J&K BANK LTD Vs. SRINAGAR CARPET CO

JUDGEMENT

(1.) THIS Appeal is directed against judgement and order dated 4th September, 1998 passed by the Jammu and Kashmir State Consumers Protection Commission, Srinagar (hereinafter referred to as the Commission), whereby the Commission has allowed the complaint of the respondent against the appellant -Bank. Before adverting to the quantum of compensation awarded by the Commission and other directions made by it in the impugned judgement a resume of the relevant facts is given hereunder.

(2.) THE complainant -firm namely, the respondent herein, is stated to be dealing in the manufacture, supply and export of Kashmir hand -made/hand -knotted woollen and silken carpets, and enjoying the banking facilities offered by the Opposite Party, namely, the appellant -Bank herein. In its complaint before the Commission, the respondent alleged that being a regular consumer of the services offered by the appellant -Bank, a Bills Purchase Limit of Rupees fifty lacs (Rs. 50,00,000) and a Packing Credit Limit of Rupees twenty lacs (Rs. 20,00,000) was sanctioned and allowed in its favour. Vide invoice No. 37/96 dated 6th April, 1996, the respondent consigned twenty -five bales of its merchandise valuing US Dollars 38,190.60, through Kuwait Airways in terms of their bill No. 229 34195114 dated 8th April, 1996, to its buyer, namely, M/s ENG Ahmad Saleh Al Wakeel Co. Ltd., Riyadh, Kingdom of Saudi Arbia, (KSA). The respondent further alleged that the bill and other documents were drawn by it on D/P basis (i.e., Delivery on Payment) and endorsed in favour of the appellant -Bank at its Branch Office, Dalgate, Srinagar, who discounted and purchased the same for collection on 24th April, 1996 under the Foreign Exchange facility and, vide DLC No. 002757/96, credited an amount of Rupees twelve lac fifty thousand (Rs. 12, 50,000) into their account on the aforesaid date, i.e. 24th April, 1996. The respondent specifically alleged that the aforesaid amount was credited into their account after the appellant -Bank deducted charges/recovered their exchange commission. According to the respondent, the discounting and purchase of the bill and the payment of its value to the respondent was done by the appellant -Bank in usual course of its banking services and after full satisfaction of the nature of the bill. In this manner, according to the respondent, the ownership and title of the documentary bill in full value thereof, stood transferred to the appellant -Bank. The respondent further stated that the Riyadh Bank in Saudi Arbia, allegedly an agency of the appellant -Bank, ostensibly, mishandled the documents and the goods and, without any authority, handed over the documents to the buyer without payment. The respondent alleged that appellant -Bank, thereafter, indulging in unfair trade practice illegally, unjustly, unilaterally and deceptively, recovered Rs. 12,50,000 representing the proceeds of the said documentary bill from the respondent (i.e. Rs. 6,00,000) recovered on 3rd February, 1997 from the Packing Credit Limit advanced to it by the Bank and Rs. 6,50,000 recovered on 17th April, 1997 from the proceeds of a fresh documentary bill deposited by it vide DLC 017251 with the Appellant -Bank). This, according to the respondent was done by the appellant -Bank despite it having purchased the said bill and in fact, having lodged a claim with the International Chamber of Commerce for reimbursement of the loss. The respondent claimed a total compensation of Rs. 20,50,000 on account of loss of Rs. 12,50,000 as being the price of the goods Rs. 7,00,000 as loss of business profits at the rate of 40% per annum and Rs. 1,00,000 as compensation on account of agony suffered by them.

(3.) THE stand of the appellant -Bank before the Commission was that the respondent has been enjoying the Pre -shipment Packing Credit facility to the extent of Rupees twenty lacs (Rs. 20,00,000) and Post -shipment Credit facility to the tune of Rupees fifty lacs (Rs. 50,00,000) as per the terms and conditions contained in sanction letter dated 10th May, 1994. It was stated by the appellant -Bank that the goods were consigned by the complainant to Riyadh Bank Al Sitteen Str. branch Riyadh, KSA (hereinafter referred to as the foreign Bank) and the documents pertaining thereto, drawn by the respondent on its buyer on D/P (Delivery on payment) basis, were delivered by it to the appellant -Bank on 12th April, 1996 in terms of even dated letter with the instructions to send the same to the foreign Bank for "Collection on Payment" basis. The appellant -Bank vehemently denied that the documents were endorsed to the appellant -Bank for payment or were discounted or purchased by it under the Foreign Exchange Documents Bills Purchase facility (FDBP account) on 24th April, 1996 or on any other date, or that the proceeds thereof were paid and credited to the respondents account. It was specifically stated that the appellant -Bank received the documents on 12th April, 1996 for collection and, as per the instructions of the respondent, the documents were sent to the foreign Bank for collection without charging any commission, whatsoever, from the respondent. It was the specific case of the appellant -Bank in their reply before the Commission that, at the request of the respondent, the appellant -Bank allowed Post -shipment Advance of Rs. 12.50 lacs in favour of the respondent on 24th April, 1996 against the said collection. The advance of Rs. 12.50 lacs as aforesaid was not credited to the respondents account by debit to FDBP but by debit to ACC account i.e., Advance against Collection. It was further stated that the respondent, whose consignment was not accepted by the buyer, did not liquidate the amount of Rs. 12.50 lacs advanced to it as Post -shipment Advance, which constrained the appellant -Bank to issue notice to the respondent. In response to the notice, the respondent vide letter dated 1st October, 1996 undertook to liquidate the advance of Rs. 12.50 lacs in five instalments. It was further the case of the appellant -Bank that the outstanding on account of the Post -shipment Advance of Rs. 12.50 lacs was recovered by the appellant -Bank at the request of the respondent. The appellant -Bank denied that the Drawee Bank, i.e., the foreign Bank (Al Sitteen St. Branch, Riyadh, KSA) was an agency of the appellant -Bank. It was further the case of the appellant -Bank that the foreign Bank, which was an agency of the respondent on refusal of the buyer to take the goods against payment, re -exported the goods to India which shipment arrived at Delhi on flight No. SV 760 on 20th June, 1996. On arrival of the goods in India, the Manager Cargo operations of Air India Cargo Terminal, Indira Gandhi International Airport, New Delhi, vide letter dated 21st June, 1996, asked the respondent to take the delivery of the consignment. The appellant -Bank denied that it lodged any claim with the International Chamber of Commerce in this regard. According to the appellant -Bank, it only sought their intervention for which the respondent was asked to make available an amount of US$ 1000, but the respondent did not respond. The appellant -Bank denied that it resorted to any illegal trade practice or that the amount was recovered by it from the respondent illegally, deceptively or unilaterally.