DREAM DECOR vs State Bank of India

THIS complaint has been filed for recovery of a sum of Rs. 10.00 lakhs from the opposite parties. That amount consists of Rs 5.00 lakhs towards loss of profit and another sum of Rs. 5.00 lakhs towards loss of reputation and future prospects of business and mental torture for the uncertainty caused in the mind of the complainant regarding his future business.

THE claim of the complainant for recovery of compensation of Rs. 10.00 lakhs centres round a cheque bearing No. 627926 dated 21.8.1995 issued by the complainant to M/s. Vidyut Real Estates Pvt. Ltd., which on presentation was returned unpaid with the endorsement ''Refer to Drawer''. THE case of the complainant is that he had cash credit facility with the first opposite party to an extent of Rs. 2,00,000/- against hypothecation of stocks and in the course of business he used to buy his requirements from M/s. Vidyut Real Estates Pvt. Ltd., and accordingly he had issued a cheque for Rs. 45,000/-, dated 21.8.1995 favouring M/s. Vidyut Real Estates Pvt. Ltd. and the same has been returned unpaid with the endorsement as ''Refer to Drawer''. It has been pleaded, this return of cheque issued by him was unwarranted and was also unprecedented and that the same has resulted in loss of reputation and business to him for a period of four months. THE complainant has referred to the exchange of letters between him and the opposite party from 5.9.1995 to 23.11.1995. THErefore he has sought for the recovery of the two sums of Rs. 5,00,000/- totalling to Rs. 10,00,000/- from the opposite parties. The first opposite party has filed his written version in reply to the complaint. That the complainant had cash credit facility to the extent of Rs. 2,00,000/- and that he issued a cheque for a sum of Rs. 45,000 /- and the same on presentation was not honoured and was returned with an endorsement as ''referred to drawer'', are not disputed by the opposite parties. It has further been pleaded that the return of cheque was under bonafide belief that the cheque in question was issued for inter-firm transaction which was not allowed under cash credit accommodation; that the complainant has been put to any kind of financial loss or it is to an extent of Rs. 5,00,000/- or that there has been any loss of reputation to him or that it is liable to compensate the complainant to the extent of Rs. 5,00,000/- towards loss of reputation, have been denied. It has further been pleaded that there was a meeting between the complainant and the Zonal Manager of the State Bank of India and all the disputes were settled and it was agreed that the first opposite party should give a letter of apology and that has been given and therefore, the whole matter stands settled and there is no scope for the complainant to further resort to any grievance for award of compensation. Therefore, it has been prayed that the complaint be dismissed.

Before we advert to the point that arises for consideration in this complaint, it would be useful to refer to one aspect, namely, the complainant is the proprietor of the concern called "M/s. Dream Decor" and the cheque in question had been issued in favour of Vidyut Real Estates Pvt. Ltd., of which the complainant himself is the Managing Director. The first opposite party in his letter dated 5.9.1995 written to the complainant has pointed out that withdrawals from the working capital facility should be made strictly for making genuine business payments pertaining to the firm''s activity. In another letter dated 16.9.1995 the first opposite party had informed the complainant that cheques drawn favouring Associates/related concern may not be honoured by the branch unless each such transaction is vetted by the Bank by way of scrutiny of invoice copies, delivery challans and physical verification of stocks. In letter dated 16.9.1995, the first party has also referred to the relevant conditions which form part of the working capital finance extended to the complainant as hereunder :s "No part of the loan will be allowed to be utilised for financing other concerns, if any, under the same management". Existence of such a condition is not disputed by the complainant. The first aspect that has to be examined is under the circumstances, whether the complaint is maintainable before the Commission under the provisions of the Consumer Protection Act.

THE National Commission in the decision in Ram Kripal Bhargava v. Union of India, I (1991) CPJ 23 at 25 (NC) has observed as follows: "It is for the Bank to decide whether a particular party is eligible for credit within the framework of the credit policy laid down by the Government of India and the Reserve Bank of India, xx xx If there is any evidence of proved abuse of exercise of their authority for giving credit by Bank Officials, redress has to be sought from the officers of the Bank in their higher echelons".

In the decision in The Branch Manager, State Bank of India v. Sunderlal Kela, reported in III (1995) CPJ 5 (NC)=1986-96, Part II page-2702 at 2705, National Commission and S.C. on Consumer Cases, it has been pointed out by the National Commission as hereunder : "It has been repeatedly held by this Commission that it is for the Bank to decide whether a particular party is eligible for the grant of credit within the framework of the credit policy laid down by the Government of India and the Reserve Bank of India. It will not be open to this Commission to substitute its judgment for the decision to be taken by the Banks for giving credit".

AGAIN the National Commission observed as hereunder in the decision in M/s. Essex Farms (P) Ltd. v. Punjab National Bank, reported in I (1992) CPJ 111 (NC)=National Commission Rulings on Consumer 1986-1995 page 530 at 532: "The refusal of the Bank to enhance the existing sanctioned limits of credit or even to continue to grant credit to the extent of the limits already sanctioned cannot and does not constitute a breach of Bank''s obligation towards its debtors. (emphasis supplied by us) In view of these observations of the National Commission, it has to be held that there is no scope for the complainant to raise a consumer dispute before this Commission in respect of non-encashment of cheque for the sum of Rs. 45,000/- issued by the complainant, with the endorsement as ''Refer to the Drawer''. Further as pointed out by the National Commission, it would not be open for this Commission to substitute its judgment in relation to the honouring the said cheque and therefore, the complaint is not maintainable. Even assuming for a moment that the complaint is maintainable, it has to be seen whether there has been any abuse of exercise of authority by the first opposite party in not honouring the cheque for Rs. 45,000/- issued by the complainant. As already pointed out that the complainant is the proprietor of the concern ''Dream Decor'', which has been extended a cash credit facility and that Vidyut Real Estates Pvt. Ltd., in whose favour the cheque in question was issued is a private limited company of which the complainant himself is the Managing Director, is not in dispute. The complainant has not placed any other material to show who are all the other shareholders in the Company Vidyut Real Estates Pvt. Ltd. That one of the conditions for grant of cash credit facility is that no part of the loan will be allowed to be utilised for financing the other concern, if any, under the same management as mentioned in the letter of the first opposite party dated 16.9.1995 has not been challenged. It is not the case of the complainant that the invoice copies, delivery challans in respect of the transaction pertaining to the cheque for Rs. 45,000/ - were made available to the first opposite party or that physical verification of stocks was done or that there was material to show that the complainant had genuine business transaction with the Company of which he was the Managing Director. If under these circumstances, the Branch Manager of the State Bank of India has felt that honouring the cheque would amount to utilisation for financing other concern under the same management, it cannot be said that there has been any abuse of authority vested in him regarding grant of cash credit facility.

EVEN before this Commission, the complainant has not produced any papers whatsoever in the first instance to show that he had in fact purchased the various items from the Company in whose favour the cheque had been issued. Later at the time of arguments, he produced some copies purporting to be the credit bills and income tax orders. Delivery notes and stock books of both the concerns have not been produced. In the assessment order relating to Vidyut Real Estates Pvt. Ltd., we do not get any material to show that it was having genuine business transaction with the complainant who is no other than its own Managing Director. Copies of statements as also the credit bills produced before this Commission for the first time at the time of arguments do not also bear the seals of the Income-tax Authority. Under these circumstances, on the basis of the material placed by the complainant, it would not be possible for this Commission, even assuming that it is open to the Commission to come to a different conclusion in relation to extension of cash credit facility pertaining to the cheque in question, it is difficult to come to any different conclusion than the one arrived at by the Branch Manager of the first opposite party. Therefore that is also a circumstance to hold that there is no abuse of the authority vested in the first opposite party.

IT has to be next seen whether there has been any loss of reputation and loss of income so far as the complainant is concerned on account of bouncing of the cheque in question. IT has to be noticed that cheque has been issued by the complainant as proprietor of complainant''s concern to the Company of which he was the Managing Director. IT has not been issued to any stranger. Therefore, in respect of the transaction between these two legal entities, there could hardly be any scope for loss of reputation so far as the complainant is concerned. IT was tried to be contended by the complainant that Vidyut Real Estates Pvt. Ltd. has suffered loss on account of this unwarranted action of the Bank. We are not concerned in the present dispute whether Vidyut Real Estates Pvt. Ltd. has been put to any loss or not. What we are concerned is loss of reputation of the complainant and financial loss incurred by the complainant. In the circumstances, there could hardly be any scope for the loss of reputation of the complainant. Even otherwise, it may be noticed that the complainant in the fax message dated 7,11,1995 has unequivocally stated, "we shall not claim any amount for the loss of prestige. However, we stick to our claim for Rs. 5,00,000/- received from you". Therefore, even on this ground, there is no scope for the complainant to claim any amount by way of damages for loss of reputation.

Then we have to examine whether the claim for actual financial loss to the extent of Rs. 5,00,000/- has been made out. In the fax message referred to above, the complainant has stated that "we suffered direct loss to the tune of Rs. 2.5 lakhs and a further Rs. 2.00 lakhs by way of indirect loss". In his earlier letter dated 18.10.1995, the complainant had estimated his direct loss at Rs. 2.5 lakhs and indirect loss at Rs. 1.00 lakhs and including the claim for loss of prestige at Rs. 5,00,000/- he has mentioned that the total compensation payable is Rs. 8.5 lakhs. Therefore the earlier claim for financial loss even according to his earlier letter is Rs. 3.5 lakhs.

EXCEPT making out a bald claim that he has been put to great financial loss to the extent of Rs. 5,00,000/-, or 3.5 lakhs, the complainant has not provided any material whatsoever in respect of his profit or loss for the earlier years or for the year in question or any subsequent years or placed any further material to show that the said loss is attributable to bouncing back of the cheque for Rs. 45,000/-. Without laying any foundation for the claim, if the complainant only makes a fanciful claim in this regard, it is not possible for this Commission to accept his Ipsi dixit which has no basis whatsoever. Therefore, it has to be held that he has not incurred any financial loss, direct or indirect, or that it is to the tune of Rs. 5,00,000/- as sought to be made out by him. Therefore, even assuming for a moment that the complaint is maintainable, and further also assuming for arguments sake that the Branch Manager of the first opposite party was not justified in returning the cheque in question with the endorsement as ''Refer to the Drawer'' the complainant has not made out any case for award of any compensation. As pointed out by the National Commission, the complainant has taken up this matter with the higher authorities and in order to maintain good relation with the customers, the matter has been tried to be amicably settled but the complainant not being satisfied has made fanciful claim which has no legs to stand. Under the circumstances, considering from any angle, it is clear that the complainant has not made out a case for award of compensation to him. In the result, we dismiss the complaint with costs of Rs. 1,000/-. Complaint dismissed.