STATE BANK OF INDIA vs ASHOK MANWANI

In this revision petition filed by the Petitioner/Opposite Party, there is challenge to order dated 3.1.2011 passed by Chhattisgarh State Consumer Disputes Redressal Commission, Pandri, Raipur (for short, ''State Commission'') in First Appeals No.464 and 476 of 2010.

Brief facts are that deceased Ashok Manwani-Complainant deposited Rs.1,00,000/- in his sole name under Reinvestment Plan of Petitioner under "Special Term Deposit Receipt" (hereinafter referred to as "STDR") for a period of 36 months expiring on 01.01.03. On maturity, sum of Rs.1,40,514/- was payable. In March 2000, in the capacity of proprietor of M/s. Panacea Investments, he applied for dealership of Inter Connected Stock Exchange of India Ltd. (hereinafter "ICSE"), to acquire trading rights in the ICSE. As per terms and conditions of ICSE membership, he was required to deposit Rs.5,00,000/- as Admission Fee, Rs.25,000/- as Annual Subscription, Rs.5,000/- for SEBI Registration Fee, Rs.8,925/- as Insurance Premium, Rs.5,000/- towards initial contribution to Settlement Guarantee Fund and Rs.2,00,000/- as Security Deposit (Base Minimum Capital i.e. BMC) Out of BMC of Rs.2,00,000/-, Rs.1,00,000/- was payable by Demand Draft in favour of ICSE and balance Rs.1,00,000/- by way of D/D or Fixed Deposit for a period of 2 years, or Bank Guarantee or Pledge of Securities. The STDR of Rs.1,00,000/-, which was available with the petitioner was utilized for this purpose and petitioner was requested to mark lien over STDR No.894860 in favour of ICSE. The petitioner marked lien over the bank deposits, the STDR, in favour of third party. It is further averred, that as per Banking Law, marking of lien over a Bank Deposit in favour of a third party is not permissible and it never creates any right or any charge over STDR. But respondent fulfilled requirements and other conditions of ICSE and then was granted dealership by the ICSE, but ICSE failed to keep its promises and after a long spell of correspondence, respondent was forced to close down his terminal in July 2001 due to incurring heavy losses. He requested ICSE to return all his deposits including the captioned STDR of Rs.1,00,000/-. He was apprehending misuse of lien by the ICSE, so he requested the petitioner to cancel lien over the STDR, by revoking the instructions of marking lien, by letter dated 17.07.02. It was also requested that no payment be made to the ICSE. However, petitioner did not initiate any action to safeguard customer''s interest and ICSE did not return the said STDR, despite written request by the respondent. Then a request was made to the petitioner for making payment of the STDR on maturity, on the basis of respondent''s discharge on the photocopy of original STDR. Respondent also requested to renew the principal amount for further period of 36 months and credit the interest in his current account with the petitioner.

On 09.01.03, petitioner renewed the principal amount for a further period of 36 months by issuing another STDR No.655848 with its maturity date as 01.01.06. The net interest amount of Rs.35,100/- after deduction of TDS Rs.5,414/- was also credited to respondent''s account. The renewed STDR was delivered to the respondent. It was found by the respondent that on the renewed STDR also, there was a mark of lien in favour of ICSE, though no such instruction was given by him to the petitioner. Then objections were raised by the respondent before the petitioner, but mistake was not corrected. When pre-mature payment of STDR was demanded by the respondent, then petitioner demanded production of original STDR No.894860, which was in possession of the ICSE. Then again protest was made by the respondent and notice was sent through Advocate. However, petitioner clearly refused to discharge the renewed STDR and illegally demanded refund of Rs.40,514/-. This action of petitioner comes in the category of deficiency in service and refusal to make payment of the STDR of the respondent. The petitioner disbursed the amount under old non-existent STDR No.894860 to the ICSE on 26.02.05, declaring the renewed STDR No.655848 as null and void.

So, complaint was filed before District Forum seeking direction to the petitioner to pay the amount of STDR No.655848 along with interest @ 12% p.a. and also to pay Rs.1,00,000/- as compensation for the amount, which respondent had borrowed from the market because pre-mature payment was not allowed by the petitioner in spite of prayer. Further, compensation of Rs.25,000/- was also sought under the head mental pain and agony.

Petitioner in the written version refuted all the allegations and averred that lien in favour of third party ICSE was marked over STDR of the respondent on his own request, which was perfectly legal and as per rules of the Bank. It has also been averred, that once lien was marked in favour of a third party, then it cannot be revoked by the respondent without permission of that third party. The Bank also issued an undertaking to the third party ICSE in respect of lien. Therefore, consent of that third party was necessary for revoking that lien. As respondent failed to obtain the original STDR from ICSE, therefore deposit was renewed for a further period of three years, at the request of respondent along with mark of lien in favour of ICSE. There was already instruction of the respondent to that effect. It has also been averred that ICSE demanded payment of that STDR along interest and petitioner was required to make payment in view of the undertaking given by it. It has also been averred, that marking of lien on STDR of Rs.1,00,000/- was for commercial purpose, as respondent was having connectivity with ICSE and SEBI. In view of this commercial nature of transaction, consumer complaint is not maintainable. Marking lien over STDR was unconditional and binding upon the petitioner as well as respondent, in view of the interest credited by the respondent himself, in favour of third party and was paid to that third party. In doing so, petitioner has committed no deficiency in service.

District Forum vide order dated 06.08.07, dismissed the complaint on the ground that complicated questions in respect of banking contract, bailment and stock exchange are involved in the matter, which needs detailed inquiry and trial and also opinion of an expert, which can only be done by a Civil Court and it is not possible for it to do this exercise in a summary proceeding by way of consumer complaint. It was also found that ICSE, in whose favour the lien was created, has also not been made as a party, so respondent was not entitled of getting any relief.

This order was challenged by the respondent before the State Commission vide Appeal No.448/07, which was disposed of by order dated 27.04.09, wherein it was found that questions which are involved in this matter are not complicated and can be resolved by the District Forum. The controversy between the parties lies in a narrow compass as to whether the amount which was deposited by the respondent, had become payable to the respondent and whether in spite of the fact that it had become payable, it has not been paid then it is definitely deficiency in service. But on the contrary, if the amount was not payable to the respondent and therefore it was retained by the petitioner, then it may not be deficiency in service.

The State Commission directed the petitioner to produce original instructions of the respondent in respect of creating lien and also to adduce evidence to show whether they sought any information from ICSE of fresh instructions before the date of maturity of FDR. If no default was committed and if there was instruction to mark lien in the renewed FDR also, then the amount did not in fact became payable to the respondent and complaint can be ordered to be dismissed. Thus, District Forum was required to see whether any instruction was given by the respondent for marking lien for a particular period and when such instruction was given by the respondent, then whether on maturity of the STDR any fresh instruction was given by the respondent for marking lien over it or whether original instruction was to be continued. It was also to be seen as to whether any default has been committed by the respondent, so that security by way of STDR can be encashed by the ICSE.

After remand of the matter, no evidence was adduced by the petitioner in this regard, neither in the form of instruction by the respondent to the petitioner for creating lien on the STDR nor in the form of any material or document to show that default was committed by the respondent, making the security liable to be forfeited.

District Forum after providing appropriate opportunities to both parties, again heard the matter and decided against the petitioner. Vide order dated 30.6.2010, it allowed the complaint and passed the following directions; " a) The non-applicant bank will pay the maturity amount of Rs.1,24,972/- for both the first and second period of Rs.1,00,000/- deposited in STDR No.655848 to the complainant.

b) The non-applicant bank will pay interest at the rate of 6% on the entire amounts after 01.01.2006 on the maturity amount of Rs.1,24,972/- for both the first and second period of the amount of Rs.1,00,000/- deposited in STDR No.655848 till the date of its payment.

c) The non-applicant bank will pay Rs.5,000/- (Rupees five thousand only) to the applicant for mental agony due to above said act.

d) The non-applicant bank will pay Rs.1,000/- (Rupees one thousand only) to the applicant as counsel fee and cost of the case."

Petitioner being aggrieved, filed (Appeal No.464 of 2010) whereas, Respondent/Complainant also filed (Appeal No.476 of 2010) before the State Commission, which vide common impugned order dated 3.1.2011, dismissed the appeal of the petitioner and allowed the appeal of the respondent in part and passed following directions; " the amount of STDR No.655848 be paid to the complainant by the OP with accrued interest as agreed between the parties from the date of deposit till the date of maturity and thereafter as per rules of the Bank till date of payment. So far as the award of compensation for mental agony and award of cost of litigation is concerned, it requires no interference."

Now, petitioner has filed the present revision.

During pendency of the revision, complainant had died. Thereafter, petitioner filed an application for substitution of legal heirs of the deceased-complainant. Notice of the application was issued to the legal representatives of the deceased-complainant. Despite service, none of the legal heirs of the complainant appeared. Hence, vide order dated 18.1.2013, all the legal heirs of deceased-complainant were proceeded ex parte.

I have heard learned counsel for the petitioner and gone through the record.

It is submitted by ld. counsel that petitioner is contractually bound to honour its commitment to ICSE by making the payments as and when demand is made. Further, ICSE has accepted the lien over the fixed deposit in lieu of the cash deposit and after committing the default and not settling his account with ICSE, the complainant cannot ask for payment of fixed deposit.

With regard to lien on the term deposit for rupees one lac made in favour of the complainant, petitioner has relied upon letter dated 27.11.2000 addressed by ICSE to the petitioner in which, ICSE has stated that, Term Deposit Receipt No. 894860 issued in favour of the complainant, is under their lien. Further, petitioner vide its letter dated 1.1.2000 addressed to ICSE had confirmed about the unconditional lien on the said receipt. Therefore, the order passed by both the fora below, are liable to be set aside.

The State Commission in its impugned order observed; " 13. It appears that when on the date of maturity of the STDR no claim was preferred by the Stock Exchange and when nothing was brought to knowledge of the Bank regarding any default of the dealer, then the OP Bank permitted the complainant to encash the STDR and to deposit the interest of STDR in the Bank account of the complainant and issued a fresh STDR, in the name of the complainant, of the principal amount. It appears that this was not an act of renewal of STDR, it was an act of encashment of previous STDR and thereby the interest was deposited in the bank account with permission to withdraw and new STDR of the principal amount, in the name of the complainant, was prepared. 14. The OP bank has not filed any document to show the specific instructions given by the complainant in writing for marking lien in favour of Stock Exchange or in favour of anyone. The Bank has also not filed any document of giving instruction by the complainant regarding marking of lien on the original STDR for indefinite period. The case of the complainant is that the lien was to be marked for a period of three years. As per letter Annexure OP-5 of the OP Bank addressed to the Stock Exchange, lien was to be continued till the date of maturity of the STDR and claim was required to be preferred by the stock exchange on or before the date of maturity and as no claim was preferred so a fresh STDR in the name of the complainant was prepared, which has been referred as renewal of original STDR on maturity by the bank in letter dated 24.12.2003. Whatever may be its name, but it was a fresh STDR in the name of the complainant and there was no instruction given by the complainant for marking any lien in favour of the third party, on such fresh STDR or renewed STDR. In the original instruction also no period has been specified for marking lien and it has not been stated that the lien will continue even after the date of maturity. The endorsement of marking lien was also not signed by the complainant. In absence of original instruction, given by the complainant to the bank, for marking such lien, it is difficult to draw any conclusion in favour of the bank particularly keeping in mind action of the bank that after the date of maturity of STDR, it permitted the complainant to encash the STDR on the basis of photocopy and to deposit its interest in its bank account and prepared a fresh STDR in the name of the complainant. This action clearly shows that at that time, the OP bank was also of this opinion that the period of lien has already expired. 15. Counsel for the OP Bank submitted that there was an endorsement on the fresh STDR also in respect of lien. It is just possible that such endorsement might have been made by employees of the OP bank by way of abundant caution, but unless there is some instruction given by the complainant, such endorsement does not create any right of a third party on the amount of fresh STDR. Annexure-OP-3, which has been referred above in which the bank has stated that the Exchange was required to make demand for payment of the amount of STDR on or before the date of maturity, incase of default of the dealer, was the copy of the undertaking given by the bank to the Stock Exchange, in compliance of its letter dated 27.11.2000, thus it was also agreed by the parties that the period of continuation of lien would be till the date of maturity of such STDR and unless there is a fresh agreement between the parties, such period was not to be extended by any party unilaterally. 16. In view of aforesaid and in view of the fact that the bank had already encashed the earlier STDR and issued a fresh STDR, the action of the bank while refusing payment of any amount against the new STDR, definitely amounts deficiency in service and therefore the order passed by the District Forum in this regard appears perfectly alright and calls for no interference. 17. On behalf of OP Bank only affidavit of one R. P. Bhat Pahri, Branch Manager has been filed before the District Forum and he was cross-examined also, at length, by the complainant. During cross-examination, he had admitted that he was posted in that branch in the month of October 2005 and remained there up to June 2006. He was not there, when request of marking lien was made by the complainant and when the lien was marked in favour of Stock Exchange and later on also, when new STDR was prepared in the name of the complainant and was handed over. Therefore, there appears no evidence in support of case of the Bank in the form of affidavit on the basis of which its action of refusal of paying any amount of STDR can be justified."

Thus, it is manifestly clear from the record of this case, that in spite of specific directions given by the State Commission after remanding the matter to District Forum, petitioner did not produce any document before the District Forum, in respect of the instructions of the complainant for creating lien or regarding the instructions from ICSE and regarding defaults made by the complainants in making payment to ICSE. Thus, deficiency on the part of petitioner, is writ large in this case.

It is well settled that under Section 21 (b) of the Act, scope of revisional jurisdiction is very limited. Under Section 21 of the Act, this Commission can interfere with the order of the State Commission where such State Commission has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity.

Hon''ble Supreme Court in Mrs. Rubi (Chandra) Dutta vs. United India Insurance Company, 2011 (3) Scale 654 has observed; "Also, it is to be noted that the revisional powers of the National Commission are derived from Section 21 (b) of the Act, under which the said power can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order, and only then, may the same be set aside. In our considered opinion there was no jurisdictional error or miscarriage of justice, which could have warranted the National Commission to have taken a different view that what was taken by the two Forums. The decision of the National Commission rests not on the basis of some legal principle that was ignored by the Courts below, but on a different (and in our opinion, an erroneous) interpretation of the same set of facts. This is not the manner in which revisional powers should be invoked. In this view of the matter, we are of the considered opinion that that the jurisdiction conferred on the National Commission under Section 21(b) of the Act has been transgressed. It was not a case where such a view could have been taken, by setting aside the concurrent finding of two fora. "

Under such circumstances, I do not find any infirmity or illegality in the impugned order. Accordingly, present revision petition stand dismissed.

No order as to cost.