For the Appellant                 Mr Madhurendra Kumar, Proxy Counsel for

                                        Mr Ajay Shanker, Advocate

For Respondent no.1            Mr Nikhil Jain, Advocate

For Respondent no.2            Ex parte vide order dated 10.11.2022

ORDER

PER SUBHASH CHANDRA

1.      This appeal has been filed under section 21 of the Consumer Protection Act, 1986 (in short, ‘the Act’) against the judgment dated 12.02.2016 of the Uttar Pradesh State Consumer Disputes Redressal Commission, Lucknow (in short, ‘the State Commission’) in Complaint no. 77 of 2010 allowing the complaint and holding the appellant Bank (Punjab National Bank erstwhile Oriental Bank of Commerce) liable for deficiency in service and directing it to pay the complainant Rs.55,81,120/- with interest @ 6% per annum thereon from 15.09.2008.

2.     The brief facts of the case are that the appellant Oriental Bank of Commerce is an authorised dealer authorised to deal in foreign exchange by Reserve Bank of India under FEDAI (Foreign Exchange Dealers Association of India) Rules/ Regulations for conducting business in Foreign Exchange with its customers. The respondent no.1/ Complainant M/s O P Chains Ltd., is a limited Company trading in the business of gold and silver. Respondent no.2 the Handicrafts and Handloom Exports Corporation of India Limited, is in the business of handicrafts and handloom products, jewellery etc., nominated by the Government of India as an agency for importing gold/ silver/ platinum under the Foreign Trade Policy of Government of India. It was stated in the complaint that respondent no.2 in the ordinary course of business purchased goods from foreign sellers on behalf of respondent no.1 and the payment of price of the said goods so purchased was made by respondent no.1 to the respondent no.2 in Indian currency.  It was further averred that in the usual course of business, as per instructions of respondent no.2 on behalf of respondent no.1, the appellant Bank issued an Import Letter of Credit to respondent no.2 to secure the entire payment to the foreign seller on Letter of Credit (LC) maturity date. As per this practice, the respondent no.2 opened a Letter of credit no. 08420000130108 dated 12.06.2008 for USD 28,90,300 for 90 days from the date of shipment through appellant Bank and deposited Rs.12,02,00,000/-. Respondent no.2 purchased Forward US Dollar from the appellant Bank. It was further alleged that the foreign seller of the consignment received payment of the consignment on the basis of LC from the foreign Bank in whose name the LC was issued by the appellant Bank. The US Dollar was booked for delivery on 29.08.2008 as mentioned and thus respondent no.2, through Appellant Bank, was bound to make the payment of the LC on 09.08.2008 and, in case of failure, the payment of US Dollar had to be extended upto 15.09.2008, the original maturity date of LC. However, in the case of the transaction in question, respondent no.2 admittedly did not inform the appellant Bank that payment was to be made on 15.09.2008 instead of 29.08.2008 and thus did not utilize the Forward Contract on 29.08.2008, the date fixed. In terms of FEDAI Rule no. 6.A.4.v.a, the appellant Bank was required to compulsorily cancel the Forward Contracts on the 7^th working day of due date if no instructions were received from the customer within the validity of the Forward Contract. Accordingly, the appellant Bank should have cancelled the Forward Contract on 04.09.2008 and rebooked the same for delivery of USD on 15.09.2008.  Complainant/ respondent no.1 alleged that failure to compulsorily cancel the Forward Contract resulted in surplus of Rs.55,81,120/- to which respondent no.2, as per FEDAI Rule no.6.A.4.v.a., was not entitled. The cancellation was done by the appellant Bank consequent to respondent no.2 not getting the Forward Contract extended during the validity of the Forward USD contract.  It was further alleged that there was no privity of contract between respondent no.1 / complainant and the appellant Bank as the Forward Contract was booked with the appellant Bank by respondent no.2. Respondent no.2 admitted its mistake vide its letter dated 18.11.2008 addressed to the Bank for not giving instructions to the appellant Bank for extension of Forward Contract during its validity and thus compelling the appellant Bank to cancel the said Forward Contract on the 7^th working day as per the Rules of FEDAI. Respondent no.1/complainant, vide its letter dated 13.11.2009, requested respondent no.2 to file a suit of recovery of the said amount from the appellant Bank without any further delay. It is contended by Respondent no.1/complainant that respondent no.2 was aware that it was not entitled to the said surplus amount of Rs.55,81,120/- as per FEDAI Rules. However, it did not file any suit for recovery. Hence, respondent no.1/ complainant filed Complaint no.77 of 2010 before the State Commission, Lucknow. 

3.     On contest, the State Commission held as under:

The complaint of the complainant is allowed. The opposite party no.1 shall pay Rs.55,81,120/-. The said amount is due from 15.09.2008 which will be paid within two months with interest at the rate of 6% per annum. Parties to bear their own cost.

4.     This order of the State Commission has been impugned before us by the appellant Bank with the prayer to:

1. Allow the present appeal and quash and set aside the judgment and order dated 12.02.2016 passed by the State Commission in Complaint no.77 of 2010 in the interest of justice;
2. Pending hearing and final disposal of this appeal, stay the operation of the order dated 12.02.2016 passed by the State Commission in complaint no.77 of 2010 in the interest of justice; and
3.      Pass any other or further order (s) as this Hon’ble Commission may deem fit and proper in the facts and circumstances of the case and in the interest of justice.

5.     On 13.09.2023, when the matter was heard finally, a proxy counsel appeared on behalf of the appellant. The short synopsis of arguments filed by the appellant were taken as its final arguments.  We have heard the learned counsel for respondent no.1 and have given our careful consideration to the material on record. Respondent no.2 was proceeded ex parte vide order dated 10.11.2022. Further, both the parties were directed to file the case laws relied upon by them within a period of one week. However, the parties failed to file the same within the stipulated time.

6.     The appellant’s case is that respondent no.1/ complainant was not a ‘Consumer’ as per Section 2 (1) (d) (ii) of the Consumer Protection Act, 1986.  It was contended that M/s O P Chains Ltd., respondent no.1/ complainant is a Limited Company carrying on its trading business in gold and silver for a commercial purpose and that respondent no.2, Handicrafts and Handloom Export Corporation of India Limited (HHEC) which was also a commercial organisation was not a “consumer”. Learned counsel for the appellant submits that the Appellant Bank has not considered and no finding rendered by the State Commission. Accordingly, it was contended that appellant lacked any locus in the matter. It was submitted that respondent no.1/ complainant was also not a “consumer” of the appellant Bank as the transaction of booking of Forward Contract in US Dollars as the same was booked by respondent no.2. Respondent no.1/ complainant also did not pay any service charges to the appellant Bank for the transaction of booking of the Forward Contract and that the appellant did not render any service to respondent no.1/ complainant. It is the appellant’s case that respondent no.1/ complainant’s letter dated 13.11.2009 requesting respondent no.2 to file a suit against the appellant Bank indicated that the respondent no.1/complainant was aware that it has not availed of any service from the appellant Bank and thus had no locus to file a suit. Appellant further submitted that there was no privity of contract between the appellant Bank and respondent no.1/ complainant as the appellant was also not a service provider to the respondent no.1/ complainant and as the appellant Bank had not rendered any banking service to respondent no.1/ complainant for any consideration qua this foreign exchange transaction, the alleged dispute was on account of a business transaction. It was argued that despite these facts, the respondent no.1 filed a complaint before the State Commission and the same was allowed by the State Commission, without jurisdiction as the respondent no.1/ complainant was not a consumer.

7.     Per contra, the learned counsel for the respondent no.1 stated that the appellant was an authorised dealer in foreign exchange and respondent no.2 imports handicrafts and handloom products, jewellery etc., and had been nominated by the Government of India as an agency to import, gold, silver, platinum under the foreign trade policy. Learned counsel for respondent no.1 submits that respondent no.2 purchased the goods from the foreign seller on behalf of respondent no.1 and the payment was made by respondent no.1 to respondent no.2 in Indian Currency and respondent no.2 booked the foreign currency with the appellant on behalf of respondent no.1. As per its mandate, it thereafter got the foreign currency from the appellant, and respondent no.2 made the payment of the price of the goods to the foreign seller. Learned counsel for respondent no.1 states that as per the instructions of respondent no.2 on behalf of respondent no.1, the appellant issued a LC to the respondent no.2 to secure the entire payment on LC maturity date.

8.     On 02.06.2008, the respondent no.2 booked two orders for USD 2852000 with delivery due date as 29.08.2008. Learned counsel for the appellant states that on 12.06.2008 the respondent no.2 opened a LC no.08420000130108 of USD 28,90,300 for 90 days through the appellant and deposited Rs.12,02,00,000/-. The respondent no.1 completed all the formalities including the payment for getting the said consignment complete. The foreign seller got the payment of the consignment on the basis of Letter of Credit from the overseas Bank in whose name the LC was issued by the petitioner.  Learned counsel for respondent no.1 submitted that the LC was booked for the period ending 29.08.2008 thus the appellant was bound to make the payment of LC upto 29.08.2008 and in case of failure, the payment of USD can be extended upto 15.09.2008. However, the appellant failed to do so. Learned counsel for the respondent no.1 further submitted that after realising its mistake on 04.09.2008, the appellant cancelled the booking order dated 02.06.2008 and re-booked USD on 04.09.2008 at the then prevailing price, resulting in excess difference in price of USD amounting to Rs.55,81,120/-.

9.     Learned counsel for respondent no.1 submitted that the appellant realised this excess amount from respondent no.2 with a clear understanding that this amount shall be refunded by it to respondent no.2 within a period of one month after receiving exchange from its dealing offer, i.e., I D B, New Delhi. It was submitted that as the amount was realised by respondent no.2 from respondent no.1, hence, respondent no.1 was entitled for refund of the amount from respondent no.2. Learned counsel for respondent no.1 also submitted that after completion of the transaction, the respondents approached the appellant for refunding the amount but the appellant failed to pay the said amount. It was contended that as the appellant himself had owned up the mistake in the matter on their part FEDAI Rules do not apply to the present appeal.  Counsel for respondent contended that the appellant was manifestly negligent and he was legally bound either to roll over the Forward Contract within the due date for payment on 15.09.2008 or to make the payment on 29.08.2008 as he was had 100% cash margin which the appellant failed to do. When the appellant realised its mistake, the appellant cancelled the Forward Contract and rebooked the same on 04.09.2008 at the prevailing rate from respondent no.1 through respondent no.2. This act of the appellant was arbitrary, illegal, unjust and dishonest in not refunding the difference in the exchange rate even after the completion of the transaction. The learned counsel for respondent no.2 states that State Commission has passed a well-reasoned order which needs no interference, and hence, the appeal filed by the appellant should be dismissed and the order of the State Commission be upheld.

10.   The State Commission in their findings have stated that:

respondent no.2 Bank (respondent no.1) committed a mistake as has been admitted in the above letter which has been referred to as above. In the circumstances, we find that opposite party no.1 committed deficiency in service. It is also observed by us that the complaint of the complainant is admissible and the complainant who was made to pay a sum of Rs.55,81,120/- on account of USD is entitled to get the same and is also entitled to receive interest at the rate of 6% per annum from 15.09.2008.

11.    From the discussion above, it is evident that the Bank did not make the remittance under the FLC by availing overdraft against the FDRs nor did it inform that the forward covers are due for payment. It is also evident that there was difference in the forward cover buy rate as on 21.06.2008 and the selling rate as on 04.09.2008. The same was not credited to the account. The respondent no.2 has stated that there was an account mistake committed by the Bank about the due date and therefore the FC was cancelled and consequently on 04.09.2008 it was booked again and the respondent no.1 had to pay the difference in USD as per the prevailing rate on 04.09.2008.  The State Commission has held that opposite party no.1 (Oriental Bank of Commerce, now Punjab National Bank) pay Rs.55,81,120/- with interest @ 6% with effect from 15.09.2008 within two months. We see no reason to disturb this finding which is well reasoned and substantiated.

12.   In view of the foregoing, the order of the State Commission is affirmed. The appeal is dismissed. Parties shall bear their own costs.  Pending IAs, if any, stand disposed of by this order.