BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD.
F.A. No. 1354/2005 against C.D No. 178/2002, Dist. Forum, Srikakulam
Between:
The Manager
Andhra Bank
Akkupalli
Srikakulam Dist. . *** Appellant/
O.P. No. 1.
And
1. Ambati Polamma
W/o. Late Koormayya (died) *** Respondent/
Complainant
2. The Chief Manager
State Bank of India
Palasa, Srikakulam Dist. *** Respondent/
O.P. No. 2
3. The Branch Manager
State Bank of India
Doliajan Branch
Assam State. *** Respondent/
O.P. No. 3.
4. Koda Chandramma
5. Jolangi Hymavathi
6. Jogi Balamma
7. Ambati Vanakshi
All are R/o. M. Gaduru
(Madasa Gaduru),Akkupalli,
Vajrapukotturu Mandal
Srikakulam Dist. *** Respondents (4to 7)/
LRs of complainant.
Counsel for the Appellant: Mr. A. Krishnam Raju
Counsel for the Respondents: Mr. M. Narender Reddy (R2)
None for Resp/Complainants
F.A. No. 249/2005 against C.D No. 178/2002, Dist. Forum, Srikakulam
Between:
1. The Chief Manager
State Bank of India
Palasa, Srikakulam Dist.
2. The Branch Manager
State Bank of India
Doliajan Branch
Assam State. *** Appellants/
O.Ps 2 & 3.
And
1. Ambati Polamma
W/o. Late Koormayya (died) *** Respondent/
Complainant
2. The Manager
Andhra Bank
Akkupalli
Srikakulam Dist. . *** Respondent/
O.P. No. 1.
4. Koda Chandramma
5. Jolangi Hymavathi
6. Jogi Balamma
7. Ambati Vanakshi
All are R/o. M. Gaduru
(Madasa Gaduru),Akkupalli,
Vajrapukotturu Mandal
Srikakulam Dist. *** Respondents (4 to 7)/
LRs of complainant.
Counsel for the Appellant: Mr. M. Narender Reddy
Counsel for the Respondents: Mr. A. Krishnam Raju (R2)
None for Resp/Complainants
QUORUM:
HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT.
&
SRI G. BHOOPATHY REDDY, MEMBER.
WEDNESDAY, THE TENTH DAY OF SEPTEMBER TWO THOUSAND EIGHT.
ORAL ORDER: (Per Hon’ble Sri Justice D.Appa Rao, President.)
***
These appeals are preferred by the opposite parties against the order of the Dist. Forum, Srikakulam in directing them to pay Rs. 3,00,000/- with interest and compensation together with costs.
The case of the complainant in brief is that she presented a demand draft Dt. 13.6.2001 for Rs. 3,00,000/- standing in her name drawn on R2 SBI, Palasa the appellant in F.A. 1354/2005 with R1 Andhra Bank, Akkupalli the appellant in F.A. No. 249/2005 for collection and payment. When the demand draft was presented R1 returned the demand draft stating that State Bank of India, Dolijan branch (R3) ordered ‘stop payment’. She had taken the demand draft for consideration, none of the banks can return the demand draft unpaid. The amount was intended to be utilized for the purpose of performance of marriage of her daughter. The marriage was scheduled on 20.3.2002. Since the amount was not received she could not perform her marriage thereby suffered insult in their community. Non-payment of amount covered under the demand draft was on whimsical grounds. When she got issued legal notice on 22.3.2002 through her advocate, they did not give any reply. Therefore, she filed the complaint claiming refund of Rs. 3,00,000/- with interest @ 18% p.a., together with damages to a tune of Rs. 1 lakh and costs.
The Andhra Bank, Akkupalli (R1) the appellant in F.A. 249/2005 resisted the case. The complainant was having S.B. account in their branch. She presented a demand draft on 19.6.2001 for Rs. 3,00,000/- issued by SBI, Duliajan Branch, Assam for collection from SBI, Palasa. Accordingly, it has sent the same to SBI, Palasa for collection which in turn returned with objection memo stating that ‘payment stopped by the drawer. Therefore, it could not credit the amount nor paid the amount. It has also received a letter from the original purchaser i.e., Sri A. Appalaswamy directing SBI, Duliajan to return
the D.D without collection and payment. So also R3 SBI, Duliajan by letter Dt. 17.11.2001 directed it to send back the D.D. as the purchaser Mr. A. Appalaswamy demanding return of the instrument. Sri A. Appalaswamy and Smt. A. Saraswathi are the joint account holders. She got issued a registered notice Dt. 10.1.2002 demanding to re-transmit the instrument in view of their inter se family problems. At any rate, since it did not receive any amount, it was not able to pay any amount to the complainant. There was no deficiency in service on its part. It prayed for dismissal of the complaint with costs.
The State Bank of India, Palasa (R2), the appellant in F.A. 249/2005 resisted the complaint. While admitting that the complainant was having S.B. account in Andhra Bank, Akkupalli and that the complainant has presented a demand draft Dt. 13.6.2002 with the said bank which in turn sent it for collection, it alleged that there was no privity of contract between it and the complainant. It was not having any account of the complainant. Sri A. Appalaswamy, son of the complainant withdrew amount from the S.B. account maintained with SBI, Duliajan (R3) without giving proper discharge by both the depositors. It was not exclusive amount of the purchaser alone. Sine the amount was in joint S.B. account, both of them had to withdraw. One joint account holder Sri A. Appalaswamy cannot withdraw the amount and purchase the demand draft. It amounts to playing fraud not only on the bank but also on the joint account holder. After coming to know that the discharge was not made properly and on a letter from Sri A. Appalaswamy Dt. 20.6.2001 who purchased the demand draft requested R3 bank to stop payment of the amount to it the payee bank due to some family problems. After considering the same, it has no other go than to inform the fact of stop payment to R2 telegraphically to return the draft by marking a copy to R1. Accordingly, after receiving telegraphic message it returned the same. It has also received a
lawyer notice Dt. 9.1.2002 stating that Smt. A. Saraswathi and Sri A. Appala Swamy were having joint S.B. account with R3 and without knowledge of other joint account holder A. Appalaswamy withdrew Rs. 3 lakhs. After coming to know of it Smt. A. Saraswathi got issued registered notice to it by marking a copy to R3 for which suitable reply was given at the earliest with that of the letter given by A. Appalaswamy that the withdrawal was illegal. Basing on the information, R3 sent telegraphic notice to it and that it was justified in stopping payment. There was no default, dereliction, or deficiency in service on its part. It was not aware of non-performance of marriage of her daughter due to non-payment of the amount. It has nothing to do with the non-payment of money. Therefore, it prayed for dismissal of the complaint.
R3 State Bank of India, Duliajan did not file any counter. However, filed written objections reiterating the facts stated by R2. It alleged that A. Appalaswamy purchased a demand draft for Rs. 3,00,000/- in favour of complainant from its branch on 13.6.2001. But subsequently by letter Dt. 20.6.2001 he requested it to stop payment to the payee due to some unavoidable family problems and financial hardship. Considering the request they requested the payee bank to return the demand draft unpaid to the payee. It has rightly honoured the instructions of the purchaser of the demand draft and did not commit any deficiency in service. Instead of suing the purchaser of the demand draft she has wrongly impleaded it. It was not liable for any deficiency in service and therefore prayed for dismissal of the complaint with costs.
The complainant in proof of her case filed her affidavit and Exs. A1 to A7, while the R1 & R2 filed affidavit evidence and Exs. B1 to B8. The Dist. Forum after considering the evidence placed on record opined that the complainant was entitled to Rs. 3 lakhs covered under the demand draft from all the respondents with interest @ 18% p.a., together with compensation of Rs. 25,000/- , and litigation expenses of Rs. 1,000/- and costs of Rs. 500/-.
Aggrieved by the said decision the Andhra Bank, Akkupalli (R1) preferred F.A. No. 1354/2005 contending that the Dist. Forum did not appreciate either the facts or law in correct perspective. As soon as the complainant submitted the demand draft, it has sent to R2 without any delay. When the demand draft was returned by R2 with endorsement ‘stop payment’ it could not pay the amount. Unless the amount is collected from SBI, it cannot pay the amount to the complainant. Therefore, it prayed that the appeal be allowed against it.
The State Bank of India, Palasa & Doliajan (R2 & R3) preferred F.A. No. 249/2005 contending that the Dist. Forum ought not to have awarded the amount covered under the demand draft or compensation towards deficiency in service, when it had received a letter from the purchaser of the demand draft not to honour the same. A legal notice was received by them from one of the joint account holders under Ex. B8 Dt. 9.1.2003 not to pay the amount as the joint account holder A. Appalaswamy had withdrawn the amount and purchased the demand draft illegally. Therefore, it cannot be said that there was deficiency in service in stopping payment, and therefore prayed that the appeal be allowed.
It is an undisputed fact that A. Appalaswamy and Smt. A. Saraswathi were having joint S.B. account with R3 SBI, Doliajan branch. A. Appalaswamy purchased two demand drafts one for Rs. 3 lakhs Dt. 10.6.2001 and another for Rs. 2 lakhs Dt. 23.5.2001 drawn in favour of complainant Smt. A. Polamma, mother of A. Appalaswamy. It is also not in dispute that Smt. A. Polamma was having S.B. account with R1 Andhra Bank, Akkupalli. Since she being the payee presented the demand draft for Rs. 3 lakhs on 23.6.2001 with R1 which in turn sent it for encashment to R2 SBI, Palasa. R2 in turn returned the demand draft with endorsement ‘stop payment’. On that the demand draft was returned to the original bank which has issued the demand draft viz., R3.
The complainant alleges that since she was payee under the demand draft, entitled to the amount. The SBI could not have returned the demand draft on the ground that there was dispute between her son and daughter-in-law.
It is settled proposition of law that the relationship of the purchaser of a draft and the bank from which the draft has been purchased is merely that of the debtor and creditor. The purchaser of the draft can therefore call upon the bank from which he has purchased it to cancel the draft and pay back the money to him at any time before the draft has been delivered to the payee. However, once it was delivered to payee, the bank cannot refuse to pay the amount.
In Tukaram Bapuji Nikam Vs. The Begaum Bank Ltd., reported in AIR 1976 Bom 185; while considering this aspect of the matter opined that “ Once the draft has been delivered to the payee or his agent the purchaser is not entitled to stop payment of the draft to the payee and the bank cannot refuse to pay the amount thereof unless there is reasonable ground for disputing the title of the person presenting the draft.”
In this case A purchased gram dal from B of Kolhapur. The agreed price of the said goods was Rs. 863.94, out of this he made part payment of Rs. 180/- and sent a demand draft for the balance of Rs. 683.94. A on hearing from some motor drivers that there had been some commotion at Kolhapur and grain shops and trucks carrying grains had been looted there, sent instructions to the bank to stop payment of the draft. The bank declined to make the payment on presentation. The bank was held liable to pay Rs. 683.94 with interest @ 6% p.a.
In Sidh Nath Shukla Vs. Punjab National Bank of India Ltd. Reported in AIR 1960 All. 238, the Allahabad High Court held that before the draft is delivered to the payee it is open to the purchaser to get the draft cancelled. As long as the draft is retained by the purchaser he can treat the bank which issued the draft as his own debtor and can as a creditor demand the amount from the bank and the bank will be liable to satisfy the demand. The only thing it can insist on is that the draft should be handed back to it so that there may be no chance left of any other person making a claim on its basis. Once it is delivered to the payee it can be paid to the purchaser only with the consent of the payee.
In Malik Barkat Ali Vs. Imperial Bank of India, (1945) 15 Comp. Cas. 108, the Lahore High Court held that “a bank cannot stop payment of a draft unless there is some doubt as to the identity of the person presenting it. The purchaser is not entitled to ask the issuing bank to stop payment on grounds such as want of consideration in respect of which the draft has been issued at his instance. It was observed that section 10 of Negotiable Instruments Act relating to payment in due course seems to indicate that the question with regard to which a bank has to satisfy itself is that of the title of the person presenting the draft. If a draft is lost, for example, a risk may arise that it will
be presented by someone who is not entitled to be the holder and there may be a forged endorsement. In such cases, the purchaser may reasonably ask the bank to be on its guard against presentation by wrong person and if the bank does not exercise the necessary precautions, the purchaser may sue the bank for negligence.”
In Vijaya Bank Vs. Kiran & Co. AIR 1983 Mad. 357 a partnership firm purchased an account payee draft payable to ‘R’ at Bombay. R. did not receive the draft and instructed the Bombay Branch to stop payment. The purchaser of the draft also instructed the Bombay Branch to stop payment. In reply the Bombay branch informed the firm that the draft had been presented through the bank at Madras and honoured. The firm filed a suit against the Bombay as well as Madras branch as both had acted negligently. An objection was raised that the court at Madras had no jurisdiction to try the suit as the entire cause of action arose at Bombay and the court at Bombay alone had jurisdiction to try the suit. Held, that the cause of action arises at Madras where the draft was obtained.
In the light of above decisions, it may be said that the draft of Rs. 3 lakhs that was taken by his son was received by the payee i.e., the complainant herein and presented it to the bank i.e, SBI, Palasa (R2) ought to have honoured the same despite a telegram was received from R3. Simply because one of the joint account holders raised a plea that the amount was withdrawn unjustifiably, it could not have stopped payment as the draft was received by the payee. In fact SBI, Duliajan in order to justify stoppage of payment filed Ex. B8 notice issued on 9.1.2002 by Smt. A. Saraswathi to R3 with regard to settlement of disputes between the joint account holders and purchase of demand drafts in favour of complainant. However, we may state herein that we
are not concerned with inter se disputes between A. Appalaswamy and his wife. A demand draft was purchased and handed over to the payee and the payee on turn presented it for encashment, the bank has no authority to stop payment. Since, evidently, A. Appalaswamy is one of the joint account holders entitled to withdraw the amount and purchase demand draft which he did and sent it to his own mother. The bank ought not to have stopped payment of amount more so on a mere letter issued by one of the joint account holders.
The appellants SBI could not show any provision wherein they could stop payment when the demand draft was in the hands of the payee. Undoubtedly, this constitutes deficiency in service. They could not have asked SBI, Palasa to stop payment. She was entitled to the amount on the tenor of the document. At any rate, the Andhra Bank, Akkupalli (R1) cannot be held responsible or liable for the amount covered under the demand draft, when it was presented, it has promptly sent it to SBI, Palasa for collection. The SBI has stopped payment. Necessarily the appeal filed by Andhra Bank in F.A. No. 1354/2005 is liable to be allowed.
The complainant has alleged that she has suffered unnecessary monetary loss due to refusal of payment of amount under the demand draft. She could not even perform marriage of her daughter. Her reputation was lowered in the society. These averments in the affidavit were not controverted. Therefore, awarding compensation was just and proper. We do not see any merits in the appeal preferred by SBI in F.A. No. 249/2005.
In the result the appeal preferred by Andhra Bank, Akkupalli in F.A. No. 1354/2005 is allowed and the appeal preferred by State Bank of India, Palasa and Duliazan in F.A. 249/2005 is dismissed, confirming the order of the Dist. Forum against them. However, in the circumstances of the case parties are directed to bear their own costs. Time for compliance four weeks.
PRESIDENT MALE MEMBER
Dt. 10. 09. 2008.
