BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION:HYDERABAD.
C.D.No. 41 OF 2005
Between:
M/s.G.Rajender Reddy & Co.,
Rep. by its Managing Partner
Shri G.Shivender Reddy, S/o.Sri G.Rama Reddy
Aged 39 years, R/o.Plot No.171,
Road No.13, Jubilee Hills,
Hyderabad-33. ..Complainant.
And
M/s.Vijaya Bank Ltd.,
Rep. by its Branch Manager,
Malakpet Branch,
Hyderabad. ..Opposite party.
Counsel for the Complainant: Mr. D.Krishna Murthy.
Counsel for the Opposite party: Mr.E.Ajay Reddy
Coram: THE HON’BLE.JUSTICE SRI D.APPA RAO, PRESIDENT.
SMT.M.SHREESHA, MEMBER.
AND
SRI G.BHOOPATHI REDDY, MEMBER.
MONDAY, THE TWENTY NINTH DAY OF SEPTEMBER,
TWO THOUSAND EIGHT.
ORAL ORDER: (Per Smt.M.Shreesha, Hon’ble Member).
***
The brief facts as set out in the complaint are that the complainant are that the complainant is a Partnership Firm engaged in the business of executing civil contract works for Government of Andhra Pradesh. The complainant submitted that it is a Special Class Contractor for undertaking Civil Constructions work and executed several major works entrusted on pre qualification basis by various Government Departments. In the year, 2000, the complainant was awarded a contract for construction of two building works viz. North and South Block of H-Block in the premises of Secretariat, Hyderabad. The complainant had entered into an agreement with Government of Andhra Pradesh on 23-3-200- for executing the works valued at Rs.809.52 lakhs and the period of completion of the work was one year. The period of contract was over by 30-6-2001 and as per terms of clause 19.3 of the agreement, the complainant firm shall be paid a sum of Rs.80.78 lakhs as mobilization advance by the Government which sum will be recovered from the work done bills of the complainant. It is submitted that the complainant had approached opposite party bank for providing financial assistance to the complainant. Opposite Party Bank vide its letter ROH/CD/44945/2000 dated 31-3-2000 and sanctioned the following facilities:
a) C.D. against supply bills Rs.10.00 lakhs with 25% margin.
b) Bank guarantee limit Rs.115-00 lakhs with cash margin of 25%.
c) Term loan of Rs.10.70 lakhs for purchase of 2 Nos. of Trucks
Costing Rs.15.71 lakhs with a margin of 25%.
The above facilities were provided by the opposite party bank against the collateral securities of the aggregate value of 193.91 lakhs (present market value of which is Rs.500.00 lakhs). Opposite party bank provided 24 Nos. Bank Guarantee for an aggregate amount of Rs.80,78,280/- on 31-3-2000 advance favouring the Executive Engineer (R&B) East Building Division, Hyderabad for availing mobilization. The Bank guarantees originally granted were valid till 30-6-2000 and the same were extended from time to time under the instructions of the complainant. It is submitted that the complainant vide letter dated 23-3-2001 requested the opposite party Bank to renew the Bank Guarantee for a period of 3 months from 1-4-2001 to 30-6-2001 subject to the terms and conditions mentioned therein but opposite party bank has extended the Bank Guarantee till 30-6-2001 without incorporation the terms and conditions insisted by the complainant. Thereafter some disputes arose between the complainant and the Government and the Government did not make payment to the complainant the work done bills to a tune of Rs.137.00 lakhs. The complainant vide letter dated 8-6-2001 specifically instructed the opposite party bank not to extend the Bank Guarantee after 30-6-2001 since the contract itself was coming to an end by 30-6-2001 but the opposite party bank illegally extended the bank guarantee as per their will and wish in favour of the Government facilitating them to invoke the Bank Guarantee. The complainant submitted that because of the illegal and unauthorized action of the opposite party bank, the beneficiary/Government has invoked the Bank Guarantee on 2-8-2001 since the beneficiary has committed breach of contract and invoked the bank guarantee of the complainant and therefore it filed two civil suits O.S.Nos.444 and 445/2001 on the file of Chief Judge, City Civil Court, Hyderabad seeking permanent injunction restraining opposite party from making the payment under the Bank Guarantees to the Government. The said suit is pending and the opposite party bank has stopped payment of money under the Bank Guarantees to the beneficiary and the relief sought in the said suit is only to stop payment to the beneficiary/Government. The complainant had written several letters to opposite party bank dated 15-10-2001, 2-2-2002, 10-6-2002 and 2-3-2003 requesting them to settle the account and return the collateral securities since the bank has renewed the Bank Guarantee at it’s whims and fancies contrary to the written instructions of the complainant. Opposite party bank has neither settled the account nor returned the collateral securities deposited with them and in view of that the complainant has come to standstill and could not pursue any business. Collateral security worth Rs.500.00 lakhs and 25% margin money is lying with opposite party for quite long time.
Aggrieved by the illegal action of the opposite party bank, the complainant filed a complaint No.400/2003-4 before the Banking Ombudsman, Andhra Pradesh, Hyderabad. Before the Banking Ombudsman, opposite party has taken a stand that the complainant has given a letter dated 9-6-2001 requesting the bank to renew the Bank Guarantees. The complainant has filed a reply before the Banking Ombudsman denying the alleged letter dated 9-6-2001 and stated that the bank might have taken the signatures of the complainant on blank Proforma letters at the time of giving Bank Guarantees originally and got filled up on 9-6-2001 with a malafide intention. The Banking Ombudsman by order dated 17-9-2004 disposed of the complaint stating that the Ombudsman scheme would not be the appropriate forum and the matter requires recording of evidence and directed the complainant to appropriate Forum. Hence the complaint filed this complaint.
The complainant submitted that admittedly he gave a letter on 8-6-2001 specifically asking the bank not renew the bank guarantees after 30-6-2001 and the alleged letter dated 9-6-2001 does not refer to the letter dated 8-6-2001 and if the complainant had given the letter dated 9-6-2001, that letter should contain the reference of letter dated 8-6-2001. Obviously the letter dated 9-6-2001 is a letter fabricated by opposite party bank subsequently after receiving notices from the Banking Ombudsman and a bare look at the letter dated 9-6-2001 shows that it was filled by some body other than the complainant and the hand writing in the letter dated 9-6-2001 is not of the same person Mr.G.Rajender Reddy who signed the letter and the said letter does not contain the signature of any of the then bank officials. The Financial services rendered by opposite party bank is a service within the meaning of ‘service’ under the Consumer Protection Act, 1986 and that opposite party committed breach of Trust and illegally extended the Bank Guarantee contrary to the specific written instructions of the complainant. Due to illegal and unauthorized action of opposite party bank the collateral securities worth Rs.500.00 lakhs and 25% margin money is held up with the bank and the complainant was unable to do any business. The complainant submitted that its annual turnover was between 4.5 to 5 crores and since the properties of the complainant are totally blocked with the opposite party Bank, the complainant are totally blocked with the opposite party bank and the complainant could not do any other business. The margin money approximately of Rs.20 lakhs was retained by opposite party bank and it suffered a loss of income of Rs.50 lakhs per year from 2001 onwards. Apart from the loss of income in business, the complainant also lost credibility and reputation in the market and could not keep up the commitments made in the market and due to the illegal action of opposite party in renewing the bank guarantee contrary to the specific instructions of the complainant and not releasing the collateral securities not only their properties but also the properties of their friends were also locked up, which is clear deficiency of service on the part of opposite party. Hence the complaint for a direction to the opposite party to release the collateral securities furnished by the complainant to the opposite party for the Bank Guarantees, to pay a compensation of Rs.80,000/- and costs.
Opposite party filed counter and submitted that the complaint is not maintainable in view of the fact that there are cases pending before the Hon’ble City Civil Court and until the cases are decided, the reliefs claimed by the complainants cannot be granted. They denied that the aggregate value of the collateral securities is Rs.500.00 lakhs as per the present market value and denied the same. They admitted providing 24 Nos. of Bank Guarantees for an aggregate amount of Rs.80,78,280/- on 31-3-2000 favouring Executive Engineer (R&B) East Building Division, Hyderabad and its extension from time to time and also admitted that the complainant vide letter dated 23-3-2001 requested the opposite party to renew the Bank Guarantee for a period of 3 months from 1-4-2001 to 30-6-2001 subject to terms and conditions mentioned therein and that they extended the Guarantees till 30-6-2001 but denied that they extended the Bank Guarantee till 30-6-2001 without incorporating the terms and conditions insisted by the complainant. They submitted that the complainant never incorporated any terms and conditions for extension of Bank Guarantee and opposite party extended them as done earlier. They contended that they are not aware that there arose disputes between the complainant and the State Government and the Government did not make payments to the complainant for the work done bills to a tune of Rs.137.00 lakhs is not within their knowledge.
Opposite party asserted that they renewed the Bank Guarantee beyond 30-6-2001 and upto 30-9-2001 basing on the letter of Request for Extension of Bank Guarantee dated 9-6-2001 of the complainant submitted to the bank and therefore the contention of the complainant that the bank guarantees were extended as per the will and wish of the opposite party in favour of the Government facilitating them to invoke Bank Guarantees is not true and correct. They admitted filing of two Civil Suits O.S.Nos.444 and 445/2001 on the file of Chief Judge, City Civil Court, Hyderabad and pendency of the two suits and submitted that when the City Civil Court, Hyderabad dismissed the I.As. filed by the complainant, the complainant had approached Hon’ble High Court of Andhra Pradesh and obtained status Quo orders dated 27-9-2001 in C.M.P.No.18240 of 2001 in C.M.P.No.2422 of 2001 and Bank had obeyed the orders of the Hon’ble High Court. They further submitted that High Court had passed status quo orders only in respect of encashment of Bank Guarantees as on the date of order i.e. 27-9-2001 and since the Bank Guarantees have not been encashed on 27-9-2001, they had not paid the monies covered the Bank guarantees referred in the orders of Hon’ble High Court to the beneficiary and the High Court directed the lower court to dispose of the suit and Civil Miscellaneous Appeal No.2422 of 2001.
Opposite party denied the allegation of the complainant that they had renewed the Bank Guarantees contrary to the written instructions of the complainant and submitted on the specific written instructions, the Bank had extended the validity of the Bank Guarantee beyond 30-6-2001 and upto 30-9-2001. They alleged that it is not true that due to their omission and commission, the complainant company is able to pursue any business activity nor able to make use of abundant collateral security (Rs.500 lakhs) and deposit money (25% cash margin) kept unauthorized with them as security since long period. They admitted filing of complaint No.400 of 2003-04 before the Hon’ble Banking Ombudsman and the directions given by Hon’ble Banking Ombudsman to approach appropriate Forum since the matter requires recording of evidence etc.
Opposite party submitted that the complainant himself had requested the Bank to renew the Bank Guarantees vide letter dated 9-6-2001 and basing on the said letter, opposite party renewed the Bank Guarantees upto 30-9-2001 and in the meanwhile the beneficiary of the above Bank Guarantees had invoked them on 2-8-2001. They submitted that the said Bank Guarantee amount was not paid to the beneficiary i.e. the Government in view of status quo orders granted by Hon’ble High Court of Andhra Pradesh. However in view of pendency of suit filed by them and also pendency of cases before Hon’ble High Court, they had no other go except to withheld the securities and margin money amount. Until and unless the cases pending before courts are decided, they cannot release the securities and margin money as there is a dispute between the complainant and the beneficiary i.e. State Government with regard to invocation of Bank Guarantees and the validity or otherwise of the Bank Guarantees beyond 30-6-2001. They submitted that the losses, if any suffered by the complainant are due to the disputes that arose with the State Government but not with the alleged illegal actions of the bank. They submitted that they have given Bank Guarantees to the complainant after furnishing sufficient collateral securities and margin money by the complainant and when the beneficiary of the Bank Guarantees, during its validity invokes the said Bank Guarantees, they had no other option except to pay the said amount and recover the same from the complainant. In the present case, though the Bank Guarantees were invoked, the same was not paid in view of the status quo orders granted by Hon’ble High court and until and unless the cases pending before the courts are decided, they cannot release the collateral securities and margin amount to the complainant and it is for the complainant to make alternative arrangements for his business requirements and they are no way concerned with the alleged loss of business, if any, incurred by the complainant and therefore the question of payment of Rs.80,00,000/- towards business loss incurred by the complainant does not arise. They submitted that the complainant has no cause of action to file the above complaint and prayed for dismissal of the complaint.
Complainant filed affidavit in lieu of evidence and got marked Exs.A1 to A18 and opposite party filed affidavit of the Asst. Manager in lieu of evidence and got marked Exs.B1 to B6.
The point for consideration is whether the opposite party has committed any deficiency of service and if the complainant is entitled to any relief sought for in the complaint?
The complainant filed his affidavit reiterating the facts stated in the complaint.
Ex.A1 is the Firm Registration Certificate dated 4-10-2001. Ex.A2 is Bank Guarantee dated 31-3-2000. Ex.A3 to A7 and 9 to 11 are letters addressed by complainant to opposite party dated 23-3-2001, 8-6-2001, 9-6-2001, 26-12-2001 28-8-2001, 15-10-2001, 02-2-2002 and 2-3-2002 respectively. Ex.A8 is Plaint in O.S.No.445/2001 dated 7-8-2001. Ex.A13 is legal notice by complainant to opposite party bank dated 10-7-2003. Ex.A13 is complaint filed before Banking Ombudsman dated 4-7-2004. Ex.A14 is the reply filed of opposite party filed before Banking Ombudsman dated 22-7-2004. Ex.A15 is Reply statement letter from Banking Ombudsman of complainant dated 4-8-2004. Ex.A16 is letter from Banking Ombudsman dated 23-9-2004. Ex.A17 is Order of Ombudsman in complaint No.400/2003-4 dated 17-9-2004. Ex.A18 is I.T. clearance certificate dated 2-11-2000.
Opposite party bank filed affidavit reiterating the facts stated in the counter. Ex.B1 is letter of complainant to opposite party bank dated 9-6-2001. Ex.B2 is order passed in CMA No.2421 of 2001 in 21-3-2005. Ex.B3 is order passed in CMA No.2422 of 2001 dated 21-3-2005. Ex.B4 is Plaint filed in O.S.No.444/2001 dated 5-8-2001. Ex.B5 is copy of affidavit and petition filed in I.A.No.2292 of 2001. Ex.B6 is Judgement in I.A.No.2292 of 2001 in O.S.No.444/2001.
The facts not in dispute are that the complainant had entered into an agreement with Government of Andhra Pradesh on 23-3-200- for executing civil works valued at Rs.809.52 lakhs and the period of completion of the work was one year. The period of contract was over by 30-6-2001 and as per terms of clause 19.3 of the agreement, the complainant firm shall be paid a sum of Rs.80.78 lakhs as mobilization advance by the Government which sum will be recovered from the work done bills of the complainant. It is submitted that the complainant had approached opposite party bank for providing financial assistance to the complainant. Opposite Party Bank vide its letter ROH/CD/44945/2000 dated 31-3-2000 and sanctioned the following facilities:
a) C.D. against supply bills Rs.10.00 lakhs with 25% margin.
b) Bank guarantee limit Rs.115-00 lakhs with cash margin of 25%.
c) Term loan of Rs.10.70 lakhs for purchase of 2 Nos. of Trucks
Costing Rs.15.71 lakhs with a margin of 25%.
The above facilities were provided by the opposite party bank against the collateral securities of the aggregate value of 193.91 lakhs (present market value of which is Rs.500.00 lakhs). Opposite party bank provided 24 Nos. Bank Guarantee for an aggregate amount of Rs.80,78,280/- on 31-3-2000 advance favouring the Executive Engineer (R&B) East Building Division, Hyderabad for availing mobilization. The Bank guarantees originally granted were valid till 30-6-2000 and the same were extended from time to time under the instructions of the complainant. It is submitted that the complainant vide letter dated 23-3-2001 requested the opposite party Bank to renew the Bank Guarantee for a period of 3 months from 1-4-2001 to 30-6-2001 subject to the terms and conditions mentioned therein but opposite party bank has extended the Bank Guarantee till 30-6-2001 without incorporating the terms and conditions insisted by the complainant. Thereafter some disputes arose between the complainant and the Government and the Government did not make payment to the complainant for work done, for bills to a tune of Rs.137.00 lakhs. It is the complainant’s case that vide his letter dated 8-6-2001, he specifically instructed the opposite party bank not to extend the bank guarantee after 30-6-2001 since the contract itself was coming to an end by 30-6-2001 but opposite party bank extended the bank guarantee illegally in favour of the Government because of which the complainant suffered loss and requested the opposite party to settle the account and return the collateral securities and margin money.
It is the opposite party’s case that only based on the request of the complainant on 9-6-2001, the bank guarantee was extended upto 30-6-2001. It is also not in dispute that two civil suits O.S.Nos.444 and 445/2001 were filed on the file of Chief Judge, City Civil Court which dismissed the I.As. filed by the complainant and therefore the complainant approached the Hon’ble High Court and obtained status quo order dated 27-9-2001 and directed the lower court to dispose of the suits and C.M.A.No.2422/2001. It is not in dispute that the complainant had filed complaint No.400/2003-04 before the Banking Ombudsman, who gave a direction to approach the appropriate Forum, since the matter required recording of evidence.
On perusal of the material on record, we observe that Ex.B1 is a letter which is the main point for consideration in this case. On perusal of Ex.B1 shows that it is addressed by the complainant to the bank and it is dated 9-6-2001 with a request to extend the guarantee till 30-9-2001. We also observe that it is stamped and signed by the complainant. Since this very letter is disputed by the complainant on the ground that it is fabricated and forged and the signature is not his, we are of the considered view that this Consumer Commission cannot adjudicate such facts of forgery and fabrication, since the very object of the Act is summary disposal of the cases which do not involve complicated questions of fact and law and also which do not involve cheating, fabrication and forgery.
We rely on the decision of National Commission in I (2004) CPJ 101 (NC) R.D. PAPERS LTD v. NEW INDIA ASSURANCE CO. LTD. & ORS in which the National Commission held that Section 21 deals with Jurisdiction. Allegation of forgery made by complainant was denied by insurance company and held th at when complicated questions of fact are involved, Complaint is not adjudicable in summary jurisdiction and dismissed.
The Hon’ble Apex Court in the case of SYNCO INDUSTRIES v. STATE BANK OF BIKANER & JAIPUR AND OTHERS, 2002 (1) SCALE, observed where complicated questions of law and facts are involved Forum under the Consumer Protection Act may not be proper Forum to dispose of such a case in summary fashion.
The Supreme Court recently in the case of ORIENTAL INSURANCE COMPANY LTD., v. MUNI MAHESH PATEL reported in (2006) 7 SUPREME COURT CASES PAGES 655 held
‘Proceedings before the Commission are essentially summary in nature
and issues which involve disputed factual questions should not be
adjudicated by the Commission. The Commission having accepted
that there was wrong declaration of the nature of occupation of the
person insured, should not have granted the relief in the manner done.
It was further required to examine whether in view of the disputed facts
it should exercise the jurisdiction. The State Commission was right in its
view that the complex factual position requires that the matter should be
examined by an appropriate Court of law and not the Commission”.
The National Commission in the case of Ferry Gold (India ) Ltd., v. National Insurance Company Ltd., and others reported in (2002) III CPJ Page 59 also held:
“This complaint raises complex question of law and facts. To prove its case complaint will have to lead voluminous evidence both oral and documentary. It will not be possible for a Forum under the Consumer Protection Act to decide such a case in its summary jurisdiction”.
We observe from the record that there is status quo order from Hon’ble High court in Ex.B2, CMA 2421/2001 and in Ex.B3 CMA 2422/2001 and also in view of pendency of the suits in civil court, we find force in the contention of opposite party that they cannot release the securities and margin money of the complainant.
Keeping the aforesaid facts and circumstances, we are of the considered opinion that the complainant is at liberty to approach an appropriate Forum to seek remedy, if so advised.
In the result this complaint is dismissed. There shall be no order as to costs.
PRESIDENT. LADY MEMBER. MALE MEMBER.
JM Dt.29-9-2008.
//APPENDIX OF EVIDENCE//
Witnesses examined for
Complainant: Opposite Party:
-NIL- -NIL-
Exhibits marked on behalf of the complainant:
Ex.A1-Firm Registration Certificate dated 4-10-2001.
Ex.A2 is Bank Guarantee dated 31-3-2000.
Ex.A3 to A7 and 9 to 11-Letters addressed by complainant to opposite party dated
23-3-2001, 8-6-2001, 9-6-2001, 26-12-2001 28-8-2001, 15-10-2001, 02-2-
2002 and 2-3-2002 respectively. Ex.A8 is Plaint in O.S.No.445/2001 dated
7-8-2001.
Ex.A12-Legal notice by complainant to opposite party bank dated10-7-2003.
Ex.A13-Complaint filed before Banking Ombudsman dated 4-7-2004.
Ex.A14-Reply filed of opp. party filed before Banking Ombudsman dated 22-7-2004.
Ex.A15- Complainant’s Reply statement from Banking Ombudsman dated 4-8-2004.
Ex.A16-Letter from Banking Ombudsman dated 23-9-2004.
Ex.A17-Order of Ombudsman in complaint No.400/2003-4 dated 17-9-2004.
Ex.A18-I.T. clearance certificate dated 2-11-2000.
Exhibits marked on behalf of the Opp.party:
Ex.B1-Letter of complainant to opposite party bank dated 9-6-2001.
Ex.B2-Order passed in CMA No.2421 of 2001 in 21-3-2005.
Ex.B3-Order passed in CMA No.2422 of 2001 dated 21-3-2005.
Ex.B4-Plaint filed in O.S.No.444/2001 dated 5-8-2001.
Ex.B5-Copy of affidavit and petition filed in I.A.No.2292 of 2001.
Ex.B6-Judgement in I.A.No.2292 of 2001 in O.S.No.444/2001.
PRESIDENT. LADY MEMBER. MALE MEMBER.
Dt.29-9-2008.
