F.A.No.1076 OF 2009 AGAINST C.C.NO.488 OF 2008 DISTRICT FORUM-II HYDERABAD

Between:

Supal FRP Pvt. Ltd.,
28 (Type III), Industrial Estate
Kukatpally, Hyderabad-072 rep. by
Manging Director NRV Ramana Rao
S/o N.Surayanarayana Murthy
Aged about 51 years, Occ: Managing Director

                                                                                                        Appellant/complainant

        A N D

1.     Central Bank of India
        Corporate Finance Branch, Bank Street
        Hyderabad, rep. by Asst. General Manager

2.     Dr.Ram Sangapure
        Aged about 54 years, occ: Asst. General Manager
        Central Bank of India, Corporate Finance Branch
        Bank Street, Hyderabad

3.     Umesh Rao
        Aged about 50 years, Occ: Sr.Manager
        Central Bank of India, Corporate Finance Branch
        Bank Street, Hyderabad

4.     V.Ramana Babu, S/o Subrahmanyam
        Aged about 45 years, occ: Manager
        Recovery Central Bank of India, Corporate Finance Branch
        Bank Street, Hyderabad

                                                                                                Respondents/opposite parties

Counsel for the Appellant                     Sri S.Sainathan

Counsel for the Respondents:               Sri Ch.Siva Reddy

QUORUM:           SRI SYED ABDULLAH, HON’BLE MEMBER.

                                                AND

               SRI R.LAKSHMINARASIMHA RAO, HON’BLE MEMBER

                WEDNESDAY THE TWENTY SECOND DAY OF DECEMBER

TWO THOUSAND TEN

Oral Order ( As per R.Lakshminarsimha Rao, Member)
                                          ***

1.     The unsuccessful complainant is the appellant.

2.     The facts of the case as set out in the complaint are that the complainant was sanctioned credit facilities to the extent of Rs.one crore with the opposite party no.1.  the opposite parties no.2 to 4 are the officers of the opposite party no.1 were continuously harassing the complainant for closure of the account and as such the complainant approached State Bank of India, Market Street Branch and arranged for credit facilities and account was transferred to State Bank of India, market Street Branch after payment of dues of opposite party no.1 by State Bank of India on 30.3.2007.  The opposite party no.1 have issued letter dated 11.4.2007 to the State Bank of India, market Street Branch to remit an amount of Rs.8,57,653/- plus interest of Rs.96,285/- towards cheque dishonoured by them and interest on loan account less charged to the extent of Rs.26,653/- and claimed total dues of Rs.9,80,218/- from State Bank of India. 

3.     Accordingly the State Bank of India, Market Street Branch has remitted Rs.8,57,280/- vide cheque No.918883 dated 13.4.2007.  The complainant subsequently on enquiry with the beneficiary of cheque of Rs.8,57,280/-, was informed by TIFAC, that the cheque was dishonoured by the opposite party no.1 on 31.8.2006 vide letter no.CFD/2006-07/541 of opposite party no.1.  The complainant vide their letter dated 12.4.2007 has informed Central Bank of India not to encash cheque for Rs.8,57,280/- as the cheque No.466170 dated 6.4.2006 issued in favour of TIFAC has since been dishonoured by the opposite party and hence the complainant vide his letter dated 3.7.2007 has advised the opposite party to return the bankers cheque for Rs.8,57,280/- remitted by the State Bank of India.  The opposite parties after lapse of three months vide letter no.CFB/AGM.2007-08/258 dated 12.7.2007 has returned the bankers cheque for Rs.8,57,280/- which caused monetary loss to the complainant.  Hence, the complainant filed the complaint before the District Forum seeking direction to the oppose parties to pay interest of Rs.38,000/- charged by State Bank of India, to pay Rs.4 lakh towards financial loss and to pay damages of Rs.5 lakhs.

4.     The opposite parties resisted the case contending that the opposite party bank has sanctioned several credit facilities to the complainant in 2004 and the complainant has availed all the credit facilities but he failed to repay the loan as agreed upon and ultimately the complainant was not in a position to service the interest portion of the cash credit facilities and failed to repay the installments of the term loan.  The Bank Guarantee and the letter of credit were also invoked and the bank made the payments for the same.  Since the complainant failed to service the interest and repayment of the installments, the account was classified as non-performing asset, the opposite party bank issued the notice u/s 13(2) of the SARFESI Act on 11.2.2007 which is in accordance with law and for the purpose of recovery of the amount due from the complainant. 

5.     The complainant requested the oppose party to issue the confidential report in respect of its accounts stating that the accounts are performing asset for which the opposite party bank has advised the complainant to pay the out of order position of the accounts, so that they can inform the State Bank of India that the accounts are the performing assets.  Meanwhile, the complainant issued a bankers cheque for Rs.8,57,280/- in favour of M/s Technical Information Forecasting and Assessment Council (TIFAC), New Delhi and the said cheque was presented in clearing for collection by the Union Bank of Inia, SD Area Branch, New Delhi.  Since the arrangements were exceeded, the oppostie party bank returned the cheque with endorsement ‘exceeds arrangement’.  Since there was no sufficient time to return the cheque, the information of dishonor of the cheque was communicated to Union Bank of India by way of telephone and subsequently wrote a letter dated 31.8.2006 and returned the cheque. 

6.     Subsequently the State Bank of India, Market Street Branch, Secunderabad has taken over the accounts of the complainant and paid the amount due to the opposite party bank by way of cheque dated 30.3.2007.  Since State Bank of India has issued the bankers cheque and failed to honour the same which is against the bankers practice, the respondent bank has not returned the said cheque but kept with it.  As the amount of Rs.8,57,280/- was not debited to the account of the complainant, neither the State Bank of India nor the complainant sought for return of the cheque until the complainant gave a letter dated 3.7.2007 for return of the banker’s cheque.  On receipt of the said letter dated 3.7.2007 the opposite party returned the banker’s cheque to the State Bank of India.  As the cheque was returned by the State Bank of India in terms of the complainant’s stop payment instructions, the account of the complainant was not debited with the said account.  Therefore, the complainant has not suffered any loss or damage by ay of interest or whatsoever.  The return of Banker’s cheque to State Bank of India is an issue between State Bank of India and the opposite party bank as the banker’s cheque was returned without it being honoured.  Since the account of the complainant was not debited, the complainant has nothing to do with the return of the bankers cheque to State of India.  Hence, the opposite parties prayed for dismissal of the complaint. 

7.     The Managing Director of the complainant company has filed his affidavit and the documents Exs.A1 to A8. 

8.     On behalf of the opposite parties, the branch manager of the opposite party no.1 has filed his affidavit and got marked Exs.B1 to B8.

9.     The District Forum has dismissed the complaint without there being any appreciation of facts and documents. 

10.    Feeling aggrieved by the order of the District Forum, the complainant company has filed the appeal contending that the District Forum failed to consider whether issuance of notice under Securitization Act after the entire dues were adjusted would amount to deficiency in service and that it failed to consider that the account of the complainant company has been arbitrarily classified as NPA Act.

11.    The point for consideration is whether there was any deficiency in service on the part of the opposite parties and if so to what relief the complainant company is entitled to?

12.    The complainant is the account holder with the opposite party no.1 and it was sanctioned credit facility to the extent of Rs.one crore by the opposite party no.1.  The complainant company has shifted its account to the State Bank of India, Market Street Branch, Secunderabad.  The opposite parties issued notice dated 11.2.2007 under section 13(ii) of SARFAESI Act.  It is the contention of the complainant company that after the entire dues were adjusted and the documents were transferred by the opposite party no.1 to the State Bank of India, it is not liable to pay any amount to the opposite parties. 

12.    On request of the opposite party no.1, the State Bank of India, Market Street Branch has remitted Rs.8,57,280/- through cheque No.918883 dated 13.4.2007 on the premise that the cheque was dishonoured.  The complainant company through letter dated 12.4.2007 has informed the opposite partyno.1 not to encash the cheque for Rs.8,57,280/- as the cheque No.466170 dated 6.4.2006 issued in favour of TIFAC was dishonoured. 

12     The learned counsel for the opposite parties has contended that the accounts of the complainant company were classified as non-performing assets and the complainant company has shifted its account to the State Bank of India owing to harassment caused by the opposite parties no.2 to 4 as it was not in a position to repay the loan from opposite party  no.1 bank.  There is no evidence on record to show that the opposite parties no.2 to 4 had harassed the complainant company ad that only due to such harassment, the complainant company had got transferred its account to the State Bank of India. 

13.    There is no dispute of the fact that the complainant company has shifted its account to the State Bank of India and its account with the opposite party no.1 bank was classified as NPA owing to the failure of the complainant company to repay the  amounts due to the opposite party no.1 bank.  The opposite party no.1 bank has advised the State Bank of India on 11.4.2007 to issue another cheque for Rs.8,57,280/- plus uptodate interest of Rs.18 ,700/-.  The State Bank of India issued banker’s cheque dated 12.4.2007 for Rs.8,57,280/- and it had returned the very same cheque on being presented by the opposite party no.1 with an endorsement that the payment was stopped by the complainant.  As such the amount of Rs.8,57,280/- was not debited to the account of the complainant company with SBI.  Therefore, the opposite party no.1 bank has not returned the cheque as the State Bank of India or the complainant company had not requested for return of the cheque.  

14.    The complainant has requested through letter dated 3.7.2007 for return of the cheque .  Acting upon the request of the complainant company the opposite party no.1  returned on 11.7.2007 the banker’s cheque to the State Bank of India.  These facts cast obligation on the State Bank of India to honour the Banker’s Cheque and its failure can be termed as  failure to adopt the practice in terms of the banking norms.  In the circumstances the opposite party no.1 keeping the cheque with it till the complainant company has requested for return of it, has not rendered any deficient in service. .  The question of loss of interest to the complainant company does not arise as the complainant company has issued stop payment instructions to the State Bank of India and  has not chosen to request the opposite party no.1 bank to returned the banker’s cheque till 3.7.2007 and on request of the complainant company, the opposite party no.1 bank had immediately returned the banker’s cheque to the statement of India.  The entire transaction in regard to the banker’s cheque is in between the State Bank of India and the opposite party no.1 bank.  The opposite party no.1 bank has rightly classified the account of the complainant as non-performing asset and issued notice u/s 13(ii) of the SARFAESI Act as the complainant company failed to repay the amount due to the opposite party no.1.  Therefore, viewed from any angle, there is no deficiency in serviced on the part of the opposite parties. 

15.    In the result the appeal is dismissed.  No costs.

                                                                            Sd/-

                                                                        MEMBER

                                                                          Sd/-

                                                                        MEMBER

                                                                   Dt.22.12.2010

KMK*