STANDARD CHARTERED GRINDLAYS BANK Vs. PRAVISH PARVAIR PVT LTD
LAWS(DR)-2003-9-14
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on September 30,2003

Appellant
VERSUS
Respondents

JUDGEMENT

Harihar P.Chaturvedi, - (1.)THIS Transfer Application came to be registered on the basis of the records in CS No. 169/1995 from the Hon'ble High Court, Madras, filed by the applicant Bank against the defendant for recovery of a sum of Rs. 13,93,432.12 p. (rupees thirteen lakhs ninety-three thousand four hundred and thirty-two and paise twelve only) with interest @ 26% p.a. from the date of filing till the date of relization with costs.
(2.)The brief facts raising to this litigation are as follows :
2.1. The first defendant company is holding a current account in a branch of the applicant Bank bearing Account No. 01CSP0111100.

2.2. It is further stated that the applicant Bank's New York Branch has an account called 'Nostro Account' for US Dollar Currency which services all the branches of the applicant Bank in South India. This branch sends periodical statements of account of all the credits and debits and this statement of account is received by the Madras Main Branch and copies are taken there and sent to all the branches in South India. Each branch will then have to pick out the entries concerning their respective constituents and note the same in their accounts. Thus when a constituent presents to the applicant Bank a DD in US Dollars, the applicant Bank would present it to the Paying Bank under the draft and the paying Bank would remit the sum payable under the instrument in US Dollars to the New York Branch. Thereafter, the New York Branch entering the remittances in the said Nostro Account would despatch the statement of account to the Madras Main Branch and in the due course, the concerned branch would receive the copy of the statement who would thereafter credit the remittance in the constituent's account.

2.3. In the course of its dealings, the defendant received a Draft bearing No. E.676435 drawn on the Hong Kong and Shanghai Banking Corporation Ltd., for a sum of US $ 51,000. The defendant presented this Draft to the applicant Bank on 23.3.1993. This draft was immediately presented to the Hong Kong and Shanghai Banking Corporation Ltd. on 23.3.1993. On 26.3.1993, the Hong Kong and Shanghai Banking Corporation Ltd. credited a sum of US Dollars 51,000/- to the Nostro Account maintained with the New York Branch. Then a credit advice was received in this regard from the New York Branch of the applicant Bank by its Adyar Branch and the Adyar Branch thereafter credited the defendant's account with the sum of Rs. 15,84,458/- (being the sum equivalent of US $ 51,000/- at the then exchange rate).

2.4. It is further stated on 22.4.1993 the applicant Bank's New York Branch sent a separate confirmatory telex message to the applicant Bank's Madras Main Branch in respect of the said sum mentioning the receipt of US$ 51,000/- from Hong Kong and Shanghai Banking Corporation Ltd. and quoting the defendant's name as beneficiary. At no account number was quoted in the telex, and as the Madras Main Branch of the applicant Bank did not know the branch in which the defendant was a customer, it first sent the message to its Bangalore Branch. It was thereafter learnt that the defendant was not holding an account in the Bangalore Branch and after making exhaustive inquiries, it was learnt that the defendant held an account in the Adyar Branch.

2.5. The applicant Bank further stated that since the telex message bore no indication of account number, under bona fide mistake that the telex message from its New York Branch referred to a fresh remittance, accordingly credited once again in the defendant's account with Rs. 15,91,264/- (at the then are of conversion). A certificate of Foreign Inward Remittance (Foreign Inward Remittance Certificate No. 1306/293759) was also given to the defendant in this regard. Taking advantage of this mistaken second remittance, on 30.4.1993, the defendant promptly requested for a pay order for a sum of Rs. 15,00,075/- from his account.

2.6. It is further stated that around mid-July, 1993, during the reconciliation of 'Nostro Account', it was discovered that the second remittance of US $ 51,000/- was a duplicate one and the Adyar Branch of the applicant Bank was also informed of the fact of this mistaken duplicate remittance. On 15.7.1993, the applicant Bank sent a letter setting out the various facts and circumstances under which the mistaken second remittance was made and informed him that unless the defendant show satisfactory confirmation of two actual remittances of US $ 51,000/- each, the applicant Bank would be forced to proceed on the footing that the second remittance was a mistaken duplication of the earlier one and that the defendant would be liable to repay the same.

2.7. It is further stated that the defendant sent a reply through Counsel dated 20.7.1993 claiming that they had been awaiting payment in the sum of US $ 51,000/- from a foreign buyer. However, no proof of a second remittance having actually been made was produced by the defendant. Hence, the applicant Bank wrote to Reserve Bank of India on 11.9.1993 requesting them to cancel Foreign Inward Remittance Certificate No. 1306/293759 and thereupon the said FIRC came to be cancelled. On the same day, the applicant Bank also sent a notice to the defendant informing it of the said cancellation and also calling upon to repay the amount of US $ 51,000/- mistakenly credited to it along with interest thereon.

2.8. Further the applicant Bank sent a registered lawyer's notice on 25.9.1993 setting out in full detail the facts and circumstances of the case and calling upon the defendant to repay the sum of Rs. 15,91,264/- with interest thereon. The defendant sent a reply on 30.9.1993, wherein, while not denying the fact that the second remittance was made on 22.4.1993 was a mistaken one, they reiterated their case that payments to the tune of US $ 15,000/- had been awaited from their US Customers and that they had presumed the second remittance to be referable to those expected amounts. For which the applicant Bank sent a fitting rejoinder. To this, the defendant sent another letter on 2.10.1993 reiterating their stand in reply to which the applicant Bank sent a letter dated 2.12.1993.

2.9. It is further stated since the defendant failed to comply with the demand of the applicant Bank, the applicant Bank is constrained to institute this suit.

2.10. The applicant Bank further stated that they had by mistake paid to the defendant sums being equivalent to US $ 51,000/- twice over, when the defendant was intact entitled only to the first remittance and the defendant is not entitled to retain the second remittance wrongly credited. The said retention amounts to unjust enrichment on the part of the defendant. Had the money been with the applicant Bank, the Bank would have also generated funds by lending it to various parties. Unless the said sum is returned to the applicant Bank, the Bank will suffer a huge monetary loss as it will have been deprived of monies legitimately belonging to it.

2.11. It is further stated that in the meantime, a sum of Rs. 1,97,358.66 P. standing to the credit of the defendant, has been adjusted towards the claim and a sum of Rs. 13,93.432.12 P. remains payable by the defendant.

2.12. Hence the Transferred Application filed by the applicant Bank.

The defendants have filed their written statement before the Hon'ble High Court and the contentions are reproduced below:

3.1. It has neither knowledge over the facts narrated in para 4 of the plaint nor concerned with it.

3.2. It admits that it presented a draft for US $ 51,000, and the same was credited in its account.

3.3. It has no knowledge over the facts narrated in para 6 of the plaint.

3.4. Before receiving the second payment of US $ 51,773, it confirmed the same to the plaintiff.

3.5. Actually one of its overseas party was to pay a sum of Rs. US $ 51,773 for transaction. Initially only US $ 51,000 was credited in the defendant's account. The defendant asked its overseas party to remit the balance US $ 773/- due in the transaction and they remitted the same on 13.5.1993.

3.6. The defendant after receiving the confirmation from the applicant Bank over the remittance of the entire sum, authorized its clearing agent abroad to release the goods exported to the overseas party. It informed the RBI about the payment of the Bills being realized for the goods exported and completed the entire export process.

3.7. In case of transactions dealing with foreign exchange, after completions of all the formalities, Banks will issue credit certificate/remittance advice to their customers within 48 hours. In the above mentioned transaction, the plaintiff Bank issued remittance certificates only after 37 days. If at all there had been any mistake, the plaintiff has time to check the same and informed the defendant about the same. Had the plaintiff traced the mistake in time, the defendant would not have released the goods to the overseas party through its agent. Now the defendant has to seek its remedy spending huge sum of money for overseas legal expenses, trips, and other expenses, which will lead to heavy outflow of foreign exchange.

3.8. The plaintiff has retained over Rs. 2 lakhs from the defendant account after the so-called mistake. The plaintiff has also returned two cheques of the defendant by withholding the 2 lakhs of rupees. This defendant reserves its right to file a suit for damages against the plaintiff for the same.

3.9. The defendant is not liable to pay any interest, as the payment was mistakenly made by the plaintiff.

3.10. There is no cause of action for this suit against the defendant.

3.11. It is, therefore, prayed that this Hon'ble Court be pleased to dismiss the above suit with costs and render justice.

(3.)A perusal of the records further shows that the Hon'ble Justice Mr. K. Sampath of Hon'ble High Court, Madras after perusing the pleadings from both sides, framed the following issues:
ISSUES

1. Whether the plaintiff's remittance of US $ 51,000 to the credit of the defendant's account at the plaintiff's Adyar Branch with Rs. 15,91,264/- was made under a bona fide mistake that the telex message dated 22.4.1993 referred to a fresh remittance?

2. Whether the plaintiff is estopped from claiming the amount after giving confirmation to the defendant?

3. Whether the defendant took advantage of the second remittance by the plaintiff under a mistake and withdrew the amount?

4. Whether the plaintiff is entitled to the refund of the amount mistakenly credited with the defendant?



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