Ram Kanwar vs Punjab National Bank

THE complainant is representing in this appeal against inadequate compensation awarded to him by District Forum-II.

FACTS in this case, stated briefly, are that the complainant made an application for allotment of 226 convertible debentures (Rights Issue) of M/s Shriram Industrial Enterprises Ltd. In terms of the Rights Issue he issued a cheque for Rs. 25312/- on 12.12.92 on his bankers-respondent in the case, hereinafter referred to as OP for facility in favour of Hongkong Shanghai Banking Corporation Ltd. A/C v. S.I.E.L. Rights Debentures. The opposite party/dishonoured the cheque with the remarks ''insufficient funds'' not with-standing the fact that there was sufficient credit balance to meet the cheque amount. The result was that the debenture application of the complainant was rejected and the complainant lost the opportunity to secure the debentures, which would have allotted to him on a Rights basis. Terms of the Issue further provided that the applicant complainant would have been allotted automatically 226 shares at the rate of Rs. 35 per share at the end of six months and another 226 shares at the rate of Rs. 55/- per share at the ends of 15 months. During all this period prior to conversion company was to pay interest at the rate of 15%. Complainant in the complaint filed before DF-II has computed the loss caused to him on account of non-allotment of Rights debentures and denial of benefit of shares to be allotted in lieu of Part ''A'' and Part ''B'' of the debentures to be Rs. 29,172.08. In addition complainant has claimed Rs. 25,000/- on account of damages besides cost of notice and interest.

Op bank admits wrongful dishonour of cheque but attributes it to a human error.

DF-II held OP to be deficient in service and awarded a compensation of Rs. 5,000/-. Complainant considered this to be very inadequate and has filed the instant appeal. We have gone through the record of the case and have also heard Counsel for the two sides.

CONTENTION of Mr. Sunil Mittal learned Counsel for the appellant was that there is admission by OP of its default. The loss of Rs. 29,172.08/ -was a direct consequence of non-performance of the duty by OP. He further submitted that the OP had failed to file affidavit in District Forum to controvert complainants claim. Mr. Mittal is further contention was that the compensation of Rs. 5000/- awarded by DF was very inadequate and it ought to be Rs. 25,000/- in addition to the compensation for the loss suffered by him. He also pleaded for interest on the amount of award and costs. Mr. A.K. Raina learned Counsel for OP stated that the dishonour of cheque was caused due to a bona fide human error without any intention to cause harm to the complainant and consequently there was no deficiency in service. Further Mr. Raina submitted that the case involves adjudication of complicated issues and disputed facts, which can be determined only by a competent civil Court. Submissions made by the two sides and records have been carefully considered. We would firstly like to deal with the proposition of Mr. Raina learned Counsel for the OP that Commission of an error does not amount to deficiency in service.

CLAUSE (g) of Sub-section 1 of Section 2 of Consumer Protection Act defines ''deficiency'' as below: "deficiency" means fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service."

DISHONOUR of a cheque of a customer on the ground of insufficiency of funds when the customer had sufficient credit, balance will obviously amount to ''faulty'' and ''imperfect'' manner of performance of service. And, this-default is certainly covered in the definition of ''deficiency'' in service under Section 2(1)(g) quoted above. Rightly, this view has been taken consistently by Consumer FORA. We do not consider it necessary to cite decided cases. On the next contention of Mr. Raina that the case involves disputed questions of law and facts we find that this is a clear case of admission of error by the OP and does not require detailed examination of evidence or witnesses. Relegating the dispute to civil Court is therefore not warranted.

Coming to the question of quantum of damages or compensation to be allowed we find force in the contention of learned Counsel for the complainant that there was clear nexus between the default of OP (in dishonouring the cheque) and denial of allotment of debentures to complainant resulting in loss of Rs. 29,172.08/- to him. OP cannot escape liability for compensating the complainant for this loss. We draw support to this view in an order of National Commission in a case of similar nature - "State Bank of India and Anr. v. Dr. Kalika Charan Dube, II (1996) CPJ 27 (NC).

WE therefore allow compensation of Rs. 29,172.08/- to be paid to the appellant. Having allowed this, we do not see any justification for granting any further damages or compensationas laid down by National Commission in the above case. OP shall also pay costs quantified as Rs. 2000/-. Appeal is allowed in these terms. OP shall make the payment of the sum awarded within four weeks of the receipt of this order failing which it shall be open to the complainant to pursue recovery as per law. A copy of this order be communicated to the parties as well as DF-II. Appeal allowed.