JINDAL POLYSTER And STEEL LTD vs Bank of America

THIS complaint has been filed by Jindal Polysters and Steel Limited, formerly known as M/s. Hindustan Pipe Udyog Limited. The opposite parties are: (1) The Bank of America; (2) The Bank of Credit and Commerce, International (Overseas) Limited through its official liquidator (BCCI for short). M/s. Hindustan Syndicate Fibres is one of the divisions of the complainant Company. The complainant has been having dealings with M/s. Sterlite Projects Limited and according to the complainant, Sterlite Projects Limited owed a sum of Rs. 7,03,097/- as on 26.6.1991 on account of supply of certain goods made by the complainant. In order to pay part of abovementioned amount, M/s. Sterlite Projects Limited has issued a Bank Draft No. 007217 dated 2.7.1991 for Rs. 5,90,183/- payable at the Bank of America, New Delhi. The Draft was Crossed Account Payee only and was payable at par by opposite party 1. The draft was deposited by the complainant in the State Bank of Patiala and it was presented to opposite party 1 on 8.7.1991. The same was, however, returned on 9.7.1991 with the remarks "refer to drawer." The Draft was again presented for payment on 21.9.1993 and it was again returned on 23.9.1991 with the same remarks namely, refer to drawer. The complainant''s case is that opposite party 1 acted negligently and also with mala fide intention in returning the draft for the reason assigned by it. According to the complainant, there was sufficient credit balance in the account of BCCI when the draft was returned unencashed. The complainant had suffered loss on account of the dishonouring of the draft and has claimed compensation amounting to Rs. 8,91,480/- under the following counts: (1) Amount of the draft Rs. 5,90,183/- (2) 24% interest Rs. 2,83,247/- (3) Expenses on visit to Bombay and Delhi Rs. 10,000/- (4) Legal notice issued to opposite party 1. Rs. 550/- (5) Litigation expenses incurred in the present complaint Rs. 7,500/-

ARRAYED as opposite parties were the Bank of America (opposite party 1) and Bank of Credit and Commerce International (Overseas) Limited through Official Liquidator (opposite party 2). Written version was filed on behalf of the opposite party 1. It was stated that the answering respondent was put on notice by its London office about the Press Note released by the Bank of England informing of the action being taken to secure the control of assets of Bank of Credit and Commerce International (BCCI) Group of Banks. Reliance was placed on a circular from the British Bankers Association (BBA) dated July 5,1991 intimating Bank of England''s decision to have Provisional Liquidator appointed on the BCCI Group of Banks and also on a copy of Bank of America World Relay dated July 5, 1991 instructing all Banks to stop payments on account of BCCI group of Banks. The answering respondent was aware that on or around 6th July, 1991, the Reserve Bank of India issued instructions prohibiting transactions of BCCI without prior written consent of the RBI. This was followed by a letter dated 23.8.1991 of the R.B.I. based on the order of the Bombay High Court July 15,1991 intimating that the RBI had been appointed Provisional Liquidators and to transfer balance lying to the credit of the BCCI to the Liquidator''s account. In short, the plea was that it was not on account of any negligence that the Bank Draft was returned unencashed, it was on account of the information with the Bank that transactions relating to BCCI had been frozen and no further action for payment could, therefore, be taken. Along with the written statement, the opposite party filed copy of Press Notes issued by Bank of England, British Bankers Association (BBA), WBG World Relay and copy of the RBI letter dated July 17,1991. In the replication filed by the complainant, it was denied that on or about 6th July, 1991, RBI had issued any instructions as alleged or that opposite party 1 was aware of any such instructions prohibiting the transactions of BCCI being effected without prior permission of Reserve Bank of India. It was further stated that instructions said to have been issued by British Bankers Association dated 5th July, 1991 was an internal matter of the organisation of opposite party 1 and on the basis of such instructions they could not avoid their liability without any notice to the General Public.

In support of its case, the complainant filed affidavit of Mr. S.R. Khandelwal, Commercial Officer, together with the copy of the reply dated 21.2.1993 received from Sterlite Projects Limited. On behalf of the opposite party 1, affidavit of Mr. Sandeep Gupta, Vice President Bank of America National Trust and Savings Associations together with the telex dated 5.7.1991 transmitted by the office of the respondent from London office based on Press Note released by Bank of England. The Bank also filed a copy of the rejected cheques record showing return of various cheques, etc. relating to BCCI during the period 6.7.1991 to 10.7.1991.

WE have carefully gone through the records and have heard Mr. H.D. Talwani, Advocate for the complainant and Mr. Ruchir Bhasin for the opposite party 1. The contention of Mr. Talwani, learned Counsel for the complainant is that the complainant had admittedly presented the Bank Draft in question on 8.7.1991 and the same was returned on the ground of inadequate balance which was on the face of it absurd. A Bank Draft is issued against full payment and there was no question of the same being returned unencashed for want of adequate funds. He further submitted that the opposite party had failed to show that it had received order of any Court or instructions of the RBI on 8.7.1991 freezing the transactions relating to BCCI. With regard to the information based on Press Notes referred to in the written statement of the opposite party, it was stated that it was not proved that the Barakhamba Road Branch of the Bank which was the concerned branch, had received those documents on the crucial day and it was of no avail to obtain copies of those documents at the present stage. The point sought to be made is that the opposite party Bank had no jurisdiction whatsoever to return the Bank Draft unencashed and in the facts of the case, the irresistible conclusion was that the Bank was guilty of negligence and liable to compensate the complainant.

THE material question for consideration is whether the Bank returned the draft unencashed without any rhyme or reason and on account of negligence or it had basis for declining the payment. On a careful consideration of the material placed on record, we are of the view that the Bank acted on the basis of information received by it through its official channel that transactions relating to BCCI were running into difficulties; investigations had been started in respect of the BCCI Group of Companies in several countries in the month of June, 1991, Liquidators had been appointed in some cases and other countries were following suit. THE letter of the RBI dated 17.7.1991 itself refers to its earlier letter dated 6.7.1991 whereby BCCI was directed not to transact any business without the prior permission in writing from the RBI. Reference was also made to its subsequent letter dated July 9,1991 whereby further instructions under Section 35(A) of the Banking Regulation Act, 1949 had been issued. It was further stated in the letter that on July 15, 1991 RBI moved the High Court of Bombay u/Section 38 of the Banking Regulation Act for the liquidation of the local office of the BCCI and also for the appointment of a Provisional Liquidator u/Section 39 r/w the Provisions of the Companies Act to take possession of the assets and properties and affairs of the said Banks. THE Bombay High Court, it was added, had by its interim order dated 15.7.1991 appointed the central office of the State Bank of India as Provisional Liquidator and accordingly the Chief General Manager of the State Bank of India (SBI) had taken possession of the affairs of the said BCCI on July 16, 1991. THE material on record, therefore, goes to show that the respondent Bank had information about the transactions of BCCI being frozen. It was, therefore, a conscious decision why the amount of the Bank Draft was not paid. It was not returned on account of negligence. In a recent decision in R.R. Gopal @ R. Raja Gopal v. Chairman, Tamil Nadu Electricity Board, (1997) 5 CTJ 124 (CP) (NCDRC), the question arising for consideration before the National Commission was whether an intentional act on the part of the opposite party could be at the same time on account of negligence. Approving the approach and observations of the Tamil Nadu State Commission, the National Commission held that negligence and unintentional wrong doing were contrary terms and in fact, negligence was the antithesis of intentional wrong doing. In other words, intention was not an element of negligence. It was further laid down that the reliefs which could be granted to a complainant against the opposite parties by the Consumer Forums were only those, which were enumerated u/Section 14(1), of the Act. Relying on the language used in the Clause (d) of Sub-section (1) of Section 14 it was observed that it was negligence in the performance of deficient service that is the foundation of the grant of relief of compensation to a consumer for any loss or injury suffered by him. It was, therefore, firmly laid down that if there is no negligence or negligence was not established, then the Consumer Forum had no jurisdiction to grant any compensation. The National Commission placed reliance on a recent decision of the Supreme Court in the Consumer Unity and Trust Society, Jaipur v. The Chairman and Managing Director, Bank of Baroda, Calcutta and Another since reported as I (1995) CPJ 3 (SC)=(1995) 3 CTJ 97 SC (CP) in which it was laid down that the provisions of Section 14(1)(d) of the Consumer Protection Act were attracted if the person from whom damages were claimed was found to have acted negligently and such negligence had resulted in loss or injury to the person claiming damages. For the foregoing reasons, the complaint fails and the same is dismissed leaving it open to the complainant to have its remedy according to the law in the appropriate Forum. A copy of this order be communicated to the parties. Complaint dismissed.