Standard Chartered Bank vs P.N.TANTIA

THIS Revision Petition is directed against the order of the State Consumer Disputes Redressal Com mission, West Bengal, dated 8th March 1996. In order to appreciate the controversy between the parties it is necessary to state the facts briefly.

THE respondents opened an account with the Standard Chartered Bank, petitioner herein, and pledged their shares of different companies for availing of advance/overdraft facilities. THE Bank allowed the complainant to withdraw from their account a sum of Rs. 2,40,000/ on different counts. Vide letter dated 10.6.1993, the complainant requested the Bank to sell their shares on 11th June, 1993 at the price mentioned in the letter. According to the complainants, the offer was accepted by the Bank. However, in breach of the terms and conditions contained in the letter dated the 10th June, 1993, the Bank sold the shares on a date other than the date specified and on that count the complain ants suffered huge loss. In these premises, a complaint was filed for seeking reliefs for cancellation of the sale of shares and award of compensation for the loss suffered by him. The complaint was contested by the Bank. It was pleaded that the complaint was speculative and vexatious and that the complainants had no cause of action; the Bank sold the shares of the complainants as in terms of the letter dated 10.6.1993 and no breach was committed and no loss was suffered by the complainants.

The District Forum after considering the controversy between the parties, directed that the Bank would pay to the complainants the shares booked for sale after purchasing the same from the market along with profits, if any, and also with expenses incurred for legal proceedings by the complainants. The matter did not rest there. The Bank filed an appeal before the State Consumer Disputes Redressal Com mission, West Bengal, but without success. By a majority judgment, the State Commission modified the order of the District Forum to the extent that the Bank would pay Rs. 20,000/ on account of compensation. Aggrieved by the order of the State Commission, the Bank has approached this Commission by invoking its power under Section 21 (b) of the Consumer Protection Act, 1986.

WE have heard the learned Counsel for the parties and gone through the records with their help. Mr. Vipin Gogia, Advocates appearing for the petitioner canvassed that the orders passed by the District Forum as well as the State Commission suffer from legal infirmity and were not sustainable in law. The State Commission committed legal error in holding that the respondent was a "consumer" within the meaning of the provision of the Consumer Protection Act. The State Commission failed to appreciate that the relationship of the petitioner and the respondent was that of a creditor and a debtor as the petitioner granted loan to the respondent against pledge of shares. The State Commission was wrong in holding that the Bank was guilty of deficiency in service. The State Commission failed to appreciate that the petitioner being pledgee of the shares was not governed by the instructions of the respondents by virtue of a letter dated the 10th June, 1993 as its rights were governed by the provisions of the Contract Act; the State Commission committed grave error while awarding Rs. 20,000/ to the respondent.

ON the other hand, the Counsel for the respondent contended that the order of the State Commission was fully justified in the facts and circumstances of the case. The State Commission rightly held that the respondents had hired the services of the Bank and there was a deficiency in service. The compensation awarded by the State Commission was perfectly justified. We have considered the relevant contentions of the parties and have given our thoughtful consideration to the entire matter. The State Commission observed that the Bank acted as share''s Bank of the complainant inasmuch as the shares of different Companies were kept hypothecated or pledged with Bank against cash credit facility upto the sanctioned limit granted by the Bank could be availed of by the complain ant and thus by advancing loan to the complain ants in exchange of Bank interest, the Bank rendered service to the respondents for consideration earned by way of interest on account of the loan of Rs. 2,40,000/ advanced in this regard. Therefore, the complainants were con-submersing service of the Bank for consideration by way of payment or interest for the loan received from it by pledging the shares of different companies. In our opinion, the approach of the State Commission was not legally correct. In the normal course of business it is not the function of the Bank to indulge in for the sale and purchase of the shares. Section 176 of the Con tract Act provides as Under: " 176: Pawnee''s right where Pawner makes default.-If the Pawner makes default in payment of the debt, or performance, at the stipulated time, of the promise, the respect of which the goods were pledged, the Pawner may bring a suit against the Pawnee upon the debt or promise, and retain the goods pledged as a collateral security; or he may sell the thing pledged, on giving the pawner reasonable notice of the sale. If the proceeds of such sale are less than the amount due in respect of the debtor promise, the Pawner is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, the Paw nee shall pay over the surplus to the Pawner."

THE rights and duties of the pledger and a pledgee are set out clearly in Section 176. It is in the discretion of the Pawnee either to file suit for recovery of the debt and retain the pledged goods as collateral security or in the alternative to sell the pledged goods after giving reasonable notice to the Pawner. Apart from this right conferred upon the Bank, the Bank had no other legal right to sell the shares on behalf of the complainants. Even otherwise it was not obligatory on the part of the Bank to oblige the complainant by selling his shares. THE Bank could file a suit for the recovery of the debt and retain the pledged goods as a collateral security. In view of this, we are of the opinion that it was a relationship of a creditor and a debtor so far as pledged shares were concerned. As such, the question of hiring of service of the Bank would not arise in such an eventuality. No doubt, the Bank could exercise the right conferred on it in accordance with law. THE remedy of the Pawner for an improper sale of pledged property is for recovery of damages. Measure of damages is loss actually sustained. If the sale was not effected in terms of their instructions, or it was complainant could proceed against the Bank by way of a civil suit for recovery of damages on account of the loss suffered by them. THE complainant could not resort to the remedies pro vided under the Consumer Protection Act, 1986.

EVEN otherwise, we find the State Commission awarded a compensation of Rs. 20,000/ without any basis. No material was placed on the record by the complainant in support of their case that they had suffered a loss, if any, on account of the alleged improper sale of shares by the Bank. We are of the opinion that the State Commission exercised its jurisdiction illegally and with material irregularity and its order cannot be sustained in law. In the result, we allow this Revision Petition, set aside the orders passed by the State Commission as well as the District Forum and dismiss the complaint of the complainant with the observation that the complainants, if they so desire, can pursue their remedy in a competent Court of Law. However, we, make no order as to costs. Revision Petition allowed.