FA  959 of 2008   against C.C. 142/2005 , Dist. Forum, Karimnagar

Between:

1)  The Branch Manager

Union Bank of India

Manakondur Branch

Karimangar Dist.

2)  The Deputy General Manager

Nodal Regional Office

Union Bank of India

Hyderabad.                                                           ***                           Appellants/

          .                                                                                       Ops

                                                                   And

Justice Kumarayya College of Law

Karimnagar

Rep. by its Correspondent

CH. Mallikarjun Dev,

S/o. Venkatarya, Age: 50 years

H.No. 9-1-310, Beside Collectorate

Bhaghathnagar East

Karimnagar.                                               ***                         Respondent/

                                                                                                Complainant.

Counsel for the Appellants:                        M/s.  G. Vasantha Rayudu

Counsel for the Respondents:                              M/s   M. Ramgopal Reddy

CORAM:

HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT

&

                                        SMT. M. SHREESHA, MEMBER

TUESDAY, THE TWENTIETH  DAY OF  SEPTEMBER TWO THOUSAND ELVEN

ORAL ORDER:  (Per Hon’ble Sri Justice D. Appa Rao, President)

***

1)                The  opposite party bank preferred this appeal against the order of the Dist. Forum directing it to  refund Rs. 14,012.50  with interest @ 9% p.a.,  from the date of filing of the complaint till the date of payment together with costs of Rs. 1,000/-.

2)                The case of the complainant in brief is that   it has been running  a law college  recognized by APSCHE affiliated to Kakatiya University  approved by Bar  Council of India.  In compliance of formalities for recognition  it required to  furnish bank guarantee for Rs.  7.5 lakhs which was issued by the appellant bank for three years on payment of  Rs. 67,500/- @ Rs. 22,500/-  per year  from 31.12.1999 to 31.12.2002.    Later there was a change of formalities of affiliation  and therefore it has cancelled the bank guarantee from 31.12.2001 after completion of two years.   It had deposited cash of Rs.  7.5 lakhs  and also deposited Rs. 2.5 lakhs  in FDR for a period of 10 years.  It sought for refund of Rs. 22,500/- paid in excess for one year  in view of the fact that there was no service rendered.  Despite its repeated requests the appellant bank did not pay.  When it has approached the Banking Ombudsman  it directed the appellant to pay Rs. 8,437.50 as against Rs. 22,500/-.  Since it could not render justice it claimed the remaining  balance of 14,062.50 with interest  @ 12% p.a., from 31.12.2001 together with compensation and costs of Rs. 5,000/- each. 

3)                 The appellant bank resisted the case.  It alleged that the complainant could not be termed as consumer.  Having received the amount as ordered by Banking Ombudsman  it cannot file again a complaint.    As per clause 15 of the scheme the matter was amicably settled.    Such an order was passed based on the consent  between the parties.  Having consented  the complainant is debarred from filing the present complaint.   Pre-cancellation of bank guarantee  during subsistence of the period  was opted by the complainant as against contract between the parties.    Letter of guarantee would clearly establish  that  it  was not entitled for refund of commission as the agreement did not provide.   Under two circumstances  refund of bank guarantee is permitted  viz.,

i)                             if the purpose for which  the bank guarantee was issued  is served and the bank guarantee is returned for cancellation before  the expiry date: 

Refund : Nil  

ii)                           in other cases  if the purpose is not served and original bank

              guarantee is tendered for cancellation before  the date of expiry :

                       Refund:  50% of original rate for the unexpired period of

                       guarantee less than three months.

Since the case of the complainant falls under category-I  refund of commission of Rs. 8,437.50 ps  was paid as per the bank circular No 6881 dt. 18.5.2004.    The complainant was not entitled for full refund, and therefore  it prayed for dismissal of the complaint with costs. 

4)                 The complainant in proof of its case filed the affidavit evidence of its Correspondent and got Exs. A1 to A8 marked while the appellant filed the affidavit evidence of its Branch Manager and did not file any documents. 

5)                 The Dist. Forum after considering the evidence placed on record opined that the complainant has cancelled bank guarantee after expiry of two years  and therefore was  entitled for the commission that was paid for  3^rd year as no service was rendered, and therefore directed the bank to  pay Rs. 14,012.50 ps  with interest @ 9% p.a., from the date of complaint till the date of realization together with costs of Rs. 1,000/-.

6)                 Aggrieved by the said decision, the appellant bank preferred the appeal contending that the Dist. Forum did not appreciate either facts or law in correct perspective.    It ought to have seen that as per the terms of the agreement  the customer is not entitled for entire commission collected  on bank guarantee if it is tendered for cancellation before the date of expiry.  What all it would be entitled  is 50% for the unexpired period of bank guarantee as per the banking rules.   The amount for the  3^rd year as directed by  Banking Ombudsman was paid  and there was no deficiency in service, and therefore prayed that the appeal be allowed.

7)                The point that arises for consideration is whether the order of the Dist. Forum is vitiated by mis-appreciation of fact or law?

8)                It is an undisputed fact that the complainant an educational  institution imparting law to students  after obtaining requisite permission from APSCHE and Bard Council of India.    As per the norms it had furnished bank guarantee for Rs. 7.5 lakhs  for three years by paying  Rs. 67,500/- @ Rs. 22,500/-  per year  from 31.12.1999 to 31.12.2002.   Due to change of formalities of  affiliation  the complainant cancelled the bank guarantee for the third year  i.e., for  the year 2002  and requested to refund Rs. 22,500/- collected for the said year by its letter  Ex. A3 dt. 16.11.2002.   When the complainant approached the Banking Ombudsman the appellant bank by its letter dt. 25.8.2004 had refunded Rs. 8,437.50 ps  as ordered by the  Banking Ombudsman, and therefore claimed the remaining Rs. 14,012.50 ps.  Now the complainant intends the entire amount to be paid to it.   

9)                It may be stated herein that the appellant bank filed Ex. B1 schedule of service charges collected under various accounts.  Clause-32 reads as follows :

10)              From this it is beyond doubt that the very complainant institute  agreed  to the above stipulations, and  had taken bank guarantee  on payment of commission/charges.  It does not depend upon the service being rendered  and the case falls under first category.  In the light of settlement of  complaint No. 402 of 2003-2004   before  Banking Ambudsman  with the bank  it was directed to treat it as second category, and directed to refund  Rs. 8,437.50.  The complainant having received the said amount  again filed the complaint claiming  for balance.   The  refund of  commission depends  upon terms and conditions of the contract.  The contention that the bank rules are biased and against the principles of natural justice  cannot be gone into as it is beyond the jurisdiction of consumer fora.  It is contract entered by it.   There is no reason why  the complainant had agreed the amount which was directed to be paid by Banking Ombudsman  towards full and final settlement.   It is binding on it.   There is no deficiency in service on the part of the bank.   It cannot blow hot and cold at the same time.

11)               Even otherwise, the complainant an educational institution is imparting education  on taking fee, and  by no stretch of imagination  it can  be said that it is  for eking out its livelihood by means of self employment.  The Hon’ble Supreme Court in Birla Technologies Ltd. Versus Neutral Glass and Allied Industries Ltd. reported in CDJ 2010 SC-1177  held:

 “that  the goods sold by the appellant to the respondent/complainant amounted to `goods' and that such goods were purchased for commercial purpose of earning more profits, there could be no dispute that even the services which were offered had to be for the commercial purpose. Nothing was argued to the contrary.  On the  one count that under Section 2(1)(d)(i), the goods have been purchased for commercial purposes and on the second count that the services were hired or availed of for commercial purposes. The matter does not come even under the Explanation which was introduced on the same day i.e. on 15.3.2003 by way of the amendment by the same Amendment Act, as it is nobody's case that the goods bought and used by the respondent herein and the services availed by the respondent were exclusively for the purpose of earning the respondent's livelihood by means of self-employment. In that view, it will have to be held that the complaint itself was not maintainable in toto”

CDJ 2010 SC 1177

The Dist. Forum did not consider this aspect of the matter, and in fact the complainant is not entitled to invoke jurisdiction of the Dist. Forum.    In any view of the matter, we are of the opinion that the complainant is not entitled to any of the amounts.

12)              In the result the appeal is allowed setting aside the order of the Dist. Forum.  Consequently the  complaint is dismissed.   However, no costs. 

1)       _______________________________

PRESIDENT                 

2)      ________________________________

 MEMBER          

3)      ________________________________

 MEMBER          

                                                                                      20/09/2011

*pnr

“UP LOAD – O.K.”