ROSHAN D. CHINOY And OTHERS vs CHAIRMAN And MANAGING DIRECTOR, CENTRAL BANK OF INDIA

THERE are four complainants in this case. Complainants 2 to 4 are children of first complainant who is also their power of attorney holder. The first opposite party is the Chairman and Managing Director, Central Bank of India having its Central Office at Bombay. The second opposite party is the Branch Manager of Central Bank of India, Secunderabad branch. Complainants 1 to 4 had four fixed deposit receipts bearing FDR. No. 67/62 for Rs. 10,000/- FDR. No. 67/63 for Rs. 10,000/-, FDR. No. 67/64 for Rs. 10,000/-. FDR. No. 67/65 for Rs. 20,000/- all dated 4.7.91.

COMPLAINANTS 1 to 4 guaranteed the repayment of the loan granted by the bank to M/s Mira Nursing Home, Secunderabad and a suit filed by the bank O.S. No. 201/90 for recovery of loan amount against the borrower and the guarantors i.e. complainants 1 to 4 herein was pending as on 5.10.1991. While so, the first complainant for herself and as power of attorney of complainants 2 to 4 approached the opposite party No. 2 i.e. Secunderabad branch of the Central Bank on 5.10.91 for grant of loan against F.D.Rs. and handed over the original FDR S along with application for grant of loan and copies of Power of attorney on the same day. The second opposite party informed the first complainant that he would refer the matter to the Regional Manager, Hyderabad. The first complainant met the Regional Manager on the same day and the Regional Manager called the legal adviser and after discussion with him, asked the first complainant to see the branch Manager. According to the first Complainant as she suspected the bona fides of the second opposite party, she called on the second opposite party on 7.10.91 and demanded written acknowledgement evidencing receipt of FDRs and loan application form and copies of power of attorney. The second opposite party gave written acknowledgement on the same day. The second opposite party informed the first complainant to meet the Regional Manager, Hyderabad. Accordingly, the first complainant on 7.10.1991 went to the Regional Manager and she was informed by the Regional Manager that the power of attorney do not authorize to raise loan for any purpose other than for the development of nursing home and that therefore the loan on FDRs cannot be sanctioned. She was referred back to the Bank Manager at Secunderabad and to collect original FDRs. On the next day i.e. on 8.10.91 the first complainant approached the Branch Manager and demanded the return of the FDRs. But she was told by the Branch Manager that he had not yet received the same from the regional office. Thereafter, she wrote a letter on 8.10.91 itself to the Branch Manager to arrange to surrender papers to her at the earliest with the reasons for refusal in writing. When she visits the bank in the course of that week. The Branch Manager by letter dt. 12.10.1991 Informed the first complainant that a suit O.S.No. 200/90 has been filed against them also for recovery of Rs. 2,98,248.00 and also I.A.1035/91 has been filed for attachment before judgment of the F.D.Rs. in the names of the complainants and the same is posted on 22.10.91 for counter. The first complainant was also informed that the General Power of Attorney neither authorized or empowered the first plaintiff to pledge the F.D.Rs. nor to raise loans from bank for any purpose other than development of nursing home. It was further informed that the bank in exercise of its power of general lien, in respect of outstanding due from the opposite parties, is retaining the F.D.Rs. in its possession. The first complainant was therefore informed, that the Branch Manager regretted that he cannot accept and accede to the request of the first complainant for grant of loan on the above F.D.Rs. and they also cannot be returned in view of the general lien exercised. This letter was handed over to the first complainant on 14.10.91 when she visited the bank.

Complaining that the reasons given by the opposite party No. 2 that the power of attorney does not authorise the first complainant to raise loan for the purpose other than the development of nursing home is not tenable and (2) the exercise of general power of lien is illegal and not bona fide and vindictive; (3) that on account of the aforesaid illegal and unlawful action the first complainant suffered humiliation and complainant was put to mental agony and harassment; (4) that the act of the respondent in writing a letter on 29.1.90 to the complainant informing that they misplaced the specimen signature card and asking the complainant to put signatures on the fresh card by her is deficiency in service. The complainants filed C.D. No. 36/92 in this Commission claiming the amount of (1) Rs. 50,000/- covered by the F.D.Rs. with interest from 5.10.1991 with quarterly rests upto 25.2.1992 amounting to Rs. 3,501.37 ps. (2) Rs. 1,00,000/- for defamation and mental agony, cruelty and harassment and damages of Rs. 1,00,000/- with regard to loss of specimen signature card.

THE opposite party filed a counter and contended that since the suit O.S. No. 201/90 was pending and as the General Power of Attorney authorized to raise loans for the purpose of development of nursing home, the matter was referred to legal department of the bank which opined that the loan for the purpose as applied for could not be sanctioned having regard to the provisions of Power of Attorney. As the suit is pending, for recovery of money the bank exercised its power of general lien and retained the fixed deposit receipts and there is no illegality or deficiency of service in exercise of the right of general lien, by the bank. THE allegation that the F.D.Rs. have been confiscated by the bank was denied. It was further stated that as the decree was satisfied 2 F.D.Rs. which were matured have been paid to the complainant with interest at 18% p.a. from the date of maturity to the date of payment and the two F.D.Rs. which were still to mature have been handed over to the complainant. It is further denied that because the Complainant filed C.D.78/90 the bank has taken a vindictive action and not sanctioned the loan and exercised general lien over the F.D.Rs. It was contended that earlier specimen signatures card was obtained in 1977 and the bank cannot be said to be deficient in asking for specimen signatures on the ground earlier specimen signatures card was not available. THE complainants have not mentioned in the complaint that they have incurred any loss on account of asking for fresh specimen signatures. THErefore, the complainants are entitled to claim any damages for the so called mismanagement and harassment and for the loss of specimen signature card. It was also submitted that there was no irregularity in the conduct of the banking business by the opposite party and there is no deficiency of service whatsoever. So far as the claim for payment of Rs. 50,000/- preferred to by four F.D.Rs. with interest from 5.10.1991 is concerned it is evident from the counter that the bank paid the amount of two Fixed Deposit Receipts (F.D.Rs.) on maturity with interest upto the date of payment and returned two other F.D.Rs. to the Complainant as they did not mature on that day. In view of the above submissions in the counter it is not disputed by the complainants, that they are not entitled to the relief of return of the amounts covered by the two F.D.Rs. with interest from 5.10.1991 to 25.2.1992. Hence the two questions that arise for consideration are : 1. Whether the complainants are entitled to a sum of Rs. 1 Lakh towards mental agony, cruelty, harassment and humiliation of the complainants as the bank refused to advance monies on the basis of the F.D.Rs. and the power of attorney? 2. Whether the complainants are entitled to damages of Rs. 1 lakh for mismanagement and harassment for loss of specimen signatures card?

TAKING up the first contention, the contention of the complainants is that the reasoning given by the opposite party viz. that the power of attorneys do not authorize the first complainant from raising loan for personal purposes except for development of nursing home, is not supported by the recitals in the power of attorneys and that the bank itself granted loan earlier on the said F.D.Rs. On the other hand it is contended by the opposite party that the recitals in the power of attorney only authorize the first complainant to raise loans for development of nursing home and not for other purposes. In order to find out which of the contentions is correct, it is necessary to refer to the recitals in the power of attorney. Clause 2 of Power of Attorney empowers the first complainant "to deposit funds in the bank, to draw funds from the bank, to operate the existing accounts in Banks, to open new accounts or to close the accounts in Banks, to borrow funds from the Bank for the purpose of expansion of the Nursing Home, arrange for the proper utilization of the funds borrowed, and also for liquidating the loans raised from the banks". Thus, the aforesaid paragraph specifically mentions that the first complainant can borrow funds from the bank for the purpose of expansion of the nursing home. Prima facie the power of attorney authorized the first complainant to borrow money from the bank for the purpose of expansion of nursing home. Thus, having regard to the aforesaid recital it cannot be said that the view taken by the opposite party that power of attorney authorized the first complainant only to borrow fund for the expansion of nursing home is unreasonable and improper. Even if it is possible to interpret the power of attorney as authorizing the first complainant to borrow money for all purposes, it is to be seen that the opposite parties have obtained legal opinion and after consulting the Standing Counsel and on his advise look the view that the power of attorney docs not authorize the first complainant to borrow money for any purpose other than for the expansion of nursing home. In view of the consultation of the Standing Counsel and legal opinion obtained by the opposite parties it cannot be said that the refusal by the opposite parties in granting loan is arbitrary, unreasonable or vindictive. It is vaguely mentioned in the complaint that the bank granted loans earlier on the basis of the same power of attorney, therefore they are not justified in refusing the loan this time. But, the complaint does not disclose for what purposes the earlier loans were granted and whether any proceedings are pending for recovery of any amounts against the complaints. In the absence of any material to show that the opposite party granted earlier loans for purposes other than nursing home this contention of the complainants cannot be believed. Moreover by the date of the present application for loan a suit against the complainants is pending for recovery of certain amount due as guarantors in respect of the loan granted to Meera Nursing Home. Incidentally, it is also mentioned that the exercise of power of general lien relating to these four F.D.Rs. is illegal. The bankers have general lien over all forms, securities or negotiable instruments deposited by the customer in the ordinary course of banking business and the same was judicially recognized cannot be disputed. In Syndicate Bank v. Vijay Kumar and Others, I (1992) BC 324 (SC); it was held; by their Lordships of the Supreme Court that the bank can exercise the power of general lien even in respect of F.D.Rs. which came into their possession in the ordinary course of banking business. Speaking for the Bench, K. Jayachandra Reddy, J. held that : "By mercantile system the bank has a general lien over all forms of securities or negotiable instruments deposited by or on behalf of the customer in the ordinary course of banking business and that the general lien is a valuable right of the banker judicially recognized and in the absence of an agreement to the contrary, a Banker has a general lien over such securities or bills received from a customer in the ordinary course of banking business and has a right to use the proceeds in respect of any balance that may be due from the customer by way of reduction of customer''s debit balance. Such a lien is also applicable to negotiable instruments including FDRs which are remitted to the bank by the customer for the purpose of collection. There is no gain-saying that such a lien extends to F.D.Rs. also which are deposited by the customer."

It is not in controversy that the F.D.Rs. were deposited by the first complainant with the bank. As the suit is pending for recovery of some amounts against the complainants the opposite parties are justified in exercising the power of general lien. It is therefore evident that the exercise of general power of lien by the bank is not illegal or vindictive. We are not therefore inclined to accept the aforesaid submission. With regard to the second question, it is submitted by the first complainant that the specimen signatures taken by the bank some time in 1977 were lost due to carelessness and negligence of the bank and the bank asked for fresh specimen signatures by their letter dated 29.1.90. According to the complainants, it is therefore evident that officials of the bank are not comparing the signature of the account holder since they have lost the specimen signature card. The bank therefore could not have safeguarded the interests of the complainant if there was any transaction with any forged signature as no specimen signatures card was available with them. The loss of specimen signature card jeopardises the interests of the customers and is therefore deficiency in the service of the bank. From the allegations-in the complaint it is clear that the first complainant apprehended the possibility of putting her signature by somebody and drawing amounts thereby causing loss and damage to her. But it is evident that nobody forged her signature and no loss was caused to her. The bank merely asked for a fresh specimen signatures. It cannot be said to be deficiency in service. In the counter it was stated that original signatures were obtained in 1977 and it is in the interests of the complainant fresh signatures were obtained. Since there is no deficiency in the service by the bank and as no damage is caused to the complainant No.1 by taking fresh signatures, we think the claim of damages and Rs. 1 Lakh claimed for mismanagement and harassment regarding loss of specimen signatures cannot be sustained. There is no harassment by the bank when they asked for fresh specimen signature card.

FOR all the aforesaid reasons we find that the action taken by the bank in not granting a loan and in exercise of its general power of lien and also in asking for fresh specimen signature card is neither illegal nor constitutes any deficiency of service. The complaint is liable to be dismissed.

IN the result, the complaint is dismissed. There shall be no order as to costs. Complaint dismissed.