Judgment & Order dt. 06.07.2017
Dishonour of six cheques, issued by the present complainant, by OP-1 i.e. Central Bank of India, Balurghat Branch has virtually opened the pandora’s box between the parties and to get rid of it, this complaint has been filed u/s 12 of the C.P. Act, 1986 by the complainant Haripada Das, praying for compensation from the OP/Bank, alleging deficiency in service on their part. The facts leading to the filing of the instant case may be epitomized as follows.
The complainant is a businessman. He does the business of wooden furniture manufacturing and this is his only source of income by means of self-employment. He obtained a cash credit loan from the OP-Bank to the limit of Rs.5 lakh and that he has been doing his business for last 10 years without any hassle having obtained the facilities of his cash credit loan account. For the purpose of his business, once in the month of January, 2017, the complainant purchased a bulk quantity of wood from the forest department and others. He made the payment for the wood by way of six cheques bearing cheque Nos. 1) 014526 dt. 2.2.2017 of Rs.35,000/-, 2) 014529 dt. 2.2.2017 of Rs.35,000/-, 3) 014530 dt. 2.2.2017 of Rs.35,000/-, 4) 014534 dt. 2.2.2017 of Rs.35,000/-, 5) 014535 dt. 2.2.2017 of Rs.35,000/-, and 6) 014527 dt. 2.2.2017 of Rs.30,000/- drawn by him on his cash credit account maintained with the OP-1 Bank in favour of his vendors. But, all the cheques were dishonoured; payments of those cheques were not cleared by the OP-1. OP-2 did not get any clearance of cheque from the OP-1 and he informed the vendors of the complainant accordingly. Five cheques as Sl. No. 1 to 5 as above were returned with comment ‘exceeds arrangement’; and one cheque as referred to above in Sl. No. 6 was returned with comment ‘referred to drawer’.
According to the complainant, the OP-1 has deliberately dishonoured his cheques resulting in a huge loss of his business and therefore, the instant case has been filed praying for passing an order of compensation to the tune of Rs.5 lakh against both the OPs. Hence, the case.
Both the OPs have entered into appearance and have also filed separate written versions to contest herein. According to OP-1 i.e. Central Bank of India, Balurghat Branch, the complainant is a consumer of them and he took a cash credit loan to the limit of Rs.5 lakh for running wooden furniture manufacturing business. He changed the nature of his business; he started to deal in business of wooden logs with the forest department and others including a construction company also. That apart, he did not renew his loan account as per norms of the bank, which requires the complainant to renew it every year. As the complainant has changed the nature of his business and as he has not renewed his loan account in terms of norms of the bank, his cheques were returned dishonoured to prevent the misuse of money of the Bank. There has been no deficiency in service committed by the OP-1 having returned the cheques dishonoured and as such complainant’s case should be dismissed in limini.
According to the OP-2, he has no liability for dishonour of cheques of the complainant. He received the information of the cheques being not cleared by the OP-1 and accordingly, he being duty bound informed his account-holders of the facts of the cheques being dishonoured. He has committed no act of deficiency in service and as such the case be dismissed against him.
Upon the averments of the parties, following issues are formulated for effective adjudication of the matter in dispute.
ISSUES:
- Has the OP-1 committed deficiency in service by not giving clearance to the cheques drawn by the complainant in the account maintained in his bank?
- Is the complainant entitled to get compensation as prayed for ?
Evidence of the parties:
The complainant has filed an affidavit-in-chief and also the documents as per firisti in support of his case. On the other hand, the OP-1 has filed some documents also mentioned in the firisti and all these are kept in the record.
DECISION WITH REASONS
Issue Nos.1 & 2:
Ld. Lawyer appearing for the OP-1 has contended that the cheques were returned dishonoured for the reason that the payment exceeds arrangement. According to him, the cash credit loan was sanctioned in favour of the complainant for the purpose of conducting wooden furniture manufacturing business. The loan amount must be utilized in commensurate with the purpose for which it was sanctioned and if it is not utilized for the purpose it was sanctioned for, the bank is at liberty to stop payment of money from the said account in order to prevent the abuse of money of the bank. According to the submission of OP-1, the complainant has started business of wooden logs with the forest department and others and thus, he changed the nature of his business. He has violated the terms of the agreement with the bank; he has exceeded arrangement mutually agreed between the bank and the complainant at the time of cash credit account and therefore, the cheques of the complainant have not been allowed to be encashed. Ld. Lawyer appearing for the complainant has submitted with his eloquence that the complainant has never violated the terms of agreement / arrangement made between him and the bank. He never changed the nature of his business and the business remains the same as it was at the time of starting the business 10 years ago. His business is wooden furniture manufacturing business. Raw materials like wood, paint etc. are essentially required to run such business and, if any one purchases all the raw materials for his manufacturing business of such kind from any other person, it can never be said that the nature of the business was changed. So, according to him, there is no substance in the contention of the OP-1 as pointed out above and that the clearance to the cheques has been denied by the OP-1 with sheer motive to harass the complainant.
There is no dispute that the cash credit loan was sanctioned in favour of the complainant for running wooden furniture manufacturing business. It is also well-known to all that such businesses essentially require purchase of wood from outside. Purchase of wood from outside will not be a necessity to the trader, if the trader grows a garden on his own land to obtain such wood for his business. If it is not possible for a trader to grow such a garden for himself, he has no other alternative but to purchase the wood from someone else. Materials like wood and paint etc. would not come ex-nihilo; these are to be purchased from others. In the instant case the complainant wanted to purchase nothing but wood for his business from some other person, be that the forest department or any other construction company, and by doing that, he cannot be said to change the nature of his business as alleged by the OP-1. The nature of his business has always remains unchanged as it was at the time of its inception. This being so, the contention of OP-1 appears to be fully devoid of any merits.
It has also been contended on behalf of the OP-1 that the limit of loan account of the complainant got fully exhausted on the date of presentation of the cheques and that the cheques were therefore, not given any clearance. The OP-1 has not filed any documents to prove that the maximum limit of loan as sanctioned to the complainant by the Bank came to its full saturation on the very date the cheques were received by them for clearance. Had the Bank been able to show it, the case would have been considered favourably. The burden of proof lies upon the Bank and such burden could have been discharged by the Bank by filing documents which are in its custody. Not a scrap of paper has been filed on behalf of Bank i.e. OP-1 to show that the cash credit limit came to full saturation on the relevant day of receipt of the cheques. Why those vital documents are not produced before the Forum? In absence of such documents, an adverse inference is drawn against the OP-1 to the effect that the cash credit limit of the complainant was never exhausted at the relevant time and limit was as sufficient as to satisfy the clearance of the cheques of the complainant at that point of time. Regard being had to these aspects also, we make no scruple to say that the OP-1 acted arbitrarily in refusing clearance to the cheques of the complainant and such arbitrary act of OP-1 is sheer deficiency in service.
Ld. Lawyer appearing for the OP-1 has also urged before the Forum that the complainant is required to renew his account from year to year in terms of the banking rules as applicable to cash credit loan and the complainant has not renewed his account accordingly. So, the complainant is not, as goes his submission, entitled to get any clearance of the cheques presented by him. To prove his contention, one application (photocopy) dt. 3.2.2017, filed by the complainant before the Bank, has been filed before this Forum to substantiate that the complainant applied for renewal of his account on 3.2.2017 i.e. after the date of presentation of the cheques.
The above submission of Ld. Lawyer appears to be very much flatulent. Banking rules do never require that a cash credit account is to be renewed year by year. What is required is that the stock of the loanee is to be reviewed by year to year by the Bank and the Bank may diminish the credit limit of the loanee, if it is found on review by the bank that the stock value of the business of loanee has decreased. “Review” and “Renew” are not synonymous terms. In case of cash credit account, the bank is under obligation to review the stock of the loanee and the said obligation has not been discharged by the bank. It is not also the case of the bank that the cash limit was lowered on review of the stock of the complainant and that the said limit, as it stood on reduction, was not enough to give full clearance to the cheques. Had the case of the bank been so, it would have been acceptable. The fault lies with the Bank itself; it did not review the account of the complainant and failed to discharge its obligation. Instead, what did it do? It closed the complainant’s account and issued notice to the complainant on 25.5.2017 u/s 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, demanding a total amount of Rs.2,38,708/- as due from the complainant. But, no statement of account has been annexed to that notice by OP-1 to show the current status of loan as on 25.05.2017. OP-1 never files such statement of account before the Forum also to show that the credit balance of the complainant was ‘0’ on 2.2.2017 i.e. date of presentation of the cheques. It seems that the bank is not prepared to give the information about the statement of account either to the Forum or to the complainant. Why is maintained such secrecy? The OP-1 is the best person to know it. But, we must say that the bank has committed deficiency in service by not filing the statement of account either before the Forum or to the complainant. We expect more transparency in dealing of the bank i.e. OP-1. It is not expected that the OP-1 will traverse a crepuscular zone in their dealing with the innocent public. Be that as it may, OP-1 has committed deficiency in service by not allowing clearance of the cheques presented by the complainant, especially when the credit limit of his account was not exhausted and it was as sufficient as to enable the clearance of the cheques presented by the complainant. Due to dishonour of cheques, the complainant has certainly suffered loss in his business.
Now to see, how the loss of the complainant in his business can be ascertained? The business is running one and it still goes on. To maintain continuity of his business, a person like the complainant is required to borrow money of the cheques from someone else and in that case he will have to pay interest upon that amount. Payment of interest upon that amount is the yardstick to ascertain the loss suffered by the complainant and this interest is ascertained at the rate of 15% p.a. The OP-1 will have to pay interest @ 15% p.a. to the complainant upon the entire amount of all the cheques by way of compensation for its deficiency in service. No other remedy has been prayed for by the complainant and accordingly he is granted no other remedy. OP-2 is found to have committed no deficiency in service at all. In the result, the case succeeds in part.
Hence,
O R D E R E D
That the complaint-case be and the same is allowed on contest against the OP-1 with costs and dismissed on contest against the OP-2 without costs. The costs of litigation is quantified at Rs.2,000/-
The OP-1 is directed to make payment of interest @ Rs.15% p.a. on Rs.2,05,000/- i.e. the entire amount of 6 cheques from 2.2.2017 i.e. the date of presentation of the cheques to OP-1 till the full realization of the amount within a month of this order, failing which the complainant is at liberty to recover the whole of the amount from the OP-1 by execution of this judgment.
Let a plain copy of this order be supplied free of cost at once to the parties concerned.
