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PETITIONER: CORPORATION BANK & ANR.

       Vs.

RESPONDENT: NAVIN J.  SHAH

DATE OF JUDGMENT:       25/01/2000

BENCH: S.Saghir Ahmad, S.Rajendra Babu

JUDGMENT:

     RAJENDRA BABU, J.  :

     The  respondent before us filed a petition before  the National Consumer Disputes Redressal Commission [hereinafter referred  to  as  the  Commission]   to  claim  that   the respondent  has  been exporting tea to Sudan from 1970  till 1982.    The   respondent  had   effected  exports   of   13 consignments  of  tea  to M/s Sudan Tea  Company,  Khartoum, Sudan  during the period between December 11, 1980 and March 2,  1981.  The respondent who had credit facilities with the appellants entrusted the documents relating to export of tea for  the purpose of realising the proceeds thereof from  the consignee.   The  appellants  issued advice of  purchase  of bills  to the respondent in respect of the goods covered  by several  invoices.  The appellants negotiated the  documents relating  to the exports effected by the respondent  through M/s EL Nilein Bank, Khartoum, Sudan [hereinafter referred to as  the foreign bank].  The respondent claimed that he did not  ask  the appellants to negotiate the  export  documents through  any particular bank in Sudan but the appellants  on their  own  appointed  the foreign bank  for  realising  the export proceeds from the consignee;  that the appellants had not  at any time consulted or even obtained the respondents opinion  in the matter of appointing the foreign bank;  that the  appellants  had to release the export documents to  the consignee only on payment of the export value in U.S.Dollars and  the  instructions to release the shipping documents  to the  consignee  to  enable  him  to  take  delivery  of  the consignment  as  denoted  by the  expression  cash  against documents.   It  is  further claimed  that  the  appellants should  not  have  realised  the  export  documents  without receiving   the   export  value   from  the   consignee   in U.S.Dollars.   It  is  contended   that  the  invoices  were realised  in  U.S.Dollars and the appellants could not  have realised  the  export  documents before  ensuring  that  the export   proceeds   could  be   repatriated  to   India   in U.S.Dollars.   In  accordance  with the  directions  of  the Reserve Bank of India in the matter of exports, the proceeds had  to  be  realised  and  repatriated  to  India  only  in U.S.Dollars  and not in any other currency.  The  appellants did   not   inform  the   respondent  of  any   difficulties experienced  by  them in the matter of negotiations  of  the aforesaid  export  documents  at  any   time  prior  to  the

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completion  of  the  exports  covered  by  the  invoices  in question.   Moreover,  the appellants did not  approach  the respondent  in effecting any changes in the authority  given by  it in the matter of negotiating the said documents.  The respondent  had  taken  insurance coverage for  the  exports effected   by   them  from   the  Export  Credit   Guarantee Corporation  of  India Limited [hereinafter referred  to  as the Corporation] to cover the risks involved in the export business.    After  the  respondent   was  advised  by   the appellants  that they could not realise the export  proceeds in  U.S.Dollars  due to certain restrictions imposed by  the Sudan  Government  and requested the respondent to  approach the  Corporation  to  settle the claim using  the  insurance policy  taken  by  the respondent in respect  of  the  goods covered  by  the  documents in  question.   The  Corporation finally  paid ninety per cent of the export proceeds covered by  the  documents.  The appellants illegally recovered  the balance  from the respondent by adopting the balance of  ten per  cent  of  the  export  value  to  the  account  of  the respondent  with them.  The respondent also claimed a sum of Rs.52,816.76p  towards  interest  for the period  until  the insurance  claim  was  settled by  the  Corporation.   These amounts  were debited to the account of the respondent.  The appellants  also  recovered a sum of  Rs.97,482.19p  towards foreign  exchange fluctuations charges from the  respondent. It  was  claimed by the respondent that the  appellants  had totally  failed to execute the specific instructions of  the respondent  to realise the export documents to the consignee only  after  accepting  in  cash  in  U.S.Dollars  but  were negligent  in  handling the consignment given to them  as  a result  whereof the goods released to the consignee  without realising  the  export  proceeds for and on  behalf  of  the respondent.   It  was  contended  that  the  appellants  had originally  purchased  the export documents and,  therefore, the  respondent  could not have been held to be  responsible for  the  delay in settling the insurance claim as also  the fluctuation charges of foreign exchange from the respondent. The  delay in the matter of repatriation of export  proceeds are  attributable to the appellants but the Reserve Bank  of India  had been pressurising the respondent for repatriation of  the export proceeds.  Therefore, it was claimed that  an amount  of  Rs.2,25,377.04p  U.S.Dollars   was  due  to  the respondent towards the export proceeds from Sudan which were covered  by the documents negotiated through the appellants. It  was claimed that the respondent is a consumer under  the Consumer  Protection Act, 1986 and had hired the services of the  appellants for consideration and there has been a total deficiency   or   absolute  breach  of  agreement   in   the performance  of  the  duty or otherwise in relation  to  the service   rendered  by  the   appellants.   The   appellants contended  that the claim had become stale as it related  to the  years 1979 to 1982;  that the matter did not fall under the   provisions   of  the   Consumer  Protection  Act   and accordingly, the Commission had no jurisdiction;  that there was  no  transaction  with  the respondent  and  the  banks customer  was a firm carrying on business in partnership  by name  M/s  Javerilal & Sons and thus the respondent  had  no locus  standi  at  all;   that there was  no  deficiency  of service on the part of the appellant bank because it carried out  its obligations by sending the documents including  the bill of exchange to the named bank in Khartoum, Sudan and as a  collecting bank, it was not its responsibility to  ensure that  payments are collected.  If and when the named bank in Sudan  sent  the amount, the same will be to the benefit  of the  exporter;   that in any case the exporter had  received

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90%  of  the value of the export from the  Corporation  and, therefore,  the claim made in the petition was in excess  of the  actual  loss  suffered;  that the  appellant  bank  had already  filed  a suit against the export company  including the  respondent before the Sub-Court, Cochin in O.S.No.48/92 on  February 20, 1992 for recovery of about Rs.18 lakhs  due under various credit facilities.

     The  Commission, however, rejected the point  relating to  the  limitation  or that the claim being  stale  on  the ground  that the Reserve Bank of India has been pressurising the  complainant  before  them for the repatriation  of  the export  proceeds  in U.S.Dollars and it is incumbent on  the respondent  to  do so and the respondent has been  obtaining the  extensions from the Reserve Bank of India for realising the  foreign exchange.  Therefore, the amount due by way  of foreign  exchange  is still outstanding and its recovery  is not  barred by limitation.  On the other objection that  the claim  made  in these proceeding was a subject-matter  of  a suit it was stated that the suit pertains to the recovery of the  amounts  due  to the appellants under cash  credit  and packing  credit  loans  given to the respondent.   The  cash credit  loan  was granted in 1989 while packing credit  loan was  granted in 1990 and 1991 whereas the transactions  with which  we  are concerned in the present case were export  of tea  are  in the year 1980-81.  Thus the two matters had  no connection.

     On the merits of the matter, the Commission stated :

     1.   That the invoices were drawn in U.S.Dollars;   2. That  the bill amount in the Advice of Bill Purchased  the value  recoverable from the drawee is shown in  U.S.Dollars; 3.   That  the  Reserve Bank of  India  directions  required repatriation  to India of the export proceeds in U.S.Dollars and  not in any other currency;  4.  That the advices issued by  the  appellant  bank  reharding  having  negotiated  the documentary  bills clearly specify that the proceeds are  to be  remitted  to the American Express International  Banking Corporation,  New York with instructions to make payment  to the Banks Central Foreign Exchange Department, Bombay.

     The  Commission further adverted to the Export Control Manual,  1978  issued by the Reserve Bank of India and  held that  the appellants being an authorised dealer was enjoined to  receive  the  remittances from foreign countries  or  to obtain  the reimbursement from their correspondent in  those countries against payments due for exports from India either in  rupees  from the account of a bank situate in Group  A countries  or  receive  payment in any  permitted  currency. According  to the Commission, those instructions were  clear to  fix  the  responsibility  of the bank who  was  also  an authorised  dealer under the Export Control Manual and  thus the  Commission concluded that there was a lapse on the part of  the appellant bank in realising the consignments against local   currency  and  without   ensuring  realisation   and repatriation of the export value in U.S.Dollars.

     The  respondent modified the claim in the light of the appellants  response  and limited the claim for damages  as follows :

     a.  Rupee equivalent of U.S.$ 22,538 [10% of the total amount  receivable];  b.  Rs.52,816.76p deducted as interest from the petitioner complainants account;  c.  Rs.97,482.19

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deducted  from  the  petitioner   complainants  account  on account  of fluctuating exchange rates;  d.  Interest on the amounts (a), (b) and (c) above.

     On the question of exchange rate fluctuation charge it was held that the appellants could not realise the same from the  respondent inasmuch as delay has been caused due to the lapse  on  the part of the appellant bank in delivering  the consignments  without realising their value in  U.S.Dollars. As  regards the interest, the Commission allowed the same at the same rate at which foreign exchange value upto April 19, 1983  and at the same rate as the appellant bank had charged from  the date of the purchase of the bills.  On that  basis the  matter  was disposed of.  The Commission, although  the respondent  had  limited its claim, had given a much  larger relief  as  had been claimed in the original petition.   The appellant bank is in appeal before us.

     The  contentions put forth before us are as follows  : 1.  The respondent is not a consumer within the meaning of the  expression  in Section 2(d) of the Consumer  Protection Act.   The appellant bank had no dealing whatsoever with the respondent.   The  banks  customer was a firm by  name  M/s Javerilal  &  Sons  which  was   carrying  on  business   in partnership.   There was no averment in the petition  before the Commission to the effect that he was acting on behalf of the  firm  M/s  Javerilal  &  Sons.  2.   The  role  of  the appellant as a collecting bank was restricted to sending the bills  of exchange and other documents to the named  foreign bank  and  to receive the proceeds as and when the  same  is sent  by the foreign bank.  There was no complaint that  the appellant bank failed to perform any of its duties;  in fact the  undisputed  facts are that the appellant bank sent  the documents  within time to the named bank in Sudan.  Thus the appellant bank had fully performed its duty as expected and, therefore,  there was no deficiency in its service.  3.  The claim  before the Commission was wholly time barred inasmuch as the complaint relating to the transaction of 1981- 82 was filed  in the year 1992.  Even though no specific period  of limitation  applicable to the consumer protection rights  in the  year  1992,  (w.e.f.  1993 periods  of  limitation  are specified  by  Section 24A), the Commission was not to  look into  stale claims.  4.  In a transaction like this  dealing with documentary credits, banks deal only with the documents and  not with the underlying transaction.  Accordingly,  the bank  has  not  failed to provide the service  that  it  was expected to.  5.  The Commission seriously erred in granting the  relief  and  that  too in excess of  the  prayer.   The respondent was not entitled to any relief whatsoever.

     On  behalf  of the respondent the  contentions  raised before  the  Forum  to which we adverted to  in  detail  are reiterated.

     The  agreement between M/s Javerilal & Sons and  Sudan Tea  Company dated March 19, 1979 provided for sale of  tea. Clause  (5) thereof provided the mode of payment.  It states that the payment of the seller shall be made on the basis of cash against documents on the arrival of the carrier at Port Sudan  through  EL NILEIN BANK, KHARTOUM and subject to  the presentation of following documents:

     1.   Complete  set of clean on board bill of  lading marked  foreign  pre-paid in three negotiable copies.   2. Suppliers  invoice in ten copies showing C&F Port Sudan  in

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Dollars.  Details to include number of chests gross and nett weights and marks.  Invoice to be certified true and correct and  signed.   3.  Certificate of Origin.   4.   Preshipment inspection  certificate covering weight, packing and quality issued  by Messrs.  General Superintendence Co.,  Inspection fees and expenses being at sellers account.

     The  documents  in  question  were  furnished  to  the appellant  bank with the bills of exchange to negotiate  the same  through  the foreign bank on arrival of the  goods  at Port  Sudan  in  exchange  for a sum  mentioned  therein  in U.S.Dollars  in cash against documents at site of the  bills of  exchange  and pay to the order of the  Corporation  Bank fort  the value against the tea shipped from Cochin to  Port Sudan.   These bills stood purchased by the Corporation Bank with  advice  thereof with several conditions and  the  most important  thereto being the following :  We shall exercise due  diligence in the selection of our agents.  However,  in the  event you designate a correspondent other than the  one of our own selection, we shall follow your instructions upon the  explicit understanding that you assume and confirm  all the  acts  of  such correspondent of your own  choosing  and agree to hold us harmless from all consequences thereof.

     When  a  bank,  after  purchasing  or  discounting  an instrument  from  a customer, credits the customer with  the amount  of  the instrument and allows the customer  to  draw against the amount as credited before the bill or instrument is  cleared, then the bank would be collecting the money not for  the customer but chiefly for itself.  If the bills  and the  relevant documents presented by its drawer are accepted by  a banker with endorsement in its favour and the same are immediately discounted by the banker without waiting for its collection,  by giving full credit for the entire amount  of the  document,  so  presented, the banker itself  becomes  a purchaser  and the holder thereof for full value.  A  banker discounts  a bill as opposed to taking it for collection  or as security for advances, when he takes it definitely and at once  as  transferee for value and that it does  not  matter that  the  amount of the bill, less discount, is carried  to current  account  as in the case of a customer that  is  the usual  course  and  where the transaction is really  one  of discounting, the banker is of course at liberty to deal with the bill as he pleases rediscounting or transferring it.

     In  the claim form filed with the Corporation, it  was stated  that  the respondent had suffered a loss  under  the policy  owing  to  a  delay in transfer of  the  payment  in respect  of shipments in question.  The said form was signed both  by the consignor and the appellant bank.  It has  been declared  therein that the amount shall be deposited by  the buyer in the local currency with a correspondent bank in the buyers  country  on the date indicated against that  column and  proceeds are awaiting transfer to India.  The claim was to  the extent of 90% of the value of exports.  While it  is the  contention  of  the appellants that  the  exporter  had entrusted  the bank to negotiate certain documents through a certain  bank  mentioned therein when in fact that bank  had failed  to  collect  the  money   in  foreign  exchange  but collected  only in local currency in the foreign country and not  in  the  currency indicated in the documents  and  thus there was no liability at all on the part of the appellants, the  respondent  would  submit that  the  appellants  having purchased  the documents in question were in fact collecting the  monies for their own benefit and not for the benefit of

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the  respondent when the documents had clearly indicated the manner  in  which the consignee get the goods  except  after payment  of  cash  no  delivery could have  been  made,  the appellant  bank had acted with negligence and, therefore, is liable  to  make  good  the loss suffered by  it.   We  have adverted   to  the  agreement   between  the  parties.   The consignee  and the consignor have clearly indicated that the documents  had to be negotiated through the foreign bank and the  mode of payment was through the foreign bank.  If  that is  so, the appellants were acting for and on behalf of  the respondent  when  they sent the documents to the named  bank for  negotiations and collection of the money due under  the agreement  the appellants could not have sent the  documents to  any other agent inasmuch as payments had to be made only through  that foreign bank and that foreign bank as was  the usual  practice  realise  the documents against  payment  in local  currency  which was hitherto convertible  in  foreign exchange  in  U.S.Dollars  could not be done on  account  of policy  of the Sudan Government.  If that is so, it is  very difficult   to  perceive  of  a  situation   regarding   the deficiency  in  the service rendered by the appellant  bank. The  appellant  bank  negotiated the documents  as  provided under  the  agreement;   so  did the foreign  bank  but  the conversion  of  the  local currency  to  U.S.Dollars  became difficult  on  account  of policy of the  Sudan  Government. When  the  realisation  of  the  money  in  U.S.Dollars  was frustrated  by reason of the governmental action, we fail to understand  as  to  how the appellants could be held  to  be responsible  for the same.  The Commission totally failed to appreciate  this aspect.  Whatever may be the position  with regard  to  the  collection procedure that  by  discount  or purchase  of the bills or otherwise, one thing is clear that all  that  was  required to be done under the terms  of  the agreement  and  under the contract had been done by the  two banks.   Therefore, we do not think that the Commission  was justified  in having reached the conclusion the  appellants services  were deficient so as to attract the provisions  of the Consumer Protection Act.

     We  may  further notice that there is  another  strong reason as to why the claim made by the respondent should not have  been granted.  The transactions in question took place in the years 1979 and 1981.  The difficulties in realisation of  the amounts due from the consignee also became clear  at the  time when the claim was made before the Corporation and the  claim  had been made as early as on December 19,  1982. The  petition  before the Commission was filed on  September 25,  1992  that is clearly a decade after a claim  had  been made  before  the Corporation.  A claim could not have  been filed by the respondent at this instance of time.  Indeed at the  relevant  time there was no period of limitation  under the  Consumer  Protection Act to prefer a claim  before  the Commission  but  that does not mean that the claim could  be made even after unreasonably long delay.  The Commission has rejected  this  contention  by a wholly  wrong  approach  in taking  into consideration that foreign exchange payable  to Reserve  Bank  of  India was still due and,  therefore,  the claim  is  alive.  The claim of the respondent is  from  the bank.   At  any rate, as stated earlier, when the claim  was made   for  indemnifying  the   losses  suffered  from   the Corporation,  it was clear to the parties about the futility of  awaiting any longer for collecting such amounts from the foreign  bank.  In those circumstances, the claim, if at all was  to be made, ought to have been made within a reasonable time  thereafter.   What is reasonable time to lay  a  claim

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depends upon facts of each case.  In the legislative wisdom, three  years  period has been prescribed as  the  reasonable time  under the Limitation Act to lay a claim for money.  We think,  that  period  should  be  the  appropriate  standard adopted  for computing reasonable time to raise a claim in a matter  of  this nature.  For this reason also we  find  the claim  made by the respondent ought to have been rejected by the Commission.

     Further we also find that the contention raised by the appellants  as  to  the locus standi of  the  respondent  in laying  the claim has not been dealt with by the  Commission at  all.  In the cause title, the respondent is shown to  be an  individual  whereas  in  the  statement  of  facts,  the respondent  is described as a company which is registered as a partnership firm engaged in business of exports and in the petition  reference  is made to the firm or the company  and not to the individual.  As to how a single individual person could  have laid a claim on behalf of a firm is not clear to us  at all.  Whether he was a partner of the firm or he  had the  authority of the firm to lay the claim is not clear  to us as these facts have not been pleaded.

     In  these  circumstances, the Commission had not  duly applied  its  mind to the relevant aspects.  Any one of  the reasons  given  above is enough to reject the claim made  by the respondent.  We, therefore, allow this appeal, set aside the  order made by the Commission and dismiss the  complaint filed by the respondent.  No costs.