NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

 

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

             Vs.

M/s. H.B. Impex Private Ltd.                                       ..   Respondent

                         

BEFORE:

            HON’BLE MR. JUSTICE D.P. WADHWA,

                                                            PRESIDENT

            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.

 

ORDER

 

 

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.

 

 

 

                                    …………………………….J.

                                                                                                (`D.P.  WADHWA)

                                                                                                   PRESIDENT

 

                                                                                                ……………………………..J.

                                                                                                (C.L. CHAUDHRY)

                                                                                                    MEMBER

 


                                                                                                ……………………………..

                                                                                                ( B.K. TAIMNI)

                                                                                                      MEMBER