Standard Chartered Grindlays Bank vs RAJESH SILK FABRICS

THE parties are referred to in this appeal as they are arrayed in the complaint before the District Forum.

THIS appeal is by the opposite party (for short the "O.P.") challenging the order dated 12.7.2003 passed in Complaint No. 264/2002 on the file of the Consumer Disputes Redressal Forum, Bangalore Urban District, allowing the complaint of the complaint. The case of the complainant is as follows: The complainant is a Division of M/s. Biswanath Himatsinghka and others, which is a Hindu Undivided Family and is a business concern and M/s. Arihant Fabrics at Calcutta, a business associate of the complainant. M/s. Arihant Fabrics sent a cheque bearing No. 362300 dated 19.3.2001 drawn on the Calcutta Branch of the O.P. Bank in favour of the complainant for a sum of Rs. 1,38,070 which is due to the complainant in respect of the business transaction. As the complainant did not receive the said cheque, it enquired with M/s. Arihant Fabrics regarding non-receipt of the above cheque. On inquiry the complainant was informed that the cheque has already been encashed and this has been reflected in the Statement of Accounts of M/s. Arihant Fabrics. Thereafter, the complainant obtained a copy of the said cheque from the Bangalore Branch of the O.P. Bank, which revealed certain irregularities.

According to the complainant, the irregularities disclose "deficiency in service" on the part of the O.P.

THE O.P. on receipt of the notice issued by the District Forum on the complaint filed by the complainant filed its version stating that the District Forum at Bangalore has no jurisdiction to entertain the complaint, since the alleged cheque was drawn on the O.P. Bank at Calcutta and, therefore, complaint, if any, could have been filed at Calcutta and not at Bangalore. THE further case of the O.P. is that the averments made in the complaint are not sufficient to establish any deficiency in service on the part of the O.P. It is further averred in the version that since the complainant disputes its signature found on the cheque, it is for the complainant to establish the same. One other contention raised by the O.P. in its version is that the complainant has filed this complaint in collusion with M/s. Arihant Fabrics in order to attempt to make unlawful gain. After considering the evidence adduced by the parties and the documents produced by them, the District Forum allowed the complaint directing the O.P. to pay a sum of Rs. 1,38,017 with interest at 10% per annum from 31.3.2001 till payment.

THIS order is under challenge by the O.P. in this appeal. The point that now arises for consideration is: Whether the District Forum is justified in allowing the complaint of the complainant? The District Forum has rightly held that it has jurisdiction to entertain the complaint because the cheque drawn by the O.P. Bank is payable to the complainant at Bangalore.

THE cheque bearing No. 362300 dated 19.3.2001 drawn on the Calcutta Branch of the O.P. Bank in favour of the complainant for a sum of Rs. 1,38,017 was a "crossed cheque". When there is a crossed cheque drawn in the name of the firm of the complainant, the payment of the said cheque should be only credited to the account of the firm and it should not be paid by cash. THE District Forum directed the O.P. to produce the original cheque in question before it. But the O.P. did not produce the original cheque before the District Forum. THE complainant has produced a copy of the crossed cheque issued by the Bangalore Branch of the O.P. Bank. Since the said cheque has not been disputed by the O.P., the District Forum considered the said cheque to resolve the dispute between the parties. This Commission after hearing for some time directed the O.P. Bank to produce the original cheque in question. Pursuant to the said direction, the O.P. Bank has produced the said cheque before this Commission along with a memo.

IT is seen that the crossing made by M/s. Arihant Fabrics on the cheque is smudged in ink. In view of this it is not possible to make out the nature of the crossing on the cheque. The name of M/s. Arihant Fabrics is printed just below the column provided for mentioning the amount in numbers. Below that the signature of a person stated to be authorised to sign the cheque is found. This printing of "M/s. Arihant Fabrics" just below the column provided for mentioning the numbers appears to have been made by the O.P. Bank since the complainant is a regular customer, instead of putting seal on every occasion whenever a cheque is issued. On the reverse of the cheque, the seal of complainant firm is found at two places. In between the lines of the seals, the signature of one Mr. Pawan Kumar Himatsingka is found. The said signature is said to have been identified by one Mr. Raj Kumar. We verified the signature of Mr. Pawan Kumar Himatsingka found on the reverse of the cheque with his signatures on the ''Vakalath'' filed in this appeal before this Commission and also in the Vakalath and affidavit filed in the complaint before the District Forum. After verifying the signature found on the reverse of the cheque with that in the Vakalaths and affidavit, we are of the view that the signature found on the reverse of the cheque is not that of Mr. Pawan Kumar Himatsingka. When it is clear to the naked eye that the signature found on the reverse of the cheque is of a different person, we are of the view that there is no need to refer the signatures for any expert opinion. One Mr. Raj Kumar has identified the signature of Mr. Pawan Kumar Himatsingka. IT is not known who is the said Raj Kumar. The O.P. also has not stated in its version or in the affidavit as to who is Raj Kumar who has identified the signature of Mr. Pawan Kumar Himatsingka. IT is written on the cheque "crossing cancelled and pay by cash". On the reverse of the said cheque, there is an endorsement in Hindi. According to this endorsement, the amount covered under the cheque is credited to the account of one Mr. Anoj Kumar. The O.P. Bank has also not stated either in the version or in the affidavit who is the said Anoj Kumar and whether the amount is credited to the Bank account of Anoj Kumar. From all these facts, it is seen that the amount covered by the cheque has not been paid to the complainant, even though the complainant is entitled for the same. Section 123 of the Negotiable Instruments Act, 1881, provides for crossing of cheque generally. Section 124 provides for crossing of cheque specially. In the instant case, since the crossing is smudged in ink, it is not possible to say whether the crossing is as per Section 123 or Section 124. Section 126 which deals with payment of cheque crossed generally states that where a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise than to a banker. As regards payment of cheque crossed specially, Section 126 states that where a cheque is crossed specially, the banker on whom it is drawn shall not pay it otherwise than to the banker to whom it is crossed, or his agent for collection. In the instant case, it is not possible to make out what is the nature of crossing, because the crossing has been smudged with ink. The signature on behalf of the drawer no doubt is found just below the ink at the corner of the cheque. But there is no seal of the drawer''s firm. Whenever a cheque is crossed and is to be credited to the account of the drawee, in order to cancel the said crossing the consent of the drawee is to be obtained by the drawer. In the instant case, there is no such consent of the drawee, who is the complainant and in whose favour the cheque was issued. In the absence of such consent obtained either by the drawer or by the O.P. Bank, cancellation of the crossing, if any, should not have been accepted and the amount should not have been paid in cash. There is no endorsement on the cheque so as to know that the amount covered under the cheque has been paid by cash. Further, the erasing of the crossing by the Bank also amounts to material alteration regarding the mode of payment on presentation of cheque. If there is such material alteration, the Bangalore Branch of the O.P. Bank ought not to have paid the amount covered under the cheque by cash. The cheque is drawn at Calcutta payable at Bangalore. The said cheque sent by M/s. Arihant Fabrics has not been received by the complainant. If that is so, it is not known who presented the said cheque and who is the person who encashed the said cheque. The Bangalore Branch of the O.P. Bank also has not explained who was the person who presented the said cheque and to whom the amount has been paid, because the signature found on the reverse of the cheque of one Mr. Pawan Kumar Himatsingka appears to be a forged signature, since the said signature does not tally with the signature found on the Vakalaths of Mr. Pawan Kumar Himatsingka. The Bangalore Branch of the O.P. Bank also has not produced any evidence to show who is that Raj Kumar who identified the signature of Mr. Pawan Kumar Himatsingka. The endorsement in Hindi also speaks of the fact that the amount has been credited to the account of one Mr. Anoj Kumar.

From all these facts, we are of the view that the Bangalore Branch of the O.P. Bank in collusion with somebody else got the cheque encashed and paid the amount covered under the cheque to a wrong person. Hence, we are of the view that the negligence on the part of the O.P. Bank in not applying its mind to verify what was the nature of the crossing and whether the cancellation of the crossing was done with the consent of the complainant and whether the O.P. Bank was certain about the person who presented the cheque, has resulted in payment to a wrong person. The O.P. Bank without verifying these aspects appears to have credited the amount covered under the cheque to the account of one Mr. Anoj Kumar as per the endorsement made on the reverse of the cheque in Hindi, for the reasons best known to it. Therefore, it is a clear case of "deficiency in service" on the part of the O.P.

THE fact that M/s. Arihant Fabrics has issued the cheque to the complainant is not disputed. Further, as per the findings recorded above, the complainant has not received the amount covered under the cheque. If that is so, the O.P. Bank is liable to make good the loss suffered by the complainant. The learned Counsel appearing for the O.P. relying on the decision of the National Commission in the case of N. Shivaji Rao v. M/s. Daman Motor Company and Others, reported in I (1993) CPJ 88 (NC), submitted that if there are allegations of fraud and cheat, the Consumer Court will not get jurisdiction to resolve the dispute. In the instant case, the simple case of the complainant is that the amount covered under the cheque has not been paid to it. In this situation, it is for the O.P. Bank to establish in what manner the amount has been paid to the complainant. In the instant case, the O.P. has miserably failed to establish that the said amount has been paid to the complainant. If that is so, it is a clear case of "deficiency in service" on the part of the O.P. Further, the said judgment of the National Commission was rendered prior to the coming into force of the Amendment Act of 2002 to the Consumer Protection Act, 1986. Clause (ii) of Sub-section (d) of Section 2 of the Consumer Protection Act was introduced by the Amendment Act of 2002. The word "service" was also subsequently amended by Act No. 2/2002 and Act No. 50/1993. Therefore, in our view, the said decision of the National Commission does not in any way help the O.P.

THE learned Counsel for the O.P. further relying upon the decision of the National Commission in the case of the Bombay Dyeing and Manufacturing Company Limited v. Union Bank of India, reported in I (2001) CPJ 1 (NC), submitted that since the case on hand involves complicated questions of law and facts it is to be decided by a Civil Court and not by the Consumer Forum constituted under the Consumer Protection Act, 1986. He further relied upon the decision of the National Commission in the case of M/s. Special Machines v. Punjab National Bank and Others, reported in I (1991) CPJ 78 (NC) and submitted that whenever there is an allegation of fraud and manipulation, the only remedy available is to approach a Civil Court and not the Consumer Forum. In our view, the said decisions also are of no assistance to the complainant because on the basis of the evidence and documents produced by the parties, the Consumer Forum would dispose of the case on merits. Under those circumstances, it is open for the Forums constituted under the Consumer Protection Act to give relief in favour of the person who establishes deficiency in service. In the instant case, the District Forum should have awarded punitive damages, as there is a clear case of "deficiency" on the part of the O.P. Bank. But since the complainant has not preferred any appeal as against the impugned order for non-granting punitive damages by the District Forum, we do not propose to consider the said aspect. In the result, we pass the following order: The appeal is dismissed with cost of Rs. 10,000 payable by the O.P. in favour of the complainant. Appeal dismissed.