FDRs had the words ''not transferable'' printed on the face of the each FDR and at the same time there were other terms also printed at the back of each FDR which, inter alia, provided :

''Receipt not transferable by endorsement. Payments to third party must be sanctioned by a letter of authority accompanied by the Receipt duly discharged.''

On 25th June, 1987, the said five receipts which were to mature on 13th October, 1989, were presented by the State Bank of India for payment before maturity date. THE depositor had discharged by an endorsement on the reverse which read as under :

''I hereby authorize you to prematurely pay this Fixed Deposit Receipt to Echbee Corporation.''

However, no separate letter of authority as required by the condition quoted above, accompanied the said fixed deposit receipts. In these circumstances, the Bank wrote to the original depositor on 27th June, 1987 seeking the depositors confirmation about the said endorsement and requesting him to either confirm in writing or call on the Bank personally for the purpose.

ON 29th June, 1987, the depositor wrote to the petitioner Bank as follows : ''This has reference to your letter No. PCB / 87 dated 27.6.1987 and have to inform you that as the deposits have not matured for payment, you are hereby instructed not to pay the same. Please confirm.''

In view of this, the Bank returned the said receipts expressing its inability to encash the same under the cover of its letter dated 29th June, 1987, i.e. the same day when they received the letter of the depositor. On the very next day, the Bank was served with a notice of attachment under Section 132(3) of Income Tax Act, attaching the amounts covered by the said FDRs. This was followed by further communications from the Office of the Deputy Director of Inspection (Inv.), Unit No. III, Bombay, withdrawing the prohibitory order under Section 132(2) provided the FDRs are adjusted against the income tax liability of Mr. N.B. Shah. The Bank was again served with another letter from the Additional 1st Income Tax Officer, K -IV Ward, Bombay, requiring the Bank to pay to the Reserve Bank of India, the proceeds of the said FDs towards income tax payable by the said depositor. As the amount was not immediately deposited, the Income Tax Authorities wrote a letter of 5th January, 1988 ordering that the instructions of the depositor stand substituted by the orders under Section 132(3) and invited the Banks attention .o the provisions of Section 226(3) of the Income Tax Act and directing the Bank to pay the amount failing which action according to law was taken. It was pursuant to such orders that the Bank deposited the amount in the Reserve Bank of India. It was long after the amount had been deposited with the Reserve Bank of India on 11th February, 1988, that the respondent complainant in October, 1993 presented the FDRs for encashment. As the amount had already been paid by the Bank pursuant to the demand from the Income Tax Authorities, the receipts could not be encashed. The complainant lodged the police report which matter has also failed. Ultimately, in July, 1994, after a lapse of almost seven years from the date of the first presentation on return of the FDRs and a lapse of a little less than five years from the date of maturity of FDRs a complaint was filed before the District Forum, Bombay. The said Forum went into the facts of the case and after viewing the matter in the light of the provisions of the Income Tax Act and also the terms of the FDR found that there was no deficiency in service. This view was, however, reversed by the State Commission. The District Forum had not gone into the question of limitation. Similarly, State Commission, though was conscious of the question of limitation, simply condoned the delay in view of the findings on merits without giving any reasons as to why the delay was being condoned. The State Commission has failed to consider that the FDRs which were not transferable except in a specified manner, i.e. by a separate letter which had not been done, on being presented for premature encashment had committed no error in making a reference to the original depositor. In fact, it acted like a prudent banker in making a reference in the circumstances to the depositor. The State Commission also failed to notice that the payment of the amount to the Income Tax Authorities pursuant to orders under Section 132(3) and in the light of the ''provisions of Section 226(3) afforded the Bank a complete discharge of the liability to pay. It also overlooked the fact that in 1987 when the FDRs were returned to grievance was made by the respondent. In fact, no grievance was made by the respondent for a period of over six years of such payment and in 1993 when the FDRs were presented for encashment there was no question of those being encashed because the Bank had already paid the proceeds of the FDRs to the Reserve Bank of India in compliance with the orders of the Income Tax Authorities and in law such a payment afforded the Bank a valid discharge. No grievance of such payment is made by the original depositor, nor was any grievance made by the respondent in whose favour the endorsement at the back of the FDRs existed for more than six years and the complaint before the District Forum was filed after a lapse of over seven years. With the lapse of such time both the FORA below should have considered the question of condonation of delay more seriously.

EVEN if the complaint had been entertained or appeal had been entertained the question which fell for determination is whether there was any deficiency in not honoring the original FDRs which were presented for encashment in October, 1993. The answer to this cannot be but in the negative, because, there was no money lying with the Bank which was covered by the said FDRs as the Bank had already paid it into the account of the Income Tax Authorities. An FDR is not a negotiable instrument, particularly, when its being not transferable is printed on the face of it and a special mode of transfer is printed on the reverse of it which is not followed. A reference in this connection be made to a catena of authorities discussed in the 19th Edn. Vol. I, Banking Law and Practice in India, (pages 215 to 218). No challenge has been made to the validity of the payment by the Bank to the Income Tax Authorities. In that view, we are of the opinion that the impugned order, in the light of the discussion above, cannot be sustained and is, therefore, set aside, while the order passed by the District Forum is upheld. Further, we also hold that the claim covered by the complaint in the present case was stale and barred by limitation and there is no explanation forthcoming for condonation of delay. On that score also the matter deserved to be rejected.

IN the facts and circumstances of the case, the parties are left to bear their own costs. The revision petition is disposed of as above. Revision Petition disposed of.