Case Law Details
S X J Vasan Vs Managing Director And CEO Indian Overseas Bank (NCDRC Delhi)
Conclusion: In present facts of the case, it was observed that ‘the purposes of earning livelihood by means of self-employment’, has been excluded from the purview of ‘commercial purpose’ as such purchase of commercial goods for earning livelihood by means of self-employment, will not exclude such a buyer from the purview of the “consumer”.
Facts: In present facts of the case, appeal have been filed against the order of Tamil Nadu State Consumer Disputes Redressal Commission, whereby State Commission has partly allowed the complaint and directed Indian Overseas Bank to pay Rs.500000/- as compensation, for wrongful dishonour of the cheque of the complainant.
The complainant stated that he had Saving Bank Account with the Respondent for last 10 years. The complainant and his wife invested part of their retirement benefits in ‘fixed deposits’ in above branch. In order to earn their livelihood, the complainant and his wife shifted and invested these amounts in share (stock market) in the year 2014. For stock trading, the complainant issued some cheques in favor of stock broker and receive payments from it through RTGS to his credit, in his above account. The complainant used to be allowed for higher exposure in the market on the basis of the collaterals/margins available by the said stock broker and used to pay interest for the same to them. In the stock trade, the investors have to maintain a percentage of the value of the share with the broker as margin for each share and if the value of the purchased share goes below this level, the broker used to call the investor to make good the shortfall in margin. If the client fails, the broker is at liberty to square so much shares of the investor, as is enough to make good of the margin shortfall at the prevailing rate, to safeguard their interest and avoid their risk. This option is left to the broker because they invest their money for the investors like the complainant to certain limit keeping the investors shares as collateral. It is common knowledge that in share market trading, the time element of payment for the shares bought is crucial and any delay, attracts heavy delayed payment charges. In January, 2016, the share market was crashing day by day and the amount of margin to be maintained also was fluctuating. To make good of the shortfall in margin in his portfolio of the shares held by the complainant, the broker asked the complainant to pay the margin shortfall. As the outstanding amount due by the complainant to the said share broker both in NSE and BSE put together was Rs.49518199/- as on 18.01.2016. The complainant was asked to pay Rs.5/- lacs, initially and he responded to this call and paid Rs.5/- lacs, on 13.01.2016 by cheque No.284208 drawn on at Respondent Bank. Again the complainant was asked to pay Rs.20/- lacs and he paid the same by cheque No.284209 dated 18.01.2016 drawn on above branch. Though the complainant had balance of Rs.2840180.40 in total of both saving bank account and liquiflo deposit to honour above cheques, but said cheques were unfortunately returned erroneously on 19.01.2016. It could be seen from margin table filed along with the complaint that due to the return of the cheque, the margin shortfall swelled to Rs.4478899/-. In view of extra-ordinary situation, the broker squared 8 numbers of the complainant’s blue chip (shares) at a very low price in comparison to its purchase price to make good of the shortfall in margin resulting in a loss of Rs.48.77 lacs to the complainant. A tabulation showing the purchase price, sell price and the loss incurred is enclosed. If Respondent would have honoured cheque dated 18.01.2016, the broker would not have squared off the complainant’s share, causing heavy loss to him. Respondent Bank had no reason to return the said cheque as balance in his saving account was Rs.271400/- and in liquiflo was Rs.126180/- as on 18.01.2016. On protest of the complaint against squaring of the shares, the broker informed that the cheques were bounced and they had evidence to this effect. Due to negligence committed by Respondent Bank, the complainant had suffered a loss of Rs.48.77 lacs and lost lifetime saving, which created enormous mental agony to him.
The National Commission observed that scope of the expressions “commercial purpose” and “the purposes of earning livelihood by means of self-employment” came up for consideration before Supreme Court in relation to purchase of goods in Laxmi Engineering Works Vs. P.S.G. Industrial Institute, (1995) 3 SCC 583. In which, it has been held that the Explanation was an exception to an exception. Expression “commercial purpose” has not been defined as such its dictionary meaning has to be taken into consideration. “Commerce” means financial transaction, especially buying and selling of merchandise on large scale. As in the Explanation, ‘the purposes of earning livelihood by means of self-employment’, has been excluded from the purview of ‘commercial purpose’ as such purchase of commercial goods for earning livelihood by means of self-employment, will not exclude such a buyer from the purview of the “consumer” so long as it is used by the buyer or his family members or with the help of one or two other persons. It is question of fact and has to be decided in each case independently. Supreme Court in Shrikant G. Mantri Vs. Punjab National Bank, (2022) 5 SCC 42 and National Insurance Company Limited Vs. Harsolia Motors, 2023 SCC OnLine SC 409, held that the words “for any commercial purpose” would mean that the goods purchased or services availed should be used in any activity directly intended to generate profit.
It was also observed that there is nothing on record to prove in cheque being presented again for encashment. There was no communication by the complainant to the opposite parties after 19.01.2016 till 17.08.2016. For the first time, the complainant, gave an email dated 17.08.2016 and thereafter a letter dated 14.11.2016, which was received upon the opposite parties on 29.11.2016. The complainant had not given the exact date, when the broker squared his 8 numbers of blue chip (shares). The complainant has stated that margin shortfall swelled to Rs.4478899/- then Rs.20/- lacs was not sufficient to make good the shortfall. The loss as occurred to the complainant, was due to contributory negligence of the complainant. Supreme Court in Maharashtra State Financial Corporation Vs. Sanjay Shankarsa Mamarde, (2010) 7 SCC 489, held that in order to determine the deficiency in service, it has to be seen as if there was inadequacy in the manner of performance which is required to be maintained by the service provider. Nowadays entire banking activities are linked with information technology. If for any technical fault, the transaction could be performed, then it cannot be held as deficiency in service. Supreme Court in Consumer Unity & Trust Society, Jaipur Vs. Chairman & Managing Director, Bank of Baroda, (1995) 2 SCC 150, held that bank’s failure to render service due to illegal strike does not amount to deficiency in service.
On basis of the above, the Appeal of the Complainant was dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION DELHI
1. Heard Mr. Arvind Srevastava, Advocate, for S.X.J. Vasan and Ms. Akansha Rathore, Advocate, for Indian Overseas Bank.
2. Above appeals have been filed against the order of Tamil Nadu State Consumer Disputes Redressal Commission, Chennai, dated 13.01.2022, passed in Consumer Complaint No.175 of 2017, whereby State Commission has partly allowed the complaint and directed Indian Overseas Bank to pay Rs.500000/- as compensation, for wrongful dishonour of the cheque of the complainant.
3. The office has reported 8 days delay in filing FA/179/2022, which was filed on 21.03.2022 and 187 days delay in filing FA/618/2022, which was filed on 18.08.2022. The appellants in FA/618/2022 have filed IA/7813/2022, for condoning the delay in filing the appeal, in which, it has been stated that due to third wave of Covid-19, the appeal could not be filed within time. As Supreme Court in Suo Moto Writ Petition No.3 of 2020, waived the limitation up to 30.05.2022, due to Covid-19 and consequent lock-down, as such, limitation has to be counted from 31.05.2022. After excluding 45 days period, there is delay of 34 days. In view of the cross-appeal, IA/7813/2022 is allowed and delay in filing FA/618/2022 is condoned.
4. S.X.J. Vasan filed CC/175/2017, for directing Indian Overseas Bank to pay (i) Rs.48.77 lacs, as compensation for loss incurred to him, due to negligence committed by the bank in dishonouring his cheque; (ii) Rs.25/- lacs as compensation, for loss to his reputation, due to negligence committed by the bank; (iii) Rs.25/- lacs as compensation, for driving away the complainant, from his business, due to negligence committed by the bank; (iv) Rs.25000/- as litigation costs; and (v) any other relief, which is deemed fit and proper in the fact of the case. The complainant stated that he had Saving Bank Account No.018301000050000, at Nungambakkam Branch of Indian Overseas Bank, for last 10 years, which was a liquiflo account with special feature that the amount over a specified limit, lying in his account will automatically be transferred to ‘Term Deposit’ for better rate of interest and whenever situation requires, the bank, on its own, will bring back the fund from such ‘Term Deposit’ to honour the cheques issued by the complainant and for taking demand drafts etc. Mrs. Prema Malini Vasan, the wife of the complainant had also her saving bank account in above branch. The complainant and his wife invested part of their retirement benefits in ‘fixed deposits’ in above branch. In order to earn their livelihood, the complainant and his wife shifted and invested these amounts in share (stock market) in the year 2014. For stock trading, the complainant used to issue cheques in favour of M/s. Angel Broking Private Limited, 6th Floor, Ackruti Star, Central Road, MIDC, Andheri (East), Mumbai (a stock broker) and receive payments from it through RTGS to his credit, in his above account. The complainant used to be allowed for higher exposure in the market on the basis of the collaterals/margins available by the said stock broker and used to pay interest for the same to them. In the stock trade, the investors have to maintain a percentage of the value of the share with the broker as margin for each share and if the value of the purchased share goes below this level, the broker used to call the investor to make good the shortfall in margin. If the client fails, the broker is at liberty to square so much shares of the investor, as is enough to make good of the margin shortfall at the prevailing rate, to safeguard their interest and avoid their risk. This option is left to the broker because they invest their money for the investors like the complainant to certain limit keeping the investors shares as collateral. It is common knowledge that in share market trading, the time element of payment for the shares bought is crucial and any delay, attracts heavy delayed payment charges. January, 2016 was named as wild January in stock market world because of the crash in the stock market in India. So many reasons both internal and international were attributed for this event. As a result of this, the value of the shares came down drastically. In January, 2016, the share market was crashing day by day and the amount of margin to be maintained also was fluctuating. To make good of the shortfall in margin in his portfolio of the shares held by the complainant, the broker asked the complainant to pay the margin shortfall. As the outstanding amount due by the complainant to the said share broker both in NSE and BSE put together was Rs.49518199/- as on 18.01.2016. The complainant was asked to pay Rs.5/- lacs, initially and he responded to this call and paid Rs.5/- lacs, on 13.01.2016 by cheque No.284208 drawn on at Nungambakkam Branch of Indian Overseas Bank. Again the complainant was asked to pay Rs.20/- lacs and he paid the same by cheque No.284209 dated 18.01.2016 drawn on above branch. Though the complainant had balance of Rs.2840180.40 in total of both saving bank account and liquiflo deposit to honour above cheques, but said cheques were unfortunately returned erroneously on 19.01.2016 by Nungambakkam Branch. It could be seen from margin table filed along with the complaint that due to the return of the cheque, the margin shortfall swelled to Rs.4478899/-. In view of extra-ordinary situation, the broker squared 8 numbers of the complainant’s blue chip (shares) at a very low price in comparison to its purchase price to make good of the shortfall in margin resulting in a loss of Rs.48.77 lacs to the complainant. The regulation in regard to margin as stipulated by the broker is enclosed. A tabulation showing the purchase price, sell price and the loss incurred is enclosed. If Nungambakkam Branch of Indian Overseas Bank would have honoured cheque No.284209 dated 18.01.2016, the broker would not have squared off the complainant’s share, causing heavy loss to him. Nungambakkam Branch of Indian Overseas Bank had no reason to return the said cheque as balance in his saving account was Rs.271400/- and in liquiflo was Rs.126180/- as on 18.01.2016. On protest of the complaint against squaring of the shares, the broker informed that the cheques were bounced and they had evidence to this effect. Immediately after the intimation from the broker about the return of the cheques, the complainant made inquiry from Nungambakkam Branch of Indian Overseas Bank and they informed that the cheque was never presented to them. Then the complainant confidently took stand against the broker that they had not presented the cheque to the bank and the dispute was referred for arbitration. The broker suspended trading account of the complainant in view of pending arbitration dispute. The broker produced evidence relating to presentation of the cheque to the bank for encashment, which was returned with endorsement “refer to drawer-drawee bank-Please present again”. Nungambakkam Branch of Indian Overseas Bank gave false information to the complainant in this respect also. The complainant showed above evidence to Nungambakkam Branch of Indian Overseas Bank, then they came with another explanation that the cheque was presented for payment for Account No.5000 instead of 50000, hence it might have been returned. Realizing their negligence, they requested not to take any action against the bank. Due to negligence committed by Nungambakkam Branch of Indian Overseas Bank, the complainant had suffered a loss of Rs.48.77 lacs and lost lifetime saving, which created enormous mental agony to him. Apart from it, there was loss of reputation and salvage the credibility of the complainant, which can never be regained. The complainant was emotionally shattered and thrown into desperation and he had to sell his remaining shares incurring further loss and the complainant was driven out from this business. The complainant was 68 years old and cannot build up a new avenue of income. The complainant sent an email dated 28.12.2016 to the opposite parties and also to Assistant General Manager, which they forwarded to Central Office by them, instead of replying. The complainant gave reminders dated 29.12.2016 and 30.01.2017 to the opposite parties but they did not respond. On these allegations, the complaint was filed on 24.07.2017.
5. The opposite parties filed its written reply and contested the complaint. The opposite parties admitted that the complainant issued cheque bearing No.284209 dated 18.01.2016 for a sum of Rs.2000000/-, in favour of Angel Broking Private Limited and the said cheque was presented for clearing by Angel Broking Private Limited through its banker ICICI Bank Limited on 19.01.2016. The opposite parties stated that Nungambakkam Branch of Indian Overseas Bank had returned the said cheque with an endorsement “refer to drawer”, due to technical error arose out of software migration from Crown to Finacle in the system of the branch. The said cheque was returned by ICICI Bank Limited to Angel Broking Private Limited through Return Slip Memo dated 20.01.2016, with an endorsement “Contact drawer/ drawee bank-Present again”. The opposite parties were carrying on day to day business activities based on information on the system. The said cheque was returned on the basis of information shown in the system at that time and not due to the negligence on the part of opposite party-2. The cheque was neither presented again nor anybody contacted them in this respect at that time. If the return of the cheque had been intimated by the complainant to opposite party-2 immediately, the issue might have been sorted out by opposite party-2 at that time. Letter dated 05.08.2016 was issued by ICICI Bank Limited and not by the opposite parties. For the first time, the complainant gave a letter dated 14.11.2016, which was received on 29.11.2016 and replied by opposite party-2 on 17.12.2016. The opposite parties have not committed any deficiency in service. The complaint utterly lacks bonafide and is liable to be dismissed.
6. State Commission, by its judgment dated 13.01.2022, found that Angel Broking Private Limited was necessary party for adjudicating the loss of Rs.48.77 lacs to the complainant due to squaring of 8 numbers of the blue chip (shares), at a very low price in comparison to its purchase price to make good of the shortfall in margin, by it but it was not impleaded in the complaint. As such the only issue of wrongful dishonour of the cheque can be examined in this complaint. Admittedly opposite party-2 did not honour cheque No.284209 dated 18.01.2016 for a sum of Rs.2000000/-, issued by the complainant and presented for clearance on 19.01.2016 before opposite party-2, although in the account of the complainant, there was sufficient fund as such the opposite parties were liable to pay compensation of Rs.5/- lacs. On these findings, the complaint was partly allowed for Rs.5/- lacs. Hence these appeals have been filed by both the parties.
7. I have considered the arguments of the counsel for the parties and examined the record. Facility in connection with banking is ‘service’ within the meaning of Section-2(1) (o) of the Consumer Protection Act, 1986. The Explanation was added by Act No. 50 of 1993 (w.e.f. 18.06.1993) to Sction-2(1) (d) (i) of the Act. By Act No. 62 of 2002, (w.e.f. 15.03.2003), Section-2(1) (d) (ii) was also amended and the term “but does not include a person who avails such services for any commercial purpose” has been added in it and the Explanation was placed in the last, making it applicable to both the sub-sections. Scope of the expressions “commercial purpose” and “the purposes of earning livelihood by means of self-employment” came up for consideration before Supreme Court in relation to purchase of goods in Laxmi Engineering Works Vs. P.S.G. Industrial Institute, (1995) 3 SCC 583. In which, it has been held that the Explanation was an exception to an exception. Expression “commercial purpose” has not been defined as such its dictionary meaning has to be taken into consideration. “Commerce” means financial transaction, especially buying and selling of merchandise on large scale. As in the Explanation, ‘the purposes of earning livelihood by means of self-employment’, has been excluded from the purview of ‘commercial purpose’ as such purchase of commercial goods for earning livelihood by means of self-employment, will not exclude such a buyer from the purview of the “consumer” so long as it is used by the buyer or his family members or with the help of one or two other persons. It is question of fact and has to be decided in each case independently. Supreme Court in Shrikant G. Mantri Vs. Punjab National Bank, (2022) 5 SCC 42 and National Insurance Company Limited Vs. Harsolia Motors, 2023 SCC OnLine SC 409, held that the words “for any commercial purpose” would mean that the goods purchased or services availed should be used in any activity directly intended to generate profit.
8. The complainant availed banking services of the opposite parties for doing business in stock market with an intension to generate profit, which is a commercial purpose. However, the complainant has stated that in order to earn their livelihood, the complainant and his wife shifted and invested these amounts in share (stock market) in the year 2014. The complainant and his wife had retired from government service. As such the complainant falls within the Explanation to Section 2(1)(d) of the Act and the complaint is maintainable.
9. The opposite parties admitted that the complainant issued cheque bearing No.284209 dated 18.01.2016 for a sum of Rs.2000000/- in favour of Angel Broking Private Limited and the said cheque was presented for clearing by Angel Broking Private Limited through its banker ICICI Bank Limited on 19.01.2016. Opposite party-2 returned the said cheque with an endorsement “refer to drawer”, due to technical error arose out of software migration from Crown to Finacle in the system of the branch. The said cheque was returned by ICICI Bank Limited to Angel Broking Private Limited through Return Slip Memo dated 20.01.2016, with an endorsement “Contact drawer/ drawee bank-Present again”. The opposite parties were carrying on day to day business activities based on information on the system. The said cheque was returned on the basis of information shown in the system at that time and not due to the negligence on the part of opposite party-2. The cheque was neither presented again nor anybody contacted them in this respect at that time. If the complainant had intimated opposite party-2 immediately after return of the cheque, the issue might have been sorted out by opposite party-2 at that time.
10. There is nothing on record to prove that either ICICI Bank Limited or Angel Broking Private Limited presented the cheque again for encashment. There was no communication by the complainant or ICICI Bank Limited and Angel Broking Private Limited to the opposite parties after 19.01.2016 till 17.08.2016. For the first time, the complainant, gave an email dated 17.08.2016 and thereafter a letter dated 14.11.2016, which was received upon the opposite parties on 29.11.23016. The complainant had not given the exact date, when the broker squared his 8 numbers of blue chip (shares). The complainant has stated that margin shortfall swelled to Rs.4478899/- then Rs.20/- lacs was not sufficient to make good the shortfall. The loss as occurred to the complainant, was due to contributory negligence of ICICI Bank Limited, Angel Broking Private Limited and the complainant. Supreme Court in Maharashtra State Financial Corporation Vs. Sanjay Shankarsa Mamarde, (2010) 7 SCC 489, held that in order to determine the deficiency in service, it has to be seen as if there was inadequacy in the manner of performance which is required to be maintained by the service provider. Nowadays entire banking activities are linked with information technology. If for any technical fault, the transaction could be performed, then it cannot be held as deficiency in service. Supreme Court in Consumer Unity & Trust Society, Jaipur Vs. Chairman & Managing Director, Bank of Baroda, (1995) 2 SCC 150, held that bank’s failure to render service due to illegal strike does not amount to deficiency in service.
O R D E R
In view of the aforesaid discussion, FA/179/2022 is dismissed and FA/618/2022 is allowed. The order of State Commission dated 13.01.2022 passed in CC/175/2017 is set aside. CC/175/2017 is dismissed.
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