MR. VIPIN BATRA vs STATE BANK OF INDIA & ANR

The Complainant, in Consumer Complaint No. 718/2007, claiming to be a partner of the firm, named and styled as Northern Coir, has filed this Revision Petition, questioning the legality of the order, dated 28.05.2008, passed by the State Consumer Disputes Redressal Commission, UT, Chandigarh (for short, the "State Commission") in Appeal No. 826/2008. By the impugned order, the State Commission has dismissed his Appeal, preferred against the order, dated 01.04.2008, passed by the District Consumer Disputes Redressal Forum-II, UT, Chandigarh (for short, the "District Forum"). By the said order, his complaint, alleging deficiency in service on the part of State Bank of India, SSI Branch, Mohali, Punjab, in converting the said firm''s accounts into proprietorship accounts, without his consent, came to be dismissed.

The facts, material for deciding the controversy in hand, are: On 07.04.2004, the Petitioner and his wife, Mrs. Manishwar Kaur Batra, entered into a Partnership for running the business of manufacturing and sale of rubberized Coir mattresses, at Dera Bassi in Punjab. The Petitioner had 25% share in the profits & losses of the firm, whereas his wife had 75% share. The Petitioner was named as the Managing Partner. Partnership was at will. For running its business, the firm availed of cash and credit limits from the Respondent Bank. Sometime in April, 2006, because of the marital discord, disputes with regard to the running of the firm arose between the partners. On 17.04.2006, his wife addressed a letter to the Bank, advising them to stop payment of all cheques as well as all kinds of transactions in the firm''s accounts, due to unavoidable circumstances. A legal notice of even date was also served on the Bank on her behalf. On 18.04.2006, the Petitioner also informed the Bank that his wife and her parents had removed all the records, computer etc. from the premises of the firm and had locked the factory, with the result that he was unable to operate the accounts with the Bank. He requested the Bank to recover all its dues by sale of the unit, in case the locks were not removed within a day or two, and after adjusting the loan amounts, disburse the balance amount amongst the partners, according to their share ratio. On receipt of the said letters from both the Partners, vide its letter, dated 16.05.2006, the Bank advised both of them to close all the accounts by depositing a sum of 34,88,614.68/- plus interest within seven days from the said letter, failing which suitable action to recover the dues would be taken. A similar letter of even date was also addressed by the Bank to Tejvir Singh, the Guarantor. On 04.08.2006, Mrs. Manishwar Kaur Batra, acting as partner of the said firm, addressed a letter to the Bank pleading for their co-operation in running of credit limits, etc. in the usual manner as she had started running the factory effectively. The said letter, on the letter head of the firm, was counter-signed by said Tejvir Singh, affirming his collateral security against the credit facilities to the firm.

On 26.09.2006, a letter purportedly signed by the Petitioner was received by the Bank, wherein while referring to his earlier letter, dated 18.04.2006, it was stated that he was withdrawing his earlier instructions given in the said letter; he had no objection for the dissolution of the firm and his wife, Mrs. Manishwar Kaur Batra, taking over all the liabilities and assets of the firm in her capacity as its proprietor. It was also indicated that they were in the process of amicably settling their differences.

The said letter was followed by another hand written letter, dated 29.09.2006, signed only by Mrs. Manishwar Kaur Batra, advising the Bank that the firm was being converted into a proprietorship. The letter reads as under:- " With reference to our letter dated 17.04.2006 and we advice you that we are converting our Firm from Partnership with Smt. Manishwar Kaur Batra as proprietorship at the same time we have already agreed to own the liabilities of our existing partnership firm you are requested to show in the opening of A/c of new firm and get the fresh documents with regards to the limits. We are agreeable to deposit a sum of Rs.114376 i.e Rupees One Lakh Fourteen Thousand Three Hundred Seventy Six only and balance overdue amount in five equal installments upto March 2007. You are requested to do the needful to further strengthen the security we agreeable to give additional guarantee of Sh. Tejveir Singh. Also find enclosed consent letter from the registering guarantor Shri Tejvir Singh from continuation of this guarantee to new proprietorship firm." (Underlines for Emphasis)

The letter was also accompanied by a letter addressed by the Guarantor to the Bank, inter-alia, affirming that he continues to stand as Guarantor for the new proprietorship concern, as the firm had been dissolved. Acting on the afore-extracted letter, rather swiftly, the Bank got the requisite documents executed only from Mrs. Manishwar Kaur Batra, as proprietor of Northern Coir and regularized the accounts in her name.

Having learnt about the action of the Bank in converting the firm''s accounts into proprietorship accounts, without his consent, alleging deficiency on the part of the Bank, the Petitioner filed the complaint against the Bank, inter-alia, praying for compensation of 90,00,000/- and liquidation of the assets of the firm.

The complaint was contested by the Bank. In its written version, it was stated that since vide letter dated 22.09.2006, the Petitioner had withdrawn his earlier instructions contained in his letter dated 18.04.2006 and had stated that he had no objection to the dissolution of the firm, and the other partner had taken over all the assets and liabilities of the firm in her capacity as its proprietor, the Bank accepted the request of Mrs. Manishwar Kaur Batra, regularized all the accounts and granted all the facilities, hitherto being enjoyed by the firm Northern Coir, to her.

Upon consideration of the correspondence, referred to above, the District Forum dismissed the complaint, inter-alia , holding that since the partnership was at will, it was legally and validly dissolved and, therefore, there was no deficiency in service on the part of the bank in converting the joint accounts into single accounts. The State Commission, while upholding the order of the District Forum, also observed that the allegation of the Petitioner that his wife had cheated him or had committed forgery, cannot be adjudicated by a Consumer Fora. Hence, this Revision Petition.

We have heard the Petitioner, and Learned Counsel for the Bank.

Since an unequivocal stand of the Bank is that it had converted the firm''s subject accounts to Individual accounts in the name of one of the partners of the firm on the strength of letter dated 29.09.2006 the short question for consideration is whether the said document was sufficient to carry out the subject changes in the firm''s accounts.

Section 43 of the Indian Partnership Act, 1932, deals with the dissolution of partnership at will. It provides that a partnership at will can be dissolved by serving a notice in writing by a partner to all the other partners of his intention to dissolve the firm. The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, then as from the date of the communication of the notice. The provision is unambiguous. It is true that the Section does not preclude inference from circumstances that a partnership at will has terminated, although no notice to dissolve the firm has been given by a partner, but such circumstance must be effectual, reflecting an unequivocal intention to dissolve the firm. That intention must be final and communicated to other partners.

Surely, the Bank cannot be so naive that it would not understand the scope and purport of the provisions contained in Section 43 of the Partnership Act and, therefore, what needs to be examined is whether any of the documents, referred to above, can be construed as expression or communication from one partner to another, his or her unequivocal intention to dissolve the firm, a pre-requisite for dissolution of partnership at will. In our opinion, none of the letters addressed by the parties to the Bank, meets the fundamental requirement as stipulated in Section 43 of the Partnership Act. Even letter dated 22.09.2006, alleged to have been written by the Petitioner directly to the Bank cannot be construed as notice of dissolution of partnership as contemplated in the said provision, apart from the fact that according to the petitioner, the hand writing expert has found the signatures on the said letter to be forged. As regards the two letters dated 17.04.2006, written by Mrs. Manishwar Kaur and 18.04.2006, written by the Petitioner to the Bank are concerned, both these relate to stoppage of the partnership business, which is quite different from dissolution of partnership. Now adverting to the crucial letter dated 29.09.2006, extracted above, on the basis whereof the Bank claims to have formed the opinion that the partnership had been dissolved and got the requisite documents executed from Mrs. Manishwar Kaur and carried out the necessary changes in the accounts, to say the least, reflects the poor knowledge of the Bank''s officials to understand the nature of a document. The tone and tenor of the said document, highlighted for easy reference, shows that it is purportedly written by both the partners of the firm and therefore, was required to be signed by both of them. However, admittedly it was signed only by one partner, viz., Mrs. Manishwar Kaur which fact seems to have been glossed over by the Bank for the reasons best known to it. It is quite intriguing to note that before taking cognizance of such a letter, the Bank did not think it proper to obtain a confirmation from the other partner in respect of the said letter, more so, when it was evident from the letter of both the partners that all was not well with the matrimonial relationship between them. We are of the opinion that there was gross "deficiency", as defined in Section 2(1)(g) of the Consumer Protection Act, 1986, on the part of the Bank, in relation to its services rendered as a Banker, by ignoring the statutory provisions and in not taking due precautions before converting the firm''s account into an individual''s account.

Having arrived at the said conclusion, the next question for consideration is what compensation the Petitioner is entitled to on account of the said deficiency on the part of the Bank. Although it was pleaded by the Petitioner that after the change in the accounts, Mrs. Manishwar Kaur has sold of all the assets belonging to the firm, causing him substantial monetary loss, we are of the view that for the said deficiency the Bank cannot be made liable to indemnify the Petitioner for the actual loss, claimed to have been suffered by him. Having regard to the facts and circumstances of the case, we are of the opinion that a lump sum compensation of 5,00,000/- shall meet the ends of justice. We order accordingly.

Resultantly, the Revision Petition is allowed; the impugned order is set aside with a direction to the State Bank of India, Respondent No.1 herein, to pay to the Petitioner the aforesaid compensation within six weeks from the date of receipt of a copy of this order, failing which the said amount shall carry interest @ 12% p.a. from the date of filing of the complaint till realization. The Petitioner shall also be entitled to costs quantified at 20,000/-