A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION
HYDERABAD.
FA 94/2006 against C.C. 1086/2004, Dist. Forum-I, Hyderabad.
Between:
Smt. Anuradha Chemiti
W/o. Dr. C.P. Rao
Age: 36 years,
R/o. A-5, Anand Sheel Enclave
Road No. 14, Banjara Hills
Hyderabad. *** Appellant/
Complainant.
And
1). Oriental Bank of Commerce
(Formerly Known as Global Trust Bank Ltd.)
At 9-1-129/1, Oxford Plaza Building
S.D. Road, Secunderabad
Rep. by its Head of Branch/
Head of Operations. *** Respondent/
O.P. No. 1.
2) Goldstar Marketing Corporation
2-1-71/A, Stambalagaruvu
Guntur
Rep. by its Proprietor
Smt. Katta Sujatha
W/o. Nageswara Rao *** Respondent/
O.P. No. 2.
Counsel for the Appellant: M/s. B. Viswanatha Reddy
Counsel for the Resps: R1 – Served.
R2 – Paper Publication.
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
SMT. M. SHREESHA, MEMBER
&
SRI K. SATYANAND, MEMBER
FRIDAY, THIS THE TWENTY FIRST DAY OF AUGUST TWO THOUSAND NINE
Oral Order: (Per Hon’ble Justice D. Appa Rao, President)
*****
1) The appellant is unsuccessful complainant.
2) The case of the complainant in brief is that she invested Rs. 12 lakhs in fixed deposit with R1 bank, the maturity value being Rs. 13,03,991.57 by 9.12.2003. On the request of R2 she gave bank guarantee in favour of Hindustan Co-cola Beverages (P) Ltd., Vijayawada (in short Beverages) on its behalf allowing lien on her fixed deposit till 10.11.2003. Neither of the parties had informed about the invocation of bank guarantee. R1 had to inform in case it intended to invoke the bank guarantee beyond 10.11.2003. By the date of invocation the said bank guarantee was expired. R2 even did not reveal that a suit was pending before the Senior Civil Judge, Guntur. It informed that it had to get Rs. 23 lakhs and odd from Beverages under various heads and it was taking action. R1 had inadvertently released the payment when the Beverages invoked the bank guarantee amounting to deficiency in service. After giving legal notice she filed the complaint to recover the amount covered under the fixed deposit with interest and Rs. 50,000/- towards damages for deficiency in service and Rs. 50,000/- towards compensation for mental agony in all Rs. 14,62,585.57.
3) R1 bank resisted the case. It denied each and every allegation made in the complaint. It alleged that R1 has been amalgamated into Oriental Bank of Commerce by Reserve Bank of India with effect from 14.08.2004. The complaint was filed in collusion with R2 to cause wrongful loss to it. While admitting that the complainant has taken fixed deposit receipt for an amount of Rs. 12 lakhs maturity date being 9.12.2003, which was given as bank guarantee till 10.11.2003 in favour of Beverages on behalf of R2. By virtue of terms of the agreement, the lien on the FDR of the complainant was co-extensive with that of liability of R2, on whose request the bank guarantee was issued in favour of Beverages. She executed irrevocable letters indicating that the liability was co-extensive. The Beverages has invoked the bank guarantee on 24.10.2003, even before expiry of the bank guarantee, informing that R2 to get the bank guarantee renewed for
one more year if such renewal is not done the same would be treated as invocation of bank guarantee. Subsequent letters were also issued reiterating that the bank guarantee was invoked on 24.10.2003. R2 filed a suit in O.S. No. 57/2003 on the file of III Addl. Dist. Judge, Guntur against Beverages. In view of pendency of proceedings the bank guarantee was not renewed. The Banking Ombudsman directed it to pay the amount to the beneficiary in the light of invocation of bank guarantee on 24.10.2003 much before 10.11.2003 therefore it cannot be said that there was deficiency in service on its part. At any rate, it was bound by the orders of the Banking Ombudsman. In any view of the matter, the complaint was liable to be dismissed and therefore prayed for dismissal of the complaint with exemplary costs.
4) R2 filed counter. While admitting that at its instance the complainant agreed to issue bank guarantee on her FDR in favour of Beverages from 9.11.2002 to 10.11.2003, the complainant did not give any consent to renew the lien on her FDR expired by 10.11.2003. It was not aware of the order of the Banking Ombudsman. Without the consent of the complainant the bank had released the bank guarantee. It was not liable to give any amount to Beverages. Further it is the dispute between complainant and bank for which it has no concern. Therefore it prayed for dismissal of the complaint with costs.
5) The complainant in proof of her case filed her affidavit evidence and got Exs. A1 to A10 marked while R1 filed Exs. B1 to B11.
6) The Dist. Forum after considering the evidence placed on record opined that the bank guarantee was invoked even before the expiry of the period and the complaint was filed in collusion with R2. The amount covered under the bank guarantee was released as per the orders of the Banking Ombudsman, and therefore it cannot be said that there was deficiency in service on the part of the bank, and consequently dismissed the complaint.
7) Aggrieved by the said decision, the complainant preferred the appeal contending that the Dist. Forum did not appreciate the facts in correct perspective. It ought to have believed that the bank guarantee was expired on 10.11.2003, and there was no extension of bank guarantee and therefore the payment of the amount under bank guarantee on 17.11.2003 would amount to deficiency in service. She did not agree that her liability was co-extensive with that of R2. The Banking Ombudsman in fact closed the complaint on the ground that the bank had paid the amount, and there was no issue to be settled. The order of the Dist. Forum was erroneous, and therefore prayed that the complaint be allowed.
8) The point that arises for consideration is whether the order under appeal is contrary to law and fact and therefore liable to be set-aside?
9) It is an undisputed fact that the complainant has invested an amount of Rs. 12 lakhs by way of fixed deposit with R1 bank evidenced under Ex. A1 Dt. 9.12.2002. On behalf of R2 she agreed to give lien over her fixed deposit receipt in favour of Beverages for a specific period viz., 9.11.2002 to 10.11.2003 evidenced from her bank guarantee letter Ex. B1.
10) By letter Dt. 24.10.2003 when the Beverages has invoked the bank guarantee the bank made the payment to the beneficiary and adjusted the proceeds of FDR of the complainant. The complainant alleges that such invocation subsequent to expiry of the period was illegal, even otherwise she was not informed as stipulated under Ex. B1 and therefore the same was illegal. Evidently the Beverages by a letter Dt. 24.10.2003 (Ex. B4) even before expiry of the bank guarantee, directed R2 to get the bank guarantee renewed for one more year, and if such renewal was not done the same would be treated as invocation of bank guarantee. When the bank did not pay the amount, invoked under the bank guarantee, it filed a petition before the Banking Ombudsman. The Banking Ombudsman by its order Dt. 5.5.2004 (Ex. B10) in Complaint No. 379/2003-2004 directed the bank to pay the amount as the invocation was made before expiry of the period i.e., on 24.10.2003. Accordingly the said amount was paid. The fact that the bank has paid the amount to the beneficiary by virtue of the order of the Banking Ombudsman was not disputed, equally so the fact that the Beverages invoked the bank guarantee on 24. 10.2003.
11) It is useful to note that the bank did not pay the amount before the date of expiry of the bank guarantee. Admittedly the amount was paid on 5.5.2004 by virtue of order of Banking Ombudsman. The complainant alleges that the bank has no authority to pay the amount after expiry of the period and therefore constitutes deficiency in service, and consequently entitled to the amount which was paid irregularly. At this juncture, it may be stated that the very complainant while executing the letter in favour of the bank agreeing to stand as guarantee on behalf of R2, handed over the FDR with the following conditions:
4. I/We agree that you shall at your absolute discretion:
(a) be entitled to encash/withdraw the amount of the fixed deposit whether before or after the date or term of the deposit.
(b) be entitled to apply the amount of the deposit together with interest, accrued thereon towards payment or satisfaction of any liability whether presently payable or not to you.
5. I/We agree that you shall have my/our irrevocable authority to apply and appropriate the amounts in the FD account as represented by aforestated FDRs towards satisfaction of the amounts owned by the borrower to you in respect of the aforesaid facilities.
Simply because the bank did not pay immediately on the letter of Beverages alleging that the claim was made against it by R2, it would not mean that the bank could evade the liability to honour the bank guarantee issued in favour of Beverages. Obviously, in view of the adamant stand taken by the bank, Beverages approached the Banking Ombudsman which was registered as complaint No. 379 of 2003-2004, and on such complaint the bank was directed to pay the amount covered under the bank guarantee evidenced under order Ex. B10. Basing on the said order the bank had paid the amount evidenced under Ex. B11.
12) When the complainant herself gave bank guarantee and when the beneficiary has invoked the bank guarantee before expiry of the period and the same was honoured by the bank, more so by virtue of order by a statutory authority viz., Banking Ombudsman by no stretch of imagination it can be said that there was deficiency in service on the part of the bank.
13) Learned counsel for the appellant contended that the bank has no authority to pay the amount subsequent to expiry of the period and that amounts to deficiency in service. In support of his contention he relied a decision of Supreme Court Anumati Vs. Punjab National Bank reported in (2004) 8 SCC 498. That was a case where a joint fixed deposit with either or survivor clause was made. One of the account holders pledged the FDR without the authority, knowledge or concurrence of the other accountholder. In the light of those facts it was held that the tripartite agreement under a joint deposit cannot be bilaterally modified by one of the joint account-holders, say, by pledging the account with any third party including the bank itself in its capacity of a creditor, so that the amount becomes payable to such third party without the consent of the other joint accountholder. The bank had no right to refuse payment of the amount deposited contrary to banking norms. We do not see how the said decision has any application to the facts of the present case.
14) The complainant herself has issued bank guarantee. It was invoked within the period. More so, the amount was paid by virtue of order of a statutory authority. In such circumstances the payment made by the bank honouring its commitment towards bank guarantee cannot be termed as deficiency in service. We do not see any merits in the appeal.
15) In the result the appeal is dismissed, however no costs.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
3) _________________________________
MEMBER
Dt. 21. 08. 2009.
*pnr
“UP LOAD – O.K. “
