1. These are a set of four appeals, two each filed by M/s. Darpan Arts Emporium, Complainant before the State Commission and other two by Central Bank of India, OP before the State Commission. The matter before the UP State Consumer Disputes Redressal Commission arose from two complaints between these parties, which were disposed of together in the order of 14.7.2006 passed by the State Commission. 2. The complaints concerned two transactions of export of carpets to USA, one in January, 1999 and the other in August 1999. In both cases, the documents were sent through the OP with instructions to deliver them on payment by the buyer. In both cases, the local bank i.e. Marine Midland Bank, New York, in CC No.159 of 2000 and the Nation Bank in Houston, in CC No. 160 of 2000, delivered the documents without receiving the payment and hence the dispute. 3. The case of the Complainant/Darpan Arts Emporium before the State Commission was that it is engaged in the business of manufacture, sale and exports of carpets, rugs etc. The banking facility for this business, was being provided by the OP/Central Bank of India. When the cargo was shipped for delivery to the buyer in the USA, the documents, including the invoice and bill of lading, were sent to the OP/Central Bank of India, on the condition of delivery against payments. The OP sent the documents to its corresponding Bank in the USA with the stipulation that the delivery of the said documents was to be against payment only. Even in the written response of OP/Central Bank of India, it is mentioned that there is no dispute about the Complainant having sent the documents on DP condition i.e. delivery of documents against payment only. The complaint petition states that, “ it is the duty of the Opp-party bank or its agent to deliver the documents only after receipt of payment as the Opp-party bank charges the consideration for rendering the said facility to its customers.” 4. According to the Complainant, when the payment was not credited to his account, they contacted the Shipping agency, through whom the cargo was sent and were informed that the consignee had taken delivery of the goods after submitting the original bills of lading and other documents. Thereupon, the Complainant asked the OP to take up the matter of payment with the local bank in the USA, as the goods were already delivered. The Complainant did not receive any satisfactory reply. 5. In the written response, before the State Commission, OP/bank accepts that the documents were forwarded to the collecting bank in the USA by them; the instructions to deliver the documents only against payment were given by them; no amount was credited to the account of the complainant as none was realized through the collecting bank; they also made all possible efforts to collect the amount through the collecting bank. But interestingly, every one of these statements is qualified by a declaration that the OP was not responsible for any of these and the collecting bank was the agent of the complainant. 6. Thus, there is no dispute as to what was required to be done— documents for release of the consignment had to be released to the buyer or his agent, after receipt of payment and the money realized had to be credited in the Central bank of India, New Delhi. There is no dispute as to who had to do it—the collecting bank in the USA. There is no dispute as to who appointed the collecting bank in the USA— the OP/ Central Bank of India itself appointed the local bank in the USA as the collecting agent. There is no dispute as to what went wrong—the colleting bank failed to secure payment before delivery of the documents. The only dispute is as to who did the collecting bank represent—the OP or the Complainant? 7. The State Commission has observed that, the Bank in the USA, to whom the documents were sent by OP, was appointed by the OP/Central Bank of India Itself. The agreement between the Complainant and the OP (letter of 22.1.1997) expressly allowed the OP to appoint ‘an agent for presentation of the bill for payment or acceptance and for delivering the document’ if the OP had no office in the town in which the bill of exchange was given for collection or discount. The State Commission has also noted that the same agreement also says that the agent so appointed will be deemed to have been appointed agent of the Complainant, under Section 194 of the Indian Contract Act. But, it has also expressed its doubt about relevance and applicability of this provision to this case, in the face of very specific instructions to discharge the bill of lading only after collecting payment. Also, going by the terms and conditions between the OP and the foreign bank as well as the correspondence between them, the State Commission has taken a view that the OP had not abdicated the right, responsibility and power to the foreign bank. Therefore, it has held that the foreign bank cannot be treated as agent of the complainant. 8. We have perused the records and heard the counsels for the two parties. Learned counsel for the OP bank argued that as per the agreement between the two parties, the foreign bank was the agent of the complainant and not the OP/Central Bank of India. But the document cited by the learned counsel (letter of 18.1.1999 from the complainant to the OP) calls the foreign bank, mentioned there in, as ‘the buyer’s banker’. The counsel relied on the stipulation in this letter that asked the OP to send the documents at the risk and responsibility of the complainant. What the counsel did not point out is the purpose of this letter. It was, as per its recital, to enable the OP to purchase the export bill for 90% of the invoice value and with authorization to OP to appropriate the proceeds to the packing credit account of the complainant. Thus, as a matter of fact, this letter provides the justification for routing the documents, to the consignee in the USA, through the OP. If the documents were given by the OP to the foreign bank, mentioned therein, the OP remains accountable for the lapse of delivering them without receiving the payment, which was in clear violation of the complainant’s instruction. 9. Counsel for the OP/Central Bank of India also drew our attention to the provisions in APPENDIX 43 II of Uniform Rules of Collection, International Chamber of Commerce No. 522). He drew our attention to the INSTRUCTIONS TO THE COLLECTING BANK, issued by the OP, in which the collection order is expressly made subject to uniform rules of collection under ICC Paris Publication No. 522. He urged that under Article 11(b) of this Appendix, the OP bank has no liability for non compliance of the complainant’s instructions by the foreign collecting bank, even if the foreign bank was chosen by them. We are unable to accept this fragmented interpretation of the provisions in the Appendix. Article 9 is the very first Article in the chapter of LIABILITIES AND RESPONSIBILITIES in this Appendix. Article 9 reads— “Banks will act in good faith and exercise reasonable care.” 10. In our view, evidence on record does not show that, in the matter of presentation of documents, OP has acted with reasonable care. Instructions of the complainant, as seen from various documents on record, were very clear. Documents were to be released only on payment. OP has not led any evidence, which could show that these instructions were diligently carried out. Even after being informed that the documents (and therefore the consignment) had been released in violation of the instructions, the OP limited its role to claiming its non-liability, instead of taking specific action to secure payment through the defaulting local bank in the USA. Therefore, the benefit of Article 11(b) cannot be allowed to the OP in view of their failure to comply with the requirement of Article 9. 11. We are therefore in agreement with the decision of the State Commission, which has allowed the complaints and held OP/Central Bank of India liable in the matter. 12. The Complainant has also sought award of interest on the amounts awarded by the State Commission, compensation and refund of the amount involved in duty drawback. Having held the OP responsible for failure to secure payment before release of documents, the State Commission should have considered these, while awarding cost of Rs.1000/- in each case. Therefore, considering the facts and circumstances of these two cases, we are of the view that it will be just and proper to award lump sum compensation. We also note that the Complainant has not placed any evidence on record to show that no payment has been received by them, directly from or on behalf of the consignee, in these two transactions. 13. For the reasons detailed above, the impugned order of UP State Consumer Disputes Redressal Commission in CC Nos. 159 and 160 of 2000 is upheld, with the following modifications— (a) that the amount awarded by the State Commission shall be payable only on submission of a declaration by the complainant that they have not received any amount, directly or otherwise, from or on behalf of the consignee, in these two transactions; (b) that the award shall also include lump sum compensation of Rs.1.00 lakhs in the case concerning export bill of $ 9062.73 and Rs.1.50 lakhs in the case concerning export bill of $ 13432.94. The four appeals are disposed off in the aforesaid terms. No orders as to costs. |
