Haryana

StateCommission

A/1010/2015

FEDERAL BANK LTD. - Complainant(s)

Versus

SATISH JANGRA - Opp.Party(s)

SUSHIL GROVER

30 May 2016

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION HARYANA, PANCHKULA

                                                 

First Appeal No  :      1010 of 2015

Date of Institution:        27.11.2015

Date of Decision :         30.05.2016

 

1.     The Federal Bank Limited 510-513/8, Harpreet Plaza, Opposite Railway Road, G.T. Road, Panipat through its Manager.

2.     The Federal Bank, Head Office at Federal Towers, Aluva, Erna Kulam-683101, Kerala, India.

                                      Appellants/Opposite Parties No.1 & 2

Versus

 

1.      Satish Jangra s/o Sh. Rampal Proprietor of M/s V.K. Tex C/o 1538, HUDA, Sector-12 (Part), Panipat.

                                      Respondent/Complainant

2.      Distribuciones Perez SRL, Calle Hermanos Miguel, 182-A, Cuenca, Ecuador, Cable Perez through its Director.

Respondent/Opposite Party No.3

 

CORAM:             Hon’ble Mr. Justice Nawab Singh, President.

                             Mr. B.M. Bedi, Judicial Member.

                                                                                                         

Argued by:          Shri Sushil Grover, Advocate for appellants.

Ms. Anju Singh and Ms. Chanchal Jangra, Advocates, for respondent No.1.

Respondent No.2 –Proforma.

 

                                                   O R D E R

 

B.M. BEDI, JUDICIAL MEMBER

 

This appeal has been filed by The Federal Bank Limited (for short ‘Federal Bank’)-Opposite Parties No.1 and 2, against the order dated October 16^th, 2015 passed by District Consumer Disputes Redressal Forum, Panipat (for short ‘the District Forum’) in Complaint No.12 of 2014 filed by Satish Jangra-Complainant/respondent No.1.

2.      Satish Jangra- complainant (respondent No1) filed complaint submitting that for the purpose of earning his livelihood, he had been running Home Textile business under the name and style M/s VK Tex. He was maintaining the account with opposite party No.1/appellant. The complainant was engaged in export business. It was submitted that during the last months of 2011, the complainant got overseas export order from M/s Distribucions Perez SRL Calle Hermanos Migue Equador Cable Perez, Uruguay-Opposite Party No.3. The complainant exported home textile by way of shipments. Export business was being done through Federal Bank-opposite parties No.1 and 2/appellants. The appellants/opposite parties No.1 and 2 were to collect overseas export proceeds against delivery and those documents of payment have to be transmitted between exporter and consignee of goods through foreign exporter’s bank.

3.      The complainant exported home textile vide invoice No.VK-47 dated 05.12.2011 worth US$ 27334. The export documents complete in all respects were entrusted to the opposite parties No.1 and 2/appellants with special instructions vide letter dated 20.01.2012 to send the documents for securing and collection of exports proceeds of US$ 27334 by way of sending documents to consignee’s bank, US Bancorp Calale General Torres, 150 Cuenca, Ecuador (hereinafter referred to ‘US Bank’). The opposite parties No.1 and 2/appellants sent the documents in due course for collection of payment to their foreign counter part bank, however did not receive payment by way of export proceeds against invoice No.VK-47 dated 05.12.2011 worth US$ 27,334 for securing of export payment. It is further stated that Federal Bank was instructed by the complainant to hand over shipping documents to the opposite party No.3 only after collecting the payment as per Goods Invoice. However, the opposite party No.1 without collecting the payment entrusted the shipping documents by sending them through courier and on the basis of which the opposite party No.3 received the goods without payment and efforts made by the complainant for payment proved futile. The opposite party No.1 was stated to have committed deficiency in service by sending the shipping documents directly to the consignee, whether directly or through arranged foreign bank, without collecting payment. It was stated that the exchange rate equivalent to US$ 27334 was Rs.14,33,668/-. The complainant, thus, sought payment of Rs.14,33,668/- alongwith interest.

4.      The opposite parties No.1 and 2 contested the complaint however opposite party No.3 was given up.

5.      Opposite Parties No.1 and 2/appellants, in their reply raised objections regarding complainant being engaged in commercial activities and export business and was not a consumer. The complainant instructed the opposite parties No.1 and 2/appellants for sending the bills to US Bank for collection of the amount and accordingly the opposite party No.1 sent the bills through courier to the consignee US Bank and on inquiry it revealed that the courier agency had delivered the documents to US Bank and despite their efforts, US Bank did not make payment to opposite party No.1. The complainant not being a consumer and the complainant may have sent the documents directly to the consignee, thus complaint was not maintainable.

6.      On merits, it was stated that the complainant was not a consumer. The opposite parties admitted the complainant maintaining the account with them and also that the complainant being engaged in the business of export. It was admitted that the opposite party No.1 being banker of the complainant, was working as an agent of the complainant. It was also admitted that the complainant had sent shipment to opposite party No.3 and documents handed over to them which the opposite parties No.1 and 2 had sent by courier to US Bank, who further delivered the documents to consignee without payment. Denying any deficiency in service, dismissal of the complaint was prayed for.

7.      The parties led evidence in support of their respective claims. The District Forum after evaluating the pleadings and evidence of the parties, vide impugned order allowed complaint directing the opposite parties/appellants as under:-

“….Thus, we held the respondents No.1 and 2 to be negligent and deficient in their services and they are liable to make the payment of Indian Rupees 14,33,668/- to the complainant alongwith interest at the rate of 9% per annum from the date of filing the complaint till its actual realization and the respondents No.1 and 2 are also liable to compensate the complainant and thus, we further direct the respondents No.1 and 2 to compensate the complainant to the tune of Rs20,000/- for rendering gross negligent and deficient services, for causing unnecessary mental agony, harassment and under the head of litigation expenses.”

8.      Document Exhibit C-1 is the export order which finds mention “Terms of payment 100% DP sight via bank documents against payment”.  Exhibits C-2 and C-3 are the export invoices and details. Exhibit C-4 is the bill of lading.

9.      Opposite Parties No.1 and 2/appellants do not deny the export and shipment by the complainant and documents being entrusted to them.  Complainant got issued notice Exhibit C-7 and its reminder as Exhibit C-10. The opposite parties/appellants gave reply (Exhibit C-9) to said notice wherein they have admitted the complainant having instructed for sending the bills for payment. Relevant portion of reply is reproduced as under:-

“It is admitted that your client vide letters dated 6.1.2012 and 20.1.2012 had instructed us for sending the following bills namely 1. VK-44: MUM11120198 for an amount of USD 15202.65 and 2 VK-47: MUM11120212 for amount of USD 27334.00 to US BANCORP, CALLE GENERAL TORRES 150 CUENCA, ECUADOR for collection.”

“It is pertinent to note that we have acted as your client’s collecting bank and as per your client’s request we had sent the bills for collection to US BANCORP, CALLE GENERAL TORRES 150 CUENCA, ECUADOR and as per the information received from DHL it reveals that the bills were delivered to US BANCORP, CALLE GENERAL TORRES 150       CUENCA, ECADOR. The overseas Bank was instructed to release the documents against payment through our covering letters accompanying the bills. We are not aware of the fact that the bills were delivered to the consignee without receipt of payment.”

10.    The opposite parties have placed on the file documents dated 10.01.2012 and 23.01.2012 (page 89 & 90 of District Forum file) which the appellants/opposite parties No.1 and 2 had sent to their foreign counter part. Both these documents find special instructions as under:-

                   “Special Instructions:

1. Deliver documents against payment.
2. Advice telex/airmail/ non-payment/non acceptance stating reasons.”

11.    Even documents Annexure R-1 and R-2 placed on the file by the appellants/opposite parties No.1 and 2, find these instructions. The complainant has specifically issued the instructions to deliver documents against payment and undisputedly US Bank is a foreign bank with whom the Federal Bank had arrangement in foreign countries. The complainant has nothing to do with the US Bank Corporation. It was for the Federal Bank that in case they have branch in the said country, they send the documents to the said branch and in case the bank does not have the foreign branch, the documents are sent to the foreign bank with whom they have arrangements.

12.    The complainant has placed on the file International Home Commercial the world business organization, the terms of payment, which have been reproduced below:-

“For Exports from India under usual trade practices and also as per RBI (Exchange Control) regulations the following payment terms are allowed:

Not requiring any prior/post-RBI/Bank approval i.e. under general permission.

1. 100% Advance Payment
2. Letter of Credit (DP or DA sight)
3. D.P. Sight
4. D.A. Sight (up to 180 days D/A)”

13.    D.P. has been defined as under:-

“Documents Against Payments (D/P)”

This is sometimes also referred as Cash against Documents/Cash on Delivery. In effect D/P means payable at sight (on demand) the collecting bank hands over the shipping documents including the document of title (bill of lading) only when the importer has paid the bill. The drawee is usually expected to pay within 3 working days of presentation. The attached instructions to the shipping documents would show “Release Documents Against Payment”

                   Risks:

Under D/P terms the exporter keeps control of the goods (through the banks) until the importer pays. If the importer refuses to pay, the exporter can protest the bill and take him to court (may be expensive and difficult to control from another country). 

Find another buyer or arrange a sale by an auction.

With the last two choices, the price obtained may be lower but probably still better than shipping the goods back, sometimes, the exporter will have a contact or agent in the importer’s country that can help with any arrangements. In such a situation, an agent is often referred to as a Case of Need, means someone who can be contacted in case of need by the collecting bank.”

14.    Not only that it is admitted case of the appellants/opposite parties that documents were to be delivered against payment. Even in the documents Annexure R-1 and R-2 placed on the file by the appellants/opposite parties, these documents contain special instructions for the bank for delivering the documents against payment. It has been proved on the record that the documents were released without receiving the payment and consequently it was certainly a deficiency in service on the part of the appellants/opposite parties No.1 and 2 in delivering the documents contrary to the instructions of the complainant. If the US Bank Corporation with whom the appellants/opposite parties No.1 and 2 have overseas arrangements, delivered documents without payment contrary to instructions, it is for opposite parties No.1 and 2/appellants sue for recovery of the amount. Complainant has no link with foreign counter part of opposite parties No.1 and 2/appellants.

15.    In Standard Chartered Bank Ltd. v. Dr. B.N. Raman, JT 2006 (6) SC 368, Hon’ble Supreme Court held as under:-

“8.     The Consumer Protection Act, 1986 provides for formation of National Commission; State Commission and District Forum. These are remedial agencies. Their functions are quasi judicial. The purpose of these agencies is to decide consumer disputes. Activities relating to non-sovereign powers of statutory bodies are within the purview of the Act. The functions of such statutory bodies come under the term 'service' under section 2(1)(o) of the Act. Banking is a commercial function. 'Banking' means acceptance, for the purposes of lending or investment of deposit of money from the public, repayable on demand or otherwise [See: section 5(b) of Banking Regulation Act, 1949]. The intention of the 1986 Act is to protect consumers of such services rendered by the banks. Banks provide or render service/facility to its customers or even non-customers. They render facilities/services such as remittances, accepting deposits, providing for lockers, facility for discounting of cheques, collection of cheques, issue of bank drafts etc. In Vimal Chandra Grover v. Bank of India, [AIR 2000 SC 2181, this court has held that banking is business transaction between bank and customers. Such customers are consumers within the meaning of 2(1)(d) (ii) of the Act.”

16.    In National Bank Limited versus Ghanshyam Das Agarwal & ors, I(2015) BC 493 (SC), Hon’ble Apex Court held that “Law assures Exporter and its Bank to repose in expectation that consignment which is subject-matter of Letter of Credit is not usurped by Importer/Consignee or its agents without remitting payment to consignor’s Bank-This is strict liability cast on Bank which opens Letter of Credit-It is only when irretrievable injury is bound to result and it is plainly evident that there is egregious fraud strictly ascribable to beneficiary of LC that a reason to insulate a party before it against liability comes about only through prompt intervention and interdiction of Court”

17.    This case is squarely covered by the judgments (Supra) relied upon on behalf of the complainant. It is established that inaction on the part of appellants/opposite parties No.1 and 2 enabled the Importer to have the consignment released without authority, so it was in clear violation of its fiduciary responsibility. Thus, no case for interference in the impugned order is made out.

18.    Hence, the appeal is dismissed being devoid of merits.

19.    The statutory amount of Rs.25,000/- deposited at the time of filing the appeal be refunded to the complainant against proper receipt and identification in accordance with rules, after the expiry of period of appeal/revision, if any.

 

Announced: 30.05.2016

(B.M. Bedi) Judicial Member

(Nawab Singh) President

 

CL