ING VYSYA BANK LTD Vs. SMIT EXPORTS
LAWS(DR)-2004-10-13
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on October 27,2004

Appellant
VERSUS
Respondents

JUDGEMENT

K.J.Paratwar, - (1.) THIS is an application for recovery of Rs. 10,93,027/- with further interest thereon @ 18.50% p.a. with quarterly rests from the date of the filing of the Original Application till payment and/or full realisation.
(2.) The facts giving rise to the case (which had occurred when the applicant was "The Vysya Bank Ltd.") are set out as follows: The defendant opened Current Deposit Account with the applicant by submitting, inter alia, Form No. 58 (Letter of Indemnity) on or about 7.11.2000. On 16.2.2002 the defendant deposited (with letter dated 15.2.2002) on collection basis cheque No. 230245 dated 11.2.2002 for US $ 9,700/- drawn by Pennie & Edmonds LLP, New York on the Bank of New York and payable to the defendant. On the basis of undertaking/declaration in Form No. 58 and since the defendant's account was operating satisfactorily and bona fide believing that the cheque would be in the order, the applicant sent the cheque for collection under "Cash Letter Mechanism". Under the said Mechanism neither the collecting Bank nor the paying Bank is responsible for realisation of the cheque which could be returned any time within three years if reported to be materially altered/forged, etc. under the New York Clearing House Regulation and practice of Banks in United States. Under the said Mechanism the applicant gave provisional credit of the amount in the defendant's account on 2.3.2002 pursuant to its getting provisional credit from its correspondent Bank viz. City Bank. On 19.4.2002 the City Bank returned the cheque pointing out that it was forged one. The CitiBank debited in the applicant's nostro account proceeds of the cheque. The applicant, consequently, by letter 4.5.2002 called upon the defendant to make payment. By reply dated 18.6.2002 the defendant gave excuses. The applicant, again by letter 18.8.2002 called upon the defendant to make good the loss. By reply dated 21.8.2002, the defendant avoided the liability on unacceptable points. At the instance of the defendant, the applicant had also taken up the matter of return of cheque with the concerned Bankers viz., CitiBank and Global Corporation Banking Group of CitiBank, both the letters dated 2.7.2002, but the payee Bank stuck to its stand. As the defendant was not paying even after repeated demands and despite reminders, the applicant sent legal notice dated 23.1.2003 through the Advocate to the defendant demanding payment. By letter dated 30.1.2003 the defendant informed that the reply would be shortly sent. The defendant had also deposited (with letter dated 1.10.2001) for collection cheque No. 005181 dated 24.9.2001 for US $ 9,700 drawn by Ladas & Parry, New York on CitiBank payable to the defendant. The applicant on receiving provisional credit from its correspondent Bank (CitiBank) had given provisional credit from the amount of the cheque in the account of the defendant. However, said cheque was also returned by the CitiBank on 15.2.2003 on the ground that it was altered. The CitiBank debited to the applicant's nostro account the proceeds of said cheque. Consequently the applicant vide letter dated 17.2.2003 called upon the defendant to pay the amount. Vide reply dated 28.2.2003, the defendant disowned liability on same allegations. The applicant by letter dated 6.3.2003 denied the allegations and called upon the defendant to withdraw the same. The defendant vide letter dated 15.3.2003 once again gave unsustainable reasons and denied their liability. The defendant also informed that it had taken up the matter with Banking Ombudsman.
(3.) AS per the Banking practice, the applicant thereafter debited the defendant's account with aforesaid 2 cheques of US $ 9,700/- converted as per the then exchange rates to Rs. 4,65,115/- and Rs. 4,71,614/- and informed the defendant about the same by letter dated 13.3.2003. By reply dated 25.3.2003 the defendant disagreed for the same. In the circumstances, the defendant is liable to pay the amount as per Original Application which includes the interest.;


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