Sovintorg India Pvt Ltd vs STATE BANK OF INDIA

THE complainant in Case No. C -1/1990 on the file of the State Commission, Delhi is the appellant before us.

THE complainant company had an account No. 2283 with the respondent bank at its South Extension, Part -I Branch, New Delhi. In June, 1983, acheque for Rs. 1 lakh was deposited by the complainant with the respondent bank for collection and for the proceeds being credited to its account. Though the proceeds of the cheque were collected by the respondent on June 17,1983 they were not deposited in the account of the complainant. In spite of notices issued by the complainant, the respondent bank had failed to credit the amount realized by the collection of the cheque to the account of the complainant and hence the complainant approached the State Commission with the claim for recovery of Rs. 1 lakh being the amount of the cheque together with Rs. 3,26,000/ - by way of interest at 24 per cent per annum from June 18, 1983 till October 31,1989 and a further amount of Rs. 4 lakhs by way of compensation for alleged losses and damages for loss of prestige, status and mental agony etc. The respondent raised preliminary objection before the State Commission that the claim was barred under Article 22 of the Limitation Act. On the merits, the respondent contended that the amount of Rs. 1 lakh was held by the bank as margin money for a bank guarantee issued by the bank on behalf of the complainant favouring the Chief Controller of Imports and Exports and the Chief Controller had advised the respondent Bank even as late as on November 3,1987 not to release the guarantee. Hence the bank contended that until the guarantee was returned to the bank, the payment could not be released in the complainants favour.

THE State Commission did not accept the contention of the respondent that the claim was barred by limitation. The contention put forward by the respondent bank that since the amount of Rs. 1 lakh represented the margin money could not be realized till the guarantee was revoked also did not find favour with the State Commission. Accordingly the State Commission directed the respondent bank to pay to the complainant Rs. 1 lakh with interest at 12 per cent per annum with quarterly rests from the date when the amount was received by the bank till the date of payment. The claim put forward by the complainant for compensation for damges on the ground of alleged loss of prestige and status, mental agony, loss of business etc. was rejected by the State Commission.

NOT being satisfied with the aforesaid order passed by the State Commission, the complainant has come up before us contending that it should have been awarded exemplary damages and compensation as had been prayed for in the complaint petition. After giving our careful consideration to arguments addressed to us by Counsel appearing on both sides, we do not find any ground for interference with the order passed by the State Commission. The money realized by collection of the cheque in question did undoubtedly pertain to the complainant company but so long as there was an understanding that was to be kept as margin money for the guarantee furnished by the bank on behalf of the complainant company to the Chief Controller of Imports and Exports, the bank could not be said to be in wrong and having retained the said amount in its custody. It is not clear from the records as to when the contract of guarantee stood terminated. All that we find is that it was in force even as late as in 1987. In the circumstances the conclusion recorded by the State Commission that the complainant is entitled only to recover back the said amount with interest at 12 per cent per annum does not call for any interference. Reliance was sought to be placed by Counsel appearing on behalf of the appellant on the decisions reported in A.I.R. (1985) S.C. 1711, A.I.R. (1967) Bombay 279 and A.I.R. (1966) S.C. 495. But having gone through these rulings, we are unable to see how they are of any assistance to the appellant in the present case.

WE are in agreement with the State Commission that on the facts and circumstances of the case all that the claimant is entitled to is to recover the money from the banker with reasonable interest and that having been directed under the order of the State Commission, mere is no ground made out for any interference in this appeal. The appeal accordingly fails and is dismissed. No costs.

ORDER Mr. Y. Krishan, Member - The complainant in Case No. C -1/1990 on the file of the State Commission, Delhi is the Appellant before us.

The Complainant company had an account No. 2283 with the respondent bank at its South Extension, Part -I Branch, New Delhi. In June, 1983, a cheque for Rs. 1 lakh was deposited by the complainant with the respondent bank for collection and for the proceeds being credited to its account. Though the proceeds of the cheque were collected by the respondent on June 1/, 1983 they were not deposited in the account of the complainant. In spite of notices issued by the complainant, the respondent bank had failed to credit the amount realized by the collection of the cheque to the account of the complainant and hence the complainant approached the State Commission with the claim for recovery of Rs. 1 lakh being the amount of the cheque together with Rs. 3,26,000/ - by way of interest at 24 per cent per annual from June 18,1983 till October 31,1989 and a further amount of Rs. 4 lakhs by way of compensation for alleged losses and damages for loss of prestige, statues and mental agony etc.

, 3. 3.The respondent raised a preliminary objection before the State Commission that the claim was barred under Article 22 of the Limitation Act. On the merits, the respondent contended that the amount of Rs. 1 lakh was held by the bank as margin money for a bank guarantee issued by the bank on behalf of the complainant favouring the Chief Controller of Imports and Exports on advice the respondent bank not to realize the guarantee even as late as on November 3, 1987. Hence the bank contended that until the guarantee was returned to the bank, the payment could not be realized in the complainants favour.

The State Commission did not accept the contention of the Respondent that the claim was barred by limitation. The contention put forward by the respondent bank that since the amount of Rs. 1 lakh represented the margin money could not be realize till the guarantee was revoked also did not find favour with the State Commission. Accordingly the State Commission directed the respondent bank to pay to the complainant Rs. 1 lakh with interest at 12 per cent per annum with quarterly rests from the date when the amount was received by the bank till the date of payment. The claim put forward by the complainant for compensation for damages on the ground of alleged loss of prestige and status, mental agony, loss of business etc. was rejected by the State Commission.

Not being satisfied with the aforesaid order passed by the State Commission, the complainant has come up before us contending that it should have been awarded exemplary damages and compensation as had been prayed for in the complaint petition.

I have given careful consideration to the arguments of the counsel appearing both the sides before this Commission and perused the record.

I am unable to appreciate the contention of the Respondent (State Bank of India) in its version of the case that since the Appellant was under obligation to keep the margin money with the Respondent for the guarantee issued on behalf of the Appellant and that the appellant had failed to provide the margin money and therefore the Respondent was within his rights to retain the amount of cheque realised towards the margin money and to utilise the proceeds of the cheque in question as margin money. The bank guarantee was issued by the respondent bank in favour of the Chief Controller of Exports and Imports on behalf of the complainant on the 3rd April, 1983. The cheque dated 3rd June, 1983 by the Bank and the Bank collected proceeds of the cheque on the 17th June, 1983. Since the bank guarantee was issued a little over two months prior to the receipt of the cheque in question, I am unable to understand how the proceeds of the cheque could have been retained as margin money for a bank guarantee issued earlier. In fact, the bank guarantee could have been issued by the Bank only after margin money of Rs. 75,000/ - had been deposited by the Appellant/Complainant. I am unable to see the link between the issuing of the bank guarantee in April, 1983 and utilizing the proceeds of the cheque realised in June, 1983. In the reply filed by the appellant here to the written version of the respondent on 27th March, 1991 the internal not of 6th March, 1985 by an official of the Bank has been reproduced which clearly shows that the Bank had received margin money of Rs. 75,000/ - on behalf of the appellant while issuing the bank guarantee of Rs. 3.02 lakhs on the 7th April, 1983. Again, if the amount of margin required to be deposited was Rs. 75,000/ - only, it remains unclarified as to how the Bank kept Rs. 1 lakh i.e., an extra amount of Rs. 25,000/ - also as margin money. It would appear that the respondent bank has tried to confuse the issue to justify the delay in crediting the proceeds of the cheque of Rs. 1 lakh in the account of the appellant by linking it with the question of margin money for the bank guarantee.

IT is further observed that the bank guarantee expired on 6th April, 1986, but the cheque amount of Rs. 1 lakh has not been credited to the account of the appellant even after a lapse of seven and half years (see Para 6 of the appeal). The reply filed by the respondent here does not deal with this aspect at all. The Commission has, therefore, no doubt that the respondent bank acted illegally in not crediting the cheque of Rs. 1 lakh realised in June, 1983 to the account of the appellant and denying him the benefit of this amount for over seven years. This is indicative of a grave deficiency in service on the part of the respondent bank towards the appellant which has caused serious demage to the business of the appellant

I am therefore satisfied that the bank has acted in a highly arbitrary, illegal and prejudicial manner and unjustifiably denied the appellant funds to the tune of Rs. 1 lakh which legitithately belonged to him. It is further aggravated by the fact that even after the Expiry of the bank guarantee for which the amount of the cheque was wrongfully retained as margin money, the respondent bank did not care to release the amount due to the appellant.

I feel that the appellant should be allowed the same rate of interest as he has been charged by the respondent from his customers on loans and advances from 1983 onwards till the date when the amount of Rs. 1 lakh was or is credited to the account of the appellant. In addition there is a good case for the appellant being awarded compensation for all the harassment and damage he has suffered at the hands of the respondent bank and the cost of litigation. There is also a case for exemplary damages being awarded. I, therefore, order as unders: 1. The respondent bank should credit the proceeds of the cheque in favour of the appellant to his account

It should pay interest at the rate at which the bank was charging it from its customers from June, 1983 onwards from time to time.

It should pay a sum of Rs. 1 lakh by way of compensation for the damages suffered by the appellant due to the negligence of the respondent. The respondent should pay the amount awarded by this order within a period of four weeks from the date of the order.

The order of the State Commission will stand modified to the above extent Order accordingly.