NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
FIRST APPEAL NO. 63 OF 2001
(From the order dated 13.2.2001 in Complaint Case No.C-4/99
of the State Commission, Delhi)
Standard Chartered Grindlays Bank Ltd. Appellant
M/s. H.B. Impex Private Ltd. .. Respondent
HON’BLE MR. JUSTICE D.P. WADHWA,
HON’BLE MR. JUSTICE C.L. CHAUDHRY, MEMBER
MR. B.K. TAIMNI, MEMBER
Bank - Deficiency in service - Defective bank draft - Delay in execution of export order (though payment received) - Subsequent export orders allegedly cancelled on that account - If entitled to damages for loss of profit - Loss suffered too remote not the direct result of invalid bank draft - Normal and unusual loss, distinction.
For the Appellant : Mr. Ravinder Sethi, Senior Advocate and
Mr. Sanjay Gupta and Ms. Varsha Kripalani,
Advocates with him.
For the respondent : Mr. J.K. Bhola, Advocate.
Dated the 25th September, 2001
PER JUSTICE D.P. WADHWA (PRESIDENT)
Appellant is aggrieved by the order dated 13.2.2001 of the Delhi State Consumer Disputes Redressal Commission by which order complaint of the respondent(complainant) was allowed. State Commission by the impugned order directed the appellant-opposite party(bank) to pay a sum of Rs.15,37,920/- as compensation for loss suffered by the complainant on account of deficiency in service.
This amount was to carry interest @ 12% per annum from the date of the order till payment. A sum of Rs.10,000/- was also awarded as cost of litigation to the complainant. The deficiency in service, in brief, was the defective bank draft prepared by the appellant on account of which the respondent-complainant alleged it suffered loss.
To understand the controversy between the parties it may be appropriate to refer the issues framed by the State Commission which are as follows:
“1) Whether the present complaint, filed by the complainant, is barred by limitation in terms of the provisions contained in section 24A(2) of the Act?
2.) Whether the complainant is a ‘consumer’ within the meaning of section 2(1)(d) of the Act?
3.) Whether in the given facts the opposite parties were providing any ‘service’ within the meaning of section 2(1)(o) of the Act?
4) Whether the present complaint, filed by the complainant raises such complicated and complex questions of facts and law which cannot be satisfactorily adjudicated by this Commission in the present proceedings?
5) Whether, in the given facts, was there any ‘deficiency’ in service on the part of the opposite party No.2 within the meaning of Section 2(1)(g) of the Act? and
6) To what relief the complainant is entitled to in the facts and circumstances of the present case?
All the issues were held in favour of the complainant by the State Commission. When the appeal came up for admission, we passed the following order:
“Mr. Ravinder Sethi, learned counsel for the Appellant does not press issue nos. 1 to 5. He states that he will argue on issue number 6 as his contention is that no damages could have been awarded in the facts of the case.
Mr. Rajesh Majajan, Caveator accepts notice. It is agreed that evidence shall be led and Mrs. Harmi Wadhwa, Executive Director of the Respondent Company, to whom the Appellant wanted to cross-examine and for that purpose an application was filed before the State Commission, shall be cross-examined before this Commission. Mrs. Harmi Wadhwa will come for cross-examination on 2.5.2001 at 2.15 P.M.
The parties shall complete the pleadings as per the record of the State Commission within a period of four weeks.
Mr. Rajesh Mahajan, learned counsel for the Respondent says that he will not press for implementation of the order of the State Commission till further orders”.
In pursuance of this order cross-examination of Ms. Harmi Wadhwa, Executive Director of the complainant was recorded. Arguments were addressed. Parties also filed their written submissions.
As to what is the deficiency in service alleged against the bank, we have to refer to few facts. Complainant is a merchant exporter engaged in the business of export of handicrafts, textiles and other items to various parts of the world. For the purpose of its export business, complainant has an account with the appellant-bank for the last several years. M/s. B. Motiram, Canary Islands, Spain placed order with the complainant for import of certain goods from India to Spain. It is alleged that M/s. B. Motiram is one of the principal importers which placed orders on the complainant for import of goods from India. Two such orders were placed by M/s. B. Motiram on the complainant on 4.5.1995 and 3.6.1995 valuing respectively US$ 17,000.00 and US$ 1,27,160.00. For certain goods out of these orders shipment was to be made by the complainant by 15.9.95 and it is stated that time for shipment was the essence of the contract. In order to comply with the order placed by B. Motiram, complainant in turn placed order with M/s. Peetex/Phundipalle Textile Mills, Solapur (the ‘manufacturer’) for the manufacture of those goods. Time schedule for payment and dispatch of goods by manufacturer to the complainant was also settled under which the goods to be manufactured were to be dispatched to the complainant by 25.8.1995. Under this agreement payment schedule was also settled and it was agreed that a sum of Rs.1,40,000/- will be paid by complainant to the manufacturer. Accordingly complainant instructed the bank to issue bank draft for Rs.1,40,000/- in favour of the manufacturer on charging usual commission. The bank did prepare the bank draft for Rs.1,40,000/- and charged its commission for the purpose. However, the bank draft which was prepared was invalid draft made in favour of the manufacturer with the result when the manufacturer deposited the bank draft with its bankers namely the Indian Bank, Solapur, it was returned to the manufacturer with the remarks “authorised signatory’s signatures required”. The bank draft was not honoured by the Indian Bank Solapur. The manufacturer returned the invalid draft to the complainant on or after 25.8.1995 blaming the complainant for such a bogus/defective draft. It was clear that there was negligence on the part of the bank. This invalid bank draft was brought to the notice of the bank by the complainant. It was corrected by the bank and dispatched to the manufacturer. Grievance of the complainant was that issue of invalid bank draft delayed the dispatch of goods by the manufacturer and after undergoing tedious procedure of repacking as per the order of the importer B. Motiram the goods could be shipped only on 29.9.1995. Allegation is that because of the defective bank draft delay was caused in the supply of goods by the manufacturer to the complainant which resulted in the shipment being delayed. Meanwhile, B. Motiram, importer had placed another order for supply of certain goods by the complainant on 9.9.1995 valuing US$ 96,000.00. Now the allegation is that on account of delay in shipment of the goods under orders dated 4.5.95 and 3.6.95, B. Motiram cancelled the confirmed order dated 9.9.95 of the aforesaid amount.
Now assuming all the facts as stated by the complainant as correct, could it be said that cancellation of the order for US$ 96,000.00 was the direct result of delayed shipment in respect of orders dated 4.5.95 and 3.6.95 and that was on account of the negligence of the bank who prepared the invalid bank draft which amounted to deficiency in service?
Without there being any evidence on this particular aspect, State Commission held that cancellation of the order of US$ 96,000.00 was direct result of deficiency in service by the bank and further held that 50% of this amount would be the profits earned by the complainant. State Commission therefore, awarded compensation amounting to Rs.15,39,360/- being the converted value of the US$ 48,000.00. It is not the case of the complainant that because of the defective bank draft the orders which were placed by B. Motiram, on the complainant on 4.5.95 and 3.6.95 were cancelled. Had that been so, it could have been said that cancellation of those orders was the direct result of the complainant’s suffering loss because there was a chain reaction in the sense that the manufacturer would not manufacture the goods unless he receives the payment. After the manufacturer got the payment he manufactured the goods and dispatched the same to the complainant but only after the stipulated date of 25.8.1995. Bank being consignee of those manufactured goods, received the same on 11.9.1995 along with documents from Solapur. The documents were released to the complainant by the bank on 12.9.95 late in the evening. Complainant unloaded the goods on 13.9.95. Thereafter these were
unpacked , inspected and repacked etc. and the consignment made ready for dispatch. Export consignment was sent to ICD on 22.9.95 and was subjected to pre-shipment inspection by the customs on the same day and again on 26.9.95. The goods were finally shipped from Delhi on 29.9.95. It is not the case of the complainant that it did not receive the payment from B. Motiram, the importer of this consignment. It could also be admitted that bank knew of the export business of the complainant and necessity of strictly sticking to the time schedule. Any delay in sending the bank draft to the manufacturer would have derailed whole process of export of goods within the stipulated period. But then as noted above, there is no dispute and it is also not the case of the complainant that it suffered any loss in respect of the orders dated 4.5.95 and 3.6.95 because of the defect in preparation of the bank draft. Rather case is that another order of the value of US$ 96,000.00 was cancelled because of the delay involved in shipment of the goods covered by the order dated 4.5.95 and 3.6.95. It is difficult to comprehend that bank would have known that because of its preparing a wrong or defective bank draft any subsequent order placed on the complainant for export of goods could have been cancelled. There is nothing on record to show that complainant ever make it known to the bank that for any one transaction where it acted negligently would result in cancellation of all or any order for export of goods with the complainant unconnected with that particular transaction which complainant had with the bank.
In the present case claim for damages arises out of deficiency in service by the bank on account of its negligence in preparing defective bank draft. Where a consumer sues for damages, the loss he suffered as a result of breach of contract, must not be too remote. A distinction has to be drawn between normal and abnormal or unusual loss. This is a settled principle. Normal loss is any loss which arises naturally in the usual course of events from the opposite party’s breach of contract and would be recoverable. It does not appear to us that cancellation of the order of the value of US$ 96,000.00 could be said to arise naturally in the usual course of events from the defective preparation of bank draft by the bank. It cannot be said that bank knew or had any reason to believe that loss suffered by the complainant on account of cancellation of the order US$ 96,000.00 would result from the wrong preparation of bank draft by the bank. Complainant is in the export business and is having account with the bank for the last many years. It could be said that if there was any cancellation of the order of 4.5.95 and 3.6.95 this would be within the contemplation of the bank at the time it prepared bank draft. It is difficult to accept the proposition that cancellation of the subsequent order of US$ 96,000 was ever in the contemplation of the parties. Any loss arising out of cancellation of the subsequent order would be too remote to attract compensation. There is no circumstance to hold from where it could be said that the alleged loss arising out of cancellation of subsequent order could be considered to arise in the usual course of dealings between the parties. We are, therefore, unable to hold that bank would be liable for cancellation of the order of US$ 96,000.00 placed by B. Motiram on the complainant because of the defective bank draft for Rs.1,40,000/-. To that extent we would set aside the impugned order of the State Commission.
However, there has been deficiency in service by the bank in view of the issue No.5 which has been held against the bank and not disputed before us. For the anxiety and harassment and mental agony that would have been caused to the complainant for defective bank draft complainant would certainly be entitled to compensation. It is different matter that orders dated 4.5.95 and 3.6.95 were not cancelled but that resulted in delayed shipment and would have nevertheless caused great deal of mental tension to the complainant. We are thus of the opinion that the
complainant has to be compensated. We fix this amount at Rs.2.00 lakhs. It is so particularly considering that complainant is a merchant exporter and had dealing with the bank for the last many years. There was every likelihood of the export order being cancelled as the manufacturer refused to manufacture the goods to be exported till payment received by it. We further direct that this amount of Rs.2.00 lakhs will carry interest @ 12% per annum from the date of filing of the complaint till payment.
The appeal is partly allowed. There shall be no order as to costs.
( B.K. TAIMNI)