PUNJAB NATIONAL BANK, FARIDABAD vs ASHOK PIPE UDYOG

CAN the public sector banks with-hold the rates of prescribed service charges in respect of inland letters of credit from their customers, is the somewhat significant issue in this appeal.

THE respondent M/s Ashok Pipe Udyog are the agents of Eicher Tractors Limited, Faridabad at Charkhi Dadri. THEy established a inland letters of credit for Rs. 2 lacs in favour of the aforesaid Eicher Tractors with the N.I.T. Branch, Faridabad of the Punjab National Bank. Subsequently they transferred the said transaction of the inland letters of credits the Neelam Bata Road branch of the said bank at Faridabad. In the complaint preferred by the respondent before the District Forum at Hissar the primal allegation was that the Neelam Bata Road branch had levied excess service charges on the transactions covered by the inland letters of credit to the tune of Rs. 16,892.80 ps. upto December 1988. It was averred therein that earlier they had made a representation to the Customer Complaint Cell and other higher authorities of the Punjab National Bank and had simultaneously approached the local branch of the bank for the refund of excess charges. Since no redress was forthcoming, the respondent approached the Redressal Forum under the Act. In their reply to the complaint before the District Forum, the appellant took up a number of preliminary objections to which reference is now unnecessary, since they have not been pressed in this appeal. .On merits the appellant took up the stand that originally the inland letter of credit was open at N.I.T. Branch of the bank and subsequently on the request of the complainant the same was that on a comprehensive statement of accounts (which were enclosed with the reply) far from there being any excess charges levied on the complainant a sum of Rs. 8.546.64 P was due to the bank for because the service charges had been erroniously levied at a lesser rate. Whilst repudiating any liability the appellant bank made a counter claim that the aforesaid sum of Rs. 8,546.64 P which had been undercharged with 17% interest thereon should be directed to be paid to the bank. In the replication the complainant-respondent however, reiterated theirstand.

The primal stand of the complainant before the District Forum was that the bank had categoricaly delined to supply the rates of service charges applicable to inland letters of credit by its communication Annexure ''D''. In the absence of any authoritative prescription of service charges, the case of the respondent-complainant was that the rate of service charges leviable were 25 paise percent upto 11th of September, 1988 and 40 paise percent there after plus postal and incidental charges. On this basis the calculated (at above rate) claim of Rs. 16,892.80 P was raised. The District Forum dealt with the matter somewhat summarily. Relying entirely upto Para 3 in Annexure ''B'' which was merely an inter-office communication between the Manager of the Neelam Bata Road Branch to the N.I.T. Branch of the Bank, it held that because the prescribed rates of services charges had not been disclosed, the claim of the complainant was justified and consequently directed the payment of Rs. 16,892.80 P to them on pain of action being taken under Section 27 of the Act.

BEFORE adverting to the merits of the appeal, it deserves highlighting that the whole trouble herein has primarily arisen from the categorical refusal of the appellant bank to even disclose the prescribed service charges to be levied for the inland letters of credit. Mr. A.K. Mittal on behalf of the respondent legitimately raised a serious grievance on that score. The threshold question, therefore, is whether the appellant bank was justified in doing so. Herein it is not in dispute that the complaint expressly pressed for and sought information on the point of service charges. He was compelled to address a registered communication to the concerned branch of the appellant bank, surprisingly the said branch vide Annexure ''D'' replied as under:- "We thankfully acknowledge the receipt of your registered letter dated 5th of July, 1990 in which you have asked for copies of service charges. We may inform you that circulars issued by our head office are only for our internal circulation. These cannot be given to the customer."

WE feel somewhat concerned by the afore-quoted attitude of a public sector bank. In the present appeal the whole case of the appellant bank is now sought to be rested on the uniformly prescribed service charges by the state owned banks. Annexure P-1 and Annexure P-2 have been attached to this appeal and no challenge to their authenticity or admission on the record has been raised on behalf of the respondent. It is mainfest from these documents relied upon by the appellant bank itself that a high powered Committee of public sector banks have been specially constituted to consider and prescribe the service charges in respect of inland letters of credit, bankers cheques, pay orders, bills/cheques returned unpaid and inward collections. The said high powered Committee determined the aforesaid charges so that a uniform schedule thereof was adopted by all the public sector banks. This was accordingly done and circulars were issued to all offices by the head office of the appellant bank itself. In order to achieve uniformity within the area the prescription of these services charges was first circulated vide Annexure P-1, dated 25th of July, 1987. Thereafter vide Annexure P-2, dated 12th of September, 1988 a host of earlier circulars were superseded and the prescribed rates of service charges were duly communicated to the all offices of the bank. It was expressly mentioned there in that these service charges should be followed strictly and no discretionary power was available at any level to allow deviation/concession/relaxation except as expressly provided by the committee of public sector banks. It would be somewhat plain from the aforesaid that the public sector banks within the country had themselves adopted a prescribed rates of service charges on inland letters and other commercial transaction. This was rightly done in the interest of informity and to prevent discrimination between customer to customer by the stateowned banks. Consequently there could possibly have been nothing secret or confidential there could possibly have been nothing secret or confidential about the prescription of these service charges. Indeed the customers of public sector banks were entitled to know and the public sector banks were bound to disclose the same in their dealing inter se. Surprisingly the concerned branch of the appellant bank took up a adamant attitude of even refusing to disclose the service charges when expressly demanded on the ground that the relevant circulars were for the internal circulation only and these could not be given to the customer. We find not the least justification for such posture. Indeed when pressed learned counsel for the appellant bank could cite no authority or rationable for keeping back this basic information from the customers of the bank. We are firmly inclind to take the view that in this context the public sector banks far from withholding such information are bound to disclose the prescribed service charges to the customers who wish to know the same. It must be held that the appellant bank had been patently remiss is not doing so. The District Forum was thus right in raising an adverse inference against the appellant bank on this score.

IN the light of the above, the answer to the question posed at the outset is rendered in the negative and it is held that the public sector banks cannot with-hold the rates of prescribed service charges for commercial transactions including inland letters of credit from their customers.

MR. S.S. Narula, the learned advocate for the appellant had presented its case with commendable lucidity and fairness. It was pointed out that the whole case of the complainant for calculating the excess charges was based on a misapprehension. This claim was rested entirely on the assumption that the service charges were to be paid at the rate of 25 paise percent only. This according to the learned counsel was entirely unwarranted in the face of the prescribed charges which in the complainant''s case were clearly leviable @ 40 paise. Consequently, it was submitted that the inflated claim of over-charging has been wrongly allowed by the District Forum vide its order under appeal. The learned counsel for the appellant seems to be on firm ground in his stand that there is on adequate foundation whatsoever for the complainant''s claim that in his case service charges should have been levied at 25 paise only. Even when pointedly pressed, Mr. A.K. Mittal could not cite any chapter or verse, therefore. No document or any agreement could even be remotely pointed out by him wherein his case service charges were to be leviable at 25 paise percent only. It is true that the misapprehension of the respondent stemmed from the nondisclosure of the service charges leviable by the appellant bank. Nevertheless, that default by itself cannot precisely prove the quantum of over-charging or under-charging. As the complainant, the burden rested on the respondent to precisely establish the amount which had been over-charged. This burden has not been discharged fully. It is manifest from Annexure A to the complaint that the figure of Rs. 16,892.80 P has been arrived at only on the tenous premises that the charge leviable in the complainant''s case was only 25 paise percent. That on this record does not appear to be so.

On the complainant''s own showing, he had established an inland letter of credit for Rs. 2 lacs only first at the N.I.T. Branch of the bank and later at the Neelam Bata Road Branch thereof. Annexures P-1 and P-2 (to which no challenge at all could be laid on behalf of the respondent) clearly show that the prescribed charges in the complainant''s case were @ 40 paise percent. In Annexure 1 attach to Annexure P-1 dated 25th of July, 1987, it is clearly recorded that the negotiation in charges by the bank would be levied for bills up to Rs. 2.50 lacs @ 0.40% with a minimum of Rs. 100/- and for bills over Rs. 2.50 lacs @ 0.25% with a minimum of Rs. 1,000/- . Added to these charges was a discount at the applicable rate of interest from the date of negotiation to the date of reimbursement. Since the complainant respondents inland letters of credit was admittedly below Rs. 2.50 lacs the charges leviable were thus clearly at 40 paise percent and not less. The identical situation appears from Annexure P-2 which is dated the 12th of September, 1988 and is a circular in supersession of a number of earlier ones. Therein also vide Annexure 1 thereto, the negotiation charges for bills upto Rs. 2.50 lacs is clearly at 40 paise with a minimum of Rs. 100/- plus the permissible discount from the date of negotiation to the date of reimbursement. Consequently, there is cast-iron proof that the leviable charges were @ 40 paise percent and the respondent-complainant''s claim that it should be lower @ 25 percent has no legs to stand upon.

AS was noticed earlier, the District Forum in calculating the amount dealt with the matter somewhat summarily. Its basic reliance was on Para 3 of Annexure B. A reference thereto would show on the contrary that therein also the leviable charges are mentioned at 40 paise percent and not even remotely at 25 paise percent. Whilst mentioning that there has been some excess charge the precise quantum thereof is not at all worked out there. The District Forum was thus not right in accepting verbatim the calculation of the complainant which as shown above, was restedtirely on the erronious assumption in Annexure. A that the charges leviable were @ 25 paisa. In view of the above, there is no option but to hold that the amount over charging, if any has to be calculated on the basis of the leviable rate of 40 paise percent only in the present case. Once that is so on the appellant Bank''s own showing, it is clear that the Neelam Bata Road Branch had levied excess charges to the tune of Rs. 4534.17 ps. only. This is established by the appellant''s own document vide Annexure P-4. Mr. Narula very fairly conceded that on the basis of this Annexure which records each transaction with the details thereof from the 15th of April, 1988 to the 9th of January, 1989, the excess amount on the Bank''s own showing was to the tune of the figure above. We have not in anyway based ourselves on any concession of the learned counsel on the firm foundation of Annexure P-4 itself and what amerges from the statement of accounts which were annexed to the reply of the appellant bank before the District Forum. It is thus more than clear that on the appellant''s own case in the transaction subsequent to the 15th of April, 1988 the Neelam Bata Road Branch had levied the amount aforesaid in excess of the prescribed charges fixed by the bank itself.

A wholly untenable counter-claim was however, attempted to be raised on behalf of the appellant bank on the tenous ground that N.I.T. Branch had previously under-charged the respondent to the tune of Rs. 13,080.86 Paise. We are unable to see firstly how such a counter-claim can be raised in these proceedings. Since the appellant bank had at no stage conveyed the charges leviable to the respondent bank had at no stage conveyed the charges leviable to the respondent, the figures now worked out by the bank in its own favour for having under-charged any amount, are totally lacking of any proof on the present record. Again such a claim raised with regard to transactions of four years or more ago from the 6th of august, 1987 would also raise triable issues of limitation, as well. In any case we find no adequate cast-iron proof of the alleged claim of under-charging by the N.I.T. Branch of the Bank or any justification for the attempt to set off the same against the conceded over-charging by the all together different Neelam Bata Road Branch. In the light of the aforesaid discussion, the amount of excess charges has been established to the tune of Rs. 4,534/- only. Accordingly this appeal is partly allowed and the order of the District Forum is modified to the extent that the refundable amount to the respondent will be the aforesaid sum of Rs. 4,534/- only. The appellant is directed to pay the same to the respondent within one month from today, failing which Section 27 of the Act will have to be invoked as already directed by the District Forum. Appeal partly allowed.