SARASWATI CHAUDHRY vs AMERICAN EXPRESS BANK LTD.

THE original complainant Smt. Saraswati Chaudhry applied for allotment of 200 shares of M/s. Jai Prakash Industries Ltd. on 15.1.1992 in response to right issue. She submitted the application in the prescribed form alongwith a cheque, for Rs. 3.800/- drawn on Bank of India, Asaf Ali Road Branch, New Delhi. THE application and the cheque were deposited with the American Empress Bank Ltd., arrayed as opposite party. THE issue closed on 31.1.1992. THE aforesaid cheque was returned by the American Express Bank with their memo dated 31.3.1992 on the ground that the drawer had not appended her signatures on the cheque. THE case of the complainant was that the cheque had been deposited with the opposite party on 15.1.1992 and it was obligatory on the Bank to have returned the cheque within a reasonable time. If the Bank had fulfilled that obligation, the complainant could add her signatures to the cheque and could have taken the benefit of allotment of right shares which were offered @ Rs. 25/per share and were quoted in the market at Rs. 225 /- per share. According to the complainant these facts constituted deficiency in service on the part of the Bank, and, accordingly, the complainant was entitled to ccompensation. On a consideration of the matter, the District Forum held that the Bank was guilty of deficiency in service as the unsigned cheque had not been returned within a reasonable period. THE District Forum further held that the compensation claimed was on the higher side and unjustified. THE complainant was not entitled to shift the entire responsibility on the Bank as she herself failed to sign the cheque. THE complainant was, however, allowed token damages amounting to Rs. 500/-. Aggrieved by the order, the complainant has preferred this appeal.

THE contention of Mr. Jain is that the Bank was bound to return the cheque within a reasonable period and the District Forum had rightly observed that in the case of a local cheque the period of one week was reasonable period. He submitted that the American Express Bank did not present the cheque in clearing for payment by the Bank of India. On the contrary, the American Express Bank sat over the matter until return of the cheque with banker''s memo dated 31.3.1992 that the cheque required signature of the drawer. Mr. Jain also pointed out that as the application related to right issue the number of the applications was limited and the Bank could not possibly plead that it had to handle a large number of applications which took lot of time. Lastly, Mr. Jain submitted that this was a case of right issue where allotment was certain as a result of the aforesaid deficiency in service on the part of the Bank the complainant had demonstrably suffered loss in the difference of the rate at which the shares were offered and the market price thereof and there was no reason why the complainant should not have been compensated for that loss. The contention of Mr. Gupta, learned Counsel for the respondent, on the other hand is that there was no obligation on the part of the Bank to inform the complainant that the cheque did not bear the signature of the drawer. It was pointed out that the complainant was primarily guilty of not signing the cheque and not bothering to find out whether the amount of the cheque had been debited in her account. He further submitted that Section 84 of the Negotiable Instruments Act was not even remotely attracted to the present case and lastly, that the Bank could not be saddled in law to pay compensation, on account of the difference between the rate at which shares were offered and the market rate on the date of closing of the issue. Assuming for the sake of arguments that the Bank was deficient in rendering service, no case was made out for the grant of compensation claimed by the complainant and only a token amount could be awarded on account of compensation for the deficiency in service.

We have carefully considered the respective submission of the learned Counsel. In the absence of any express provision, the Bank was under an obligation to return the cheque within a reasonable period. What is a reasonable period would depend on the facts and circumstances of each case. We have no doubt that the period of 2 months taken by the Bank from 15.1.1992 to 31.3.1992 cannot be considered to be reasonable period. The District Forum has taken one week as a reasonable period and we have no reason to differ from that view.

WE are further of the view that the Bank cannot be saddled with the whole liability and compensation to be awarded is to be based on the fact that the Bank failed to return the cheque within a reasonable period. The resultant loss is not directly related with the aforesaid deficiency on the part of the Bank. WE are of the view that the award of Rs. 500/- on account of damages is on the lower side. In our view, it would meet the ends of justice if the bank is directed to pay Rs. 5,000/- as compensation. WE are informed that the Bank has already paid Rs. 500/- in persuance of the orders passed by the District Forum. The balance of Rs. 4,500/- shall be paid within four weeks of the receipt of a copy of this order failing which it will be open to the complainant to invoke jurisdiction of the Forum u/Sec. 27. The parties shall bear their own costs. A copy of this order be communicated to the parties as well as District Forum-I. Complaint disposed of. _____________