PUNJAB NATIONAL BANK vs R.P.ARORA

THIS First Appeal is filed against the order dated 6th May, 2005 passed by the State Commission, New Delhi, in complaint No.297/1994 whereby the Appellant " Punjab National Bank is directed to pay a sum of Rs.1 lakh as compensation for deficiency in service rendered to the Complainant, Shri R.P.Arora.

BRIEF facts of the case are : The Respondents filed a complaint against the Appellant Bank for deficiency in service and claimed compensation of Rs.6,13,167/- with interest @18% p.a. on three grounds. The State Commission partly allowed the complaint on two grounds and directed Appellant to pay a total sum of Rs.1 lakh for the deficiency in service for the grounds stated as under : 1. The Respondents had instructed the Appellant to remit a sum of Pound (") Sterling 5000/- on 24.8.1992 to his account with Lloyds Bank, London (U.K.). Appellant remitted the funds through their correspondent - Midland Bank at London with instructions to transfer " Sterling 5,000 to Lloyds Bank, Waterloo Place, Pall Mall, P.O. Box 349, Waterloo Place, London for credit to call Deposit Account No.7609608 of the Respondents with his said Banker. Midland Bank reverted back to the Appellant Bank on 4.9.1992 that the Code Number issued by them (Appellant Bank) was wrong and that they could not execute the payment instructions. On 16.9.1992 the Appellant Bank after verification of records, instructed Midland Bank to immediately execute the transfer as requested on 27.8.1992 and the same was confirmed by them vide telex message dated 5.10.1992. This amount got transferred only on 2.10.1992. The Respondents needed this money in Irish Pounds to be remitted for their children studying in Dublin. The Respondent No.2 (wife of Respondent No.1) visited the Appellant Bank and requested them to transfer the said amount telegraphically so that they could get 5500 Irish Pounds whereas they got only 4000 Irish Pounds due to devaluation during the period of delay by the Banks. Hence, the Respondents claimed a loss of Rs.70,000/- suffered due to the undue delay in transferring the amount by the Bank as during this period of 37 days, there was devaluation of Sterling Pound. When the amount was finally transferred, the Respondents were short of Irish Pounds by 1500 equivalent to Rs.70,000/- and he suffered loss and it was difficult for him to arrange immediately the balance sum for the children"s education. Being salaried persons, it was a huge burden on them to manage collecting this extra amount. Submissions: The Learned Counsel for the Appellant argued that the instructions for the transfer of " Sterling 5,000/- to Lloyds Bank, were given on 27.8.1992 and as verification was required regarding Code Number, which was wrong according to the Midland Bank, there was a delay of six days on the part of Midland Bank. Thereafter, there was a further delay of 11 days in correcting the Code Number and issuing further instructions to the Midland Bank. Learned Counsel for the Appellant admitted the delay of 20 days but attributed the same to a foreign corresponding Bank, i.e. Midland Bank on which they have no control and that this liability cannot be fastened on the Appellant Bank. This delay in remitting the funds was not deliberate or with malafide intention of the Appellant and that the Appellant Bank should not be penalized. 2) The second issue relates to pre-mature withdrawal of a fixed deposit by the Respondents. The circumstances are as follows : The Respondents wanted to deposit Rs.5 Lakhs in their NRE account for a period of three months. However, the Appellant Bank advised them that to earn interest they should make deposit for one year. Accordingly, deposit was made on 21.12.1994 for a period of one year. However, as the Respondents required ready cash to purchase a Maruti Car they withdrew the entire money on 30.5.1995, i.e. after 5 months and 10 days. The grievance is that no interest has been paid for this period.

The submission of the Appellant is that as per the guidelines of the Reserve Bank of India, any deposit under Non Resident Non-Repatriable Scheme which does not run for a minimum period of six months, the depositor shall not be entitled for payment of interest and hence the Appellant Bank was under no obligation to pay the interest on the said Fixed Deposit and there is no deficiency in service on their part.

WE have heard both the parties and perused the record. As for the first issue, it is clear on the face of the record that the Respondents had written a letter dated 25.02.1993 wherein it is clearly stated as under : "Due to unforeseen circumstances, money is now urgently required by my children, who are studying in Ireland. Therefore, I shall be grateful if the Fixed Deposit of Rs.1,25,000/- is prematurely withdrawn and credited to my NRE account number mentioned above. You are further requested to issue a draft in Deutsche Marks equivalent to Rs.1,25,000/- (approx.) drawn in favour of "Mr. R.P.Arora" and send the draft to me by registered post, at the earliest, to enable me to arrange transfer of money to my children. I may also bring to your kind notice that in July 1992 I had requested you to transfer Pound Sterling 5,000 on 24.8.92 to my London account, which was done only on 2.10.92 (copy enclosed). As a result of the delay occurred at your end, my children could get only Irish Pound 4,000/- instead of 5,500/-, as Pound Sterling got devalued in end-September 1992."

FROM the above letter, it is clear that Respondents suffered a loss of Rs.70,000/- in paying fee for children who were studying in Ireland due to delay in sending the draft to the children. It was the duty of the Appellant Bank to ensure that correct code is conveyed and further instructions ought to have been given to their corresponding Bank. The delay between the two Banks in communicating and corresponding cannot be considered to be in a normal course. Delay of 37 days is an inordinate delay by any banking standard. We agree with the submission made by the Respondents that they suffered the loss due to deficiency in service of the Bank. The second issue is regarding not informing the Respondents that they would not be paid any interest if the fixed deposit amount of Rs.5 lakhs is withdrawn before six months from NRE Account. It is argued by the Appellant that Respondents should know the rules and regulations and that the Bank was right in not paying the interest in conformity of the rules and regulations as prescribed by the Reserve Bank of India and in any case they ought to have inquired about it before withdrawing the amount. Here, the question is when the Respondents wanted to keep it only for three months, it is admitted that the Bank has suggested that it should be kept for one year. When the Respondents wanted to withdraw the said amount just few days before six months, whether the Bank should have informed them that if they could wait for few days then they would get the interest. The Respondents argued that they were not in a hurry to withdraw the amount prematurely. Had they known that interest would be payable on this amount (Rs.5 lakhs) if kept for six months then they would not have withdrawn the amount 20 days before the date of maturity. They emphasized on this fact that the bank should have highlighted this information to them that interest would only be payable if deposit is for six months.

IN our view, the arguments of the Respondents are far-fetched. The Respondent No.1 is an educated person, worked abroad for some time, and operates an NRE account. He has changed three months deposit into 12 months deposit to earn interest. He ought to have taken care to find out what interest would be payable if the deposit is for six months and what happens in case of a premature withdrawal. It was his duty to verify before premature withdrawal. This responsibility cannot be shifted to the Appellant Bank. For whatever reason, the Respondents prematurely withdrew the deposit in 5 months and 10 days when it was deposited for one year. So we are not inclined to grant any relief to him on this ground. State Commission has not given any reasons for finding deficiency in service on this count.

WE find there is merit in the argument of the Respondents regarding the first ground and we direct the Appellant to pay a compensation of Rs.70,000/- with interest @ 9% p.a. from the date of the complaint to be paid within six weeks from the date of this order. The order passed by the State Commission directing to pay compensation of Rs.1 lakh in Indian rupee is set aside. The Appeal is partly allowed accordingly. There shall be no order as to costs.