SAKTHIVADIVELU And SONS vs BANK OF INDIA And OTHERS

THIS is a complaint under Section 17 read with Section 12 of the Consumer Protection Act, hereinafter referred to as the Act.

THE complainant is a registered firm of partnership at Kumbakonam and it has accounts with the opposite party No. 1, Bank of India, Kumbakonam Branch and Opposite Party No. 2, Bank of India, Khand Bazaar Branch, Bombay. At the relevant point of time, the complainant had a sum of Rs. 1,77,979/- in its accounts with the opposite party No. 2, the Khand Bazaar Branch of Bank of India, Bombay. On 7.12.90 the complainant issued a self-cheque for Rs. 1,77,500/- on its accounts with the opposite party No. 2, Bank of India, Bombay and presented it to the opposite party No. 1, the Bank of India at Kumbakonam for collection and for crediting the amount in the complainant''s account with the opposite party No. 1. THE opposite party No. 2. did not honour the cheque though there were sufficient funds in its account to the credit of the complainant. After several days the complainant was informed that as opposite party No. 2 represented that this amount of Rs. 1,77,500/- had been deposited by it into the accounts of the complainant by oversight by 3 Paying Slips on 3.12.90, 4.12.90 and 5.12.90, the matter had been referred to the Head Office and the Legal Department. THE second opposite party subsequently informed the complainant that the third opposite party has filed a Summary Suit in the High Court of Judicature at Bombay and obtained an order of interim injunction against the payment of this amount to the complainant on 28.12.90, and hence the account of complainant with the second opposite party was freezed. THE case of the complainant is that the second opposite party had no right whatsoever to withhold the cheque without clearing it for so long and that the complainant has suffered serious damages on account thereof. Compensation in the sum of Rs. 5,00,000/- is claimed therefor. The second opposite party has filed a counter which is adopted by the first opposite party. It is contended that the complainant is not a consumer as no consideration has been paid by him for the services rendered by him to the opposite parties 1 and 2 as bankers. It is also contended that the cause of action of this complaint has arisen only in Bombay and this State Commission has no jurisdiction to entertain this complaint. On merits it is averred that the third opposite party by its letter dated 10.12.90 informed the second opposite party that it has by oversight deposited an aggregate of Rs. 1,77,500/- in the accounts of the complainant with the second opposite-party and produced 3 Paying Slips dated 3.12.90, 4.12.90 and 5.12.90, and claimed the said sum. The matter was, therefore, referred to the Head Office and the Legal Department. The second opposite party also learnt that the third opposite party had filed a summary suit No. 3812/90 in the High Court of Judicature at Bombay in respect of this amount of Rs. 1,77,500/-. The High Court of Judicature by its order dated 28.12.90 has granted interim injunction restraining the second opposite party from permitting withdrawal of the said sum of Rs. 1,77,500/-. The second opposite party had, therefore, no alternative but to retain the cheque. It is also averred that at the hearing of the application, the High Court, Bombay required the complainant to give bank guarantee and as the complainant has failed to give the bank guarantee, the injunction continued in force. There is, therefore, no deficiency of service on the part of opposite parties 1 and 2.

The third opposite party has also disputed the claim of the complainant to be a consumer and to maintain this complaint. There is no cause of action as against this opposite party. The complaint is not, therefore, maintainable against this opposite party. According to this opposite party the complainant entered into a business deal with it and in pursuance of this dealing the third opposite party paid and spent on behalf of the complainant a total sum of Rs. 3,77,521/- which the complainant was bound to repay to the third opposite party. With a view to pay of this amount, the complainant issued 6 cheques in favour of the third opposite party for a total sum of Rs. 3,77,500/-. Out of the 6 cheques, 4 cheques for Rs. 50,000/- each were duly honoured by the second opposite party as banker of the complainant. But the last two cheques for Rs. 1,00,000/- and for Rs. 77,500/- were dishonoured by the second opposite party as payments were stopped by the complainant. As these two cheques were returned dishonoured, the third opposite party was constrained to file a summary suit No. 3812/90 on the file of High Court of Bombay, and an order of interim injunction has been passed by the High Court 28.12.90 restraining the second opposite party from paying out this amount to the complainant. The High Court has subsequently directed the complainant to give bank guarantee for the sum of Rs. 1,77,500/-, but the complainant failed to give the necessary guarantee. The complainant has deliberately attempted to mislead this Commission and get the amount. The complaint must, therefore, to fail.

EXHIBITS Al to A21 and B19 have been marked by consent. Neither party has let in oral evidence. Written arguments have been submitted. The points that arise for consideration are: (1) Whether the complainant is a consumer and is entitled to maintain this complaint? (2) Whether this Commission has territorial jurisdiction to entertain this complaint? (3) Whether there has been any deficiency of service or negligence on the part of the opposite parties or any of them? and (4) To what amount of compensation, if any is the complainant entitled and against whom?

POINT No. 1: The complainant is a business firm at Kumbakonam in Tamilnadu. The first opposite party is the Kumbakonam Branch of the Bank of India and the second opposite party is the Khand Bazaar Branch of the Bank of India in Bombay. The complainant-firm has accounts with the first and the second opposite parties and this complaint is based on allegations of deficiency of service on the part of opposite parties 1 and 2. The contention of the opposite parties 1 & 2 is that the facilities offered by the Bank is not for any consideration and the complainant is not, therefore, a consumer within the meaning of Section 2(1)(d)(ii) of the Act. The banking industry plays a vital role in the economic life of the country and its citizens. The banks offer a number of facilities to their customers such as receiving deposits, honouring cheques, advancing loans, issuing drafts etc., and these facilities provided by the Banks are expressly brought within the definition of "service" in Section 2(1)(o) of the Act. These services are not rendered by the Banks, gratis or with any philanthropic motive. The depositors, monies are utilised by the Banks for advancing loans, for higher percentage of interest and huge profits are earned thereby and this forms the consideration for the services rendered by the Banks to their customers. This Commission has held so in Canara Bank v. Sakthivadivelu (AP 89/91 dt. 3.10.91) and this decision has been confirmed by the National Commission in Canara Bank v. Sakthivadivelu (RP No. 198/91 dated 24.2.92). We are, therefore, have no hesitation in holding that the complainant is a consumer as regards the opposite parties 1 and 2. The opposite party No. 3 is a business firm at Bombay having dealings with the complainant firm at Kumbakonam. It is not the case of the complainant that it has hired any of the services of the third opposite party for consideration and hence it cannot be said that the complainant is a consumer as regards the third opposite party. The complaint is not, therefore, maintainable as against the third opposite party. Point No. 2 : The complaint is in respect of a cheque issued by the complainant and drawn on the second opposite party on 7.12.90 at Kumbakonam. This cheque has been presented to the first opposite party at Kumbakonam for the collection of the amounts from the second opposite party, Bombay and for crediting the same to the complainants'' accounts with the first opposite party at Kumbakonam. The contention of the opposite parties 1 and 2 is that the cause of action has arisen only in Bombay and this Commission has no jurisdiction. It must be remembered that the cheque has been drawn at Kumbakonam and presented to the first opposite party at Kumbakonam for clearance and part of the cause of action in this complaint has arisen at Kumbakonam within the jurisdiction of this Commission. We hold therefore that this Commission has territorial jurisdiction to entertain this complaint.

POINT No. 3 : It is not in dispute that the complainant has current account with the opposite party No. 1 at Kumbakonam and the opposite party No. 2 in Bombay. It is also not in dispute that as on 6.12.90 there was a sum of Rs. 1,77,979/- in the accounts of the complainant with the second opposite party. The complainant has issued a self-cheque for Rs. 1,77,500/- on 7.12.90 and presented to the first opposite party at Kumbakonam for collection of and crediting of the amount in the complainant''s account with the first opposite party at Kumbakonam. The cheque has not been honoured by the second opposite party though there was sufficient funds with it in the account of the complainant. The case of the second opposite party is that the third opposite party who has business dealings with the complainant represented to the second opposite party that it had by mistake deposited three amounts namely Rs. 50,000/- on 3.12.90, Rs. 50,000/- on 4.12.90 and Rs. 77,500/- on 5.12.90 in the accounts of the complainant the second opposite party, produced the Paying Slips in original and claimed that this amount of Rs. 1,77,500/- belonged to it. Consequently the second opposite party claims to have referred the matter to the Legal Department and in the meanwhile the High Court of Bombay passed an order on 28.12.90 in Summary Suit No. 3812/90 restraining the second opposite party from permitting the withdrawal of the amount by the complainant and hence the amount could not be paid. The complainant has been informed that the account has been freezed because of the order of the High Court which is marked as Exhibit B7. It seems that subsequently the High Court has directed the complainant to give guarantee for the said sum, but the complainant has failed to give necessary guarantee. The question whether this amount of Rs. 1,77,500/- belongs to the complainant or to the third opposite party is the subject matter of the suit in summary suit No. 3812/90 on the file of the High Court, Bombay. But it is needless to go into the question here for the simple reason that the complainant has not claimed for payment of this amount in his complaint. The complaint is against the failure of the opposite party to clear the cheque till the High Court of Bombay issued the order of injunction on 23.12.90 and this is not the subject matter of the proceedings before the High Court in Summary Suit No. 3812/90. Hence the pendency of the suit on the file of the High Court, Bombay is no bar to go into the question whether there had been any deficiency of service on the apart of the second opposite party in not clearing the cheque till the date of the issue of the order of the injunction by the High Court of Bombay in Summary Suit No. 3812/90 on 28.12.90.

THERE is no allegation against the first opposite party of any deficiency of service for it has merely receive the cheque issued by the complainant on the second opposite party and forwarded to the second opposite party for collection. The allegation of deficiency is only against the second opposite party. The gravemen of the charge against the second opposite party is that it must have received the cheque issued by the complainant on 7.12.90 by about 10th or 11th of December 90 and though there were sufficient funds in the complainant''s account with the opposite party, the second opposite party has not honoured the cheque at once, but kept it pending for nearly 17 days at the instance of and in collusion with the third opposite party, till the third opposite party obtained an order of injunction of High Court of Bombay on 28.12.90, or rather to enable the third opposite party to obtain such an order of injunction and this amounted to gross deficiency of service and negligence. Reliance is ought to be placed on Section 45-ZB of the Banking Regulations Act, 1949 which runs thus : "45-ZB. Notice of claims of other persons regarding deposits not receivable. No notice of the claim of any person, other than the person or persons in whose name a deposit is held by a banking company, shall be receivable by the banking company, nor shall the banking company be bound by any such notice even though expressly given to it. Provided that nothing contained in this subsection shall affect authority from a court of competent jurisdiction relating to such deposit is produced before a banking company, the banking company shall take the due notice of such decree, order, certificate or other authority."

The explanation offered by the second opposite party is that because the third opposite party claimed that it had by oversight deposited this amount of Rs. 1,77,500/- under 3 Paying Slips dated 3.12.90, 4.12.90 and 5.12.90 and that the amount belonged to it, the second opposite party exercised caution and kept the matter in pending for the decision by the Head Office and the Legal Department, and that by 28.12.90 the third opposite party obtained an order of injunction by the High Court of Bombay. This explanation is hardly convincing. It is pertinent to point out here and now that in its counter, the third opposite party has claimed that it had spent and paid to the com plainant a total sum of Rs. 3,77,521/- in a business dealing, that in order to pay of the said amount, the complainant gave 6 cheques drawn on the second opposite party, that 4 cheques were honoured by the second opposite party while the last 2 cheques for Rs. 1,00,000/- and Rs. 77,000/- were returned dishonoured by the second opposite party, as the complainant stopped payments. It is not therefore the case of the third opposite party that there was any mistaken deposit of this amount into the accounts of the complainant with the second opposite party, as claimed by the second opposite party. Be that as it may, the conduct of the second opposite party in withholding clearance of the cheques issued by the complainant when there were sufficient funds in its accounts with the second opposite party is in contemptuous violation of the express provision of Section 45 ZB of the Banking Regulation Act of 1949 quoted above. No banking institutions are to poke their noses into other man''s affairs. It is not the business of a bank holding a customer''s money in the customers accounts to enter into or adjudicate upon the claims of the third party. Even if a person deposited ill-gotten wealth in a bank, the bank must honouring its commitments to the depositor and clear his cheques unless the bank itself has a claim against the depositor or unless there is an interdiction under the authority of law. The second opposite party ought not, therefore, to have entertained the claim alleged to have been put forward by the third opposite party that this amount of Rs. 1,77,500/- belonged to it; instead it ought to have been informed the third opposite party to seek remedy in the proper judicial forum and clear the cheque drawn by the complainant. The inference is irresistible that the second opposite party had tried to dabble in the dispute between the complainant and the third opposite party. The default of the second opposite party to clear the cheque for about 17 days is a clear case of deficiency of service and negligence. The point is found accordingly against the second opposite party. Point No. 4 : The complainant has come forward with a claim of compensation in the sum of Rs. 5,00,000/-. We cannot help feeling that it is a flight of fancy. There is no reference in the complaint to any specific loss of business on account of the failure of the second opposite party to honour the cheque of the complainant in time. But in the written argument submitted by the learned Counsel for the complainant, it is averred that on account of the default committed by the second opposite party, the contract between the complainant and M/s. Pars Ram Brothers, Singapore could not be proceeded with. This is clearly an after thought and cannot be countenanced. There are also no details in respect thereof. It may also be pointed out that the cheque in question is a self cheque handed over to the first opposite party at Kumbakonam for collection. The cheque has not been issued in favour of the business concerns in which case there may be a case of loss of reputation. The complainant is not, therefore, entitled to any special damage. But general damages perse for the mental pain and agony which the complainant would have suffered can be awarded and we find that a sum of Rs. 10,000/- as general damages against the second opposite party will be sufficient to meet the ends of justice.

In the result we order as follows : (1) The second opposite party shall pay to the complainant Rs. 10,000/- as compensation. (2) The second opposite party shall also pay Rs. 1,000/- as costs to the complainant. (3) The payments shall be made within one month from the date of the receipt of this order. (4) The complaint fails and is dismissed as against the first and the third opposite parties, but without costs.

Complaints dismissed.