Delhi

StateCommission

CC/136/1998

OVERSEAS INCORPORATION - Complainant(s)

Versus

PUNJAB NATIONAL BANK - Opp.Party(s)

14 May 2018

ORDER

IN THE STATE COMMISSION: DELHI

(Constituted under Section 9 of the Consumer Protection Act, 1986)

                                                             Date of Decision: 14.05.2018

 

 

Complaint No.136/1998

In the matter of:

Overseas Incorporation C-25, Indra Market, Old Sabzi Mandi, Delhi-110007

:

Complainant

           

Versus

 

	Punjab National Bank GT Road, Azadpur Brach, Sharp Bhawan, Naniwala Commercial Complex,  Delhi-110001	:
	Punjab National Bank Foreign Exchange Office DCM Building, 16, Barakhamba Road, New Delhi-1100014	:
	Standard Chartered Bank, Insitutional Banking, 4th floor, Hoechst House, 193, Backbay Reclamation, Nariman Point, Mumbai-400021.		Respondents

 

                            

CORAM

 

N P KAUSHIK

:

Member (Judicial)

 

1.         Whether reporters of local newspaper be allowed to see the judgment?                   Yes

2.         To be referred to the reporter or not?                                                                  Yes

 

 

N P KAUSHIK – MEMBER (JUDICIAL)

 

 

JUDGEMENT

 

1. Present complaint was filed in this Commission on 29.05.1998.  It was disposed of by this Commission vide orders dated 27.03.2007.  While allowing the complaint this Commission had held Punjab National Bank (OP  No.1 and 2) and Standard Chartered Bank (OP No. 3) guilty of ‘deficiency in service’.   Both the OPs were held liable to compensate the complainant by payment of  amount of Rs.86,737/- and Rs.96,368/- for the adverse movement of foreign exchange rates for the period from February – March 1996.  Costs of litigation of Rs10,000/- were also awarded.  Aggrieved against the said orders OP (Punjab National Bank) preferred an appeal in the National Commission submitting that it had not been served with the notice of the complaint.  Same was the stand taken by  Standard Chartered Bank (OP3).  Hon’ble National Commission vide orders dated 03.07.2012 allowed the appeal and directed this Commission to decide the complaint afresh.  It was observed by the National Commission that the orders passed by the State Commission were bereft of reasons. 

 

2. In brief, the complainant Overseas Incorporation, C-25, Indira Market, Old Sabzi Mandi, Delhi-110007 sold and delivered to Ms. Ch. Mohd. Siddiqui and Sons, P-167, New Grain Market, Dijkat, Faisalabad, Pakistan the goods of the following description:
   1. 600 bags of Bhindi Pusa Sawni seeds for INR 6,75,000/-.
   2. 750 bags of Bhindi Pusa Sawni seeds for INR 8,43,750/-.

 

3. The aforesaid transactions took place under the letter of credit bearing No. L/C No. 841/950156 dated 29.11.1995 issued by Faislabad Unit of Standard Chartered Bank (OP3).  Punjab National Bank (OP1 & OP2) acted as bankers of the complainant.  Terms of payment were as per letter of credit payable at sight by negotiations with any bank in India in Indian rupees.  Remittance of Rs.6,75,000/- routed through FOBNLC No. 675499/96 dated 25.01.1996 and of Rs.8,43,750/- through FOBNLC no. 675500/96 dated 25.01.1996 was issued by OP2.

 

4. The abovesaid transactions allegedly suffered from the following deficiencies:
   1. Deficit of a sum of Rs.86,737/- in as much as only a sum of Rs.14,32,013/- was remitted against total funds of Rs.15,18,750/-.

 

2. No confirmation from OP-2 regarding forwarding of the GR Form to the Exchange Control Department of the Reserve Bank of India.

 

3. Deficit of Rs.86,737/- as only a sum of Rs.14,32,013/- was remitted against total funds of Rs.15,18,750/-.

 

4. Arbitrary conversion of the transaction from that in Indian currency to that in US Dollars.

 

5. Adverse movement of foreign exchange rates for the period February-March, 1996 on account of delay and negligence on the part of the OPs resulting in financial loss to the complainant to the extent of Rs.91,368/-.

 

5. Defence raised by Standard Chartered Bank (OP3) was that it had remitted payment under letter of credit in US Dollars as per terms of Letter of Credit.  Standard Chartered Bank (OP3) submitted that the complainant was a seller who had a contract with an entity in Faisalabad (Pakistan) the buyer.  At the instance of the said buyer, Standard Chartered Bank (OP3) issued a Letter of Credit bearing No. 841/950156 dated 29.11.1995 in favour of the complainant.  Punjab National Bank (OP1 & 2) was acting as a negotiating bank whereas Standard Chartered Bank (OP3) was a reimbursing bank.  Punjab National Bank (OP & OP2) lodged reimbursement claim with Standard Chartered Bank (OP3) in INR currency.  As per reimbursement instructions reimbursement was required to be made in respect of Dollar Account.  Accordingly Standard Chartered Bank (OP3) advised Punjab National Bank (OP1 & 2) to reclaim in US Dollars.  This was required as per RBI Regulations.  Punjab National Bank (OP1 & 2) did not lodged the claim in US Dollars.  Settlement was done after converting the amount into US Dollars.  Thereafter Punjab National Bank (OP1 & 2) reconverted the same into INR and paid to the complainant.  A difference of Rs.86,737/- occurred on account of exchange rate.  Payment was finally made on 26.03.1996.

 

6. Punjab National Bank (OP1 & 2) submitted that as per FERA Guidelines, trade between India and Pakistan at the relevant point of time was to take place in ACU (Asian Clearing Union) Dollars only.  It further submitted that the complainant on the contrary had got opened the letter of credit in violation of the law of the land.  On realizing its mistake, complainant instructed Punjab National Bank (OP1 & 2) to claim reimbursement from HSBC Bombay and thereafter from Standard Chartered Bank, New Delhi.  Complainant also authorised Punjab National Bank (OP1 & 2) to accept a sum of Rs.17,850/- from Standard Chartered Bank (OP3) towards interest due to delayed remittance of funds.

 

7. Contention of Punjab National Bank (OP1 & 2) is that the shortfall of Rs.86,737/- took place on the account of exchange rate fluctuation only.  In case of the fluctuation moving in favour of complainant, he would have been a happier lot.  Punjab National Bank (OP1 & 2) has no role to play in the upward or downward fluctuation. 

 

8. Parties placed on record affidavits toward evidence.  Arguments have been addressed by the Counsel for complainant Sh. A K Kaushal, Counsel for Punjab National Bank (OP & OP2) Sh. Sanjeev Bajaj and Counsel for Standard Chartered Bank (OP3), Ms. Suchita Sharma. 

 

9. Ld. Counsel for the Standard Chartered Bank (OP3) relied upon its letter dated 29.08.1996.  The relevant para of the same is reproduced below:

                        “Though we received an “authorisation to reimburse” from SCB, Pakistan vide telex in no. 00737 on February 18, 1996 we were unable to act on the same until receipt of your reimbursement claim.  Please note that till date we appear not to have received your claim.  The payment was in fact effected at the rupees of our Assistant Manager, Mr. Vibhuti Sharma.

However, in view of our relationship with your esteemed institution and the inconvenience suffered by your client, we are agreeable to compensating you for the delay in remission of funds.  On the assumption that we received your claim in USD (vide your letter dated February 27, 1996) by February 29, 1996 we shall compensate you for a period of 26 days beginning March 1, 1996 to March 25, 1996 (date of receipt of funds by yourselves) @ 16.5% (your prime lending rate) calculated on INR 15,18,750/- (total amount of the L/C).  The same shall be effected by us on receipt of your compensation claim for an amount of INR 17,850.51”

 

 

10. Ld.  Counsel for Standard Chartered Bank (OP3) has argued that on the relevant date, in terms of RBI regulations, transactions relating to letter of credit could take place only in US Dollars and not in Indian rupees.  Rule position is admitted by the complainant and Punjab National Bank (OP1 & 2) as well. 

 

11. Before proceedings further, it may be mentioned here that the letter of credit has not been placed on record by any of the parties.  Amended letter of credit shows that it was amended only on 16.01.1996.  It was so amended after the complainant realised his mistake and Punjab National Bank (OP1 & 2) settled the matter after correspondence with Standard Chartered Bank (OP3). 

 

12. With the aforesaid background of facts we are confronted with a question whether the complainant is entitled to get the benefit of his own wrong when he admittedly initiated the transaction in Indian rupees contrary to the instructions of Reserve Bank of India.

 

13. Punjab National Bank (OP1 & 2) in its letter dated 06.05.1996 wrote to the complainant that the export documents submitted by the complainant were of the value of USD 41,199.25.  Complainant never challenged the correctness of the said amount.  Parties after discovering the discrepancy of the invoice being in Indian rupees rectified the error.  Now it does not lie in the mouth of the complainant to say that either Punjab National Bank (OP1 & 2) or Standard Chartered Bank (OP3) was liable to make good loss, if any, suffered by the complainant on account of fluctuation in exchange rates.  It is not the case of the complainant that after the rectification of the error any of the OPs slept over the matter.  A reasonable time has to be given to the bankers for completing the transactions.  For these reasons, I am of the considered opinion that the complaint is devoid of merits.  The same is hence dismissed.  File be consigned to record room.

 

(N P KAUSHIK)

MEMBER (JUDICIAL)​