Union Bank Of India vs Seppo Rally Oy

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1999 Supreme(SC) 1106

1999(8) Supreme 200
Supreme Court of India
(From National Consumer Disputes Redressal Commission, Delhi)
S. Saghir Ahmad & D.P. Wadhwa, JJ.
Union Bank of India -Appellant
versus
M/s Seppo Rally OY & Ors. -Respondents
Civil Appeal No. 11440 of 1996
Decided on 23-9-1999
Counsel for the Parties :
For the Appellant : Dushyant A. Dave, Sr. Advocate, U.A. Rana, Ms. Arshi Sohail, Advocates with him for the appellant for M/s. Gagrat & Co., Advocates.
For the Respondents : J.P. Dhanda and P.N. Gupta, Advocates (NP).

Headnote:(i) Consumer Protection Act, 1986-Section 2(g) r/w Section 14 -Deficiency in service-Appellant-Bank gave unconditional bank guarantee in favour of complainant, a foreign Company-Complaint alleging there was delay and short payment on part of bank when complainant invoked bank guarantee - Bank’s case that delay was on account of failure of Complainant to reply Bank’s queries validly raised and also on account of delay in granting permission by RBI to remit amount in foreign currency-State Commission held there was deficiency in service - National Commission upholding order-Unsustainable - No negligence on the part of Bank-No deficiency in service provided by Bank. (Paras 6 to 9)
       (ii) Consumer Protection Act, 1986 - Section 17 r/w Section 11(2)-Territorial Jurisdiction of State Commission-Provisions as contained in Section 11(2) must be read into Section 17 with such modifications as may be applicable to a State Commission-Dispute arising in one State cannot be taken cognizance by State Commission of another State-Bank guarantee was provided by Bank at Saharanpur in U.P.-Bank guarantee was invoked and payment was also made by Bank at Saharanpur-Complaint filed at Delhi Commission-Held, no part of cause of action arose in Delhi-Delhi State Commission had no jurisdiction to entertain complaint.
       Held : Under Section 17 of the Act a State Commission has jurisdiction to decide complaints of the value between rupees five and twenty lakhs but there is no such provision as contained in sub-section (2) of Section 11 of the Act applicable to State Commission. Section 18 of the Act does not make provision of sub-section (2) of Section 11 applicable to the State Commission. Each State has its own State Commission. There is purpose for it. First appeal of the District Forum situated within the State lies to the State Commission and then State Commission can take cognizance of the dispute arising within that State. It cannot be the intention of the Legislature that dispute arising in one State could be taken cognizance by State Commission of other State. We have to have purposive interpretation of the provisions and we have to hold that similar provisions as contained in sub-section (2) of Section 11 with modifications as may be necessary, shall be applicable to the State Commission. In fact these are the basic provisions conferring territorial jurisdiction on a tribunal otherwise it will lead to absurd situations. We must read into Section 17 the same provisions as contained in sub-section (2) of Section 11 of the Act subject to such modifications as may be applicable to a State Commission. It may also be noticed that under sub-clause (ii) of clause (a) of Section 17 appeals against orders are heard by the State Commission against the orders of any District Forum within that State. (Para 12)
       In the present case M/s. Dany Dairy and Food Engineers Ltd. approached the Saharanpur Branch of the Bank to provide Bank Guarantee which it did. The Bank Guarantee was invoked at Saharanpur and payment was also made by the Saharanpur Branch of the Bank. Saharanpur Branch is situated within the State of U.P. No part of the cause of action has arisen in Delhi. It is difficult to agree with the view of the State Commission and also of the National Commission that the State Commission at Delhi had jurisdiction in the matter. (Para 12)

Judgment

D.P. Wadhwa, J.-Appellant Union Bank of India is aggrieved by the order dated June 18, 1996 of the National Consumer Disputes Redressal Commission (‘National Commission’ for short) passed on appeal from the order dated July 21, 1993 of the State Commission of Delhi.

2. State Commission had allowed the complaint of the first respondent M/s. Seppo Rally OY, a foreign company based in Finland against the Union Bank of India, the appellant, directing the Bank to pay 11,234 with interest at the rate of 15% to the first respondent from May 27, 1992, the date when the complaint was filed. Bank was also burdened with cost of Rs. 2,500/-. The National Commission and the State Commission have been constituted under Section 9 of the Consumer Protection Act, 1986 (for short the ‘Act’). State Commission is established by the State Government in the State and the National Commission is established by the Central Government. Appeal filed by the Bank before the National Commission under Section 19 of the Act against the order of the State Commission was dismissed. Now it was directed that the complainant, the first respondent, is entitled to an amount of Rs. 3,01,103/- with interest at the rate of 15% per annum from March 5, 1991 till the date of payment. National Commission said that the complainant was entitled to 37,336 whereas it was paid only 29,062 on March 4, 1991. An amount of 8,304 was paid less which is equivalent in Indian currency of Rs. 3,01,102 as on March 4, 1991.

3. Two contentions have been raised by Mr. Dushyant Dave, senior counsel appearing for the Bank : (1) there was no deficiency in service as defined in clause (g) of Section 2 of the Act and (2) Delhi State Commission had no jurisdiction to entertain the complaint as no cause of action arose within Delhi, Central Office of the Bank was at Bombay and the branch office which issued the Bank Guarantee, subject-matter of the complaint, was at Saharanpur in the State of U.P.

4. M/s. Dany Dairy and Food Engineers Ltd., who impleaded as second respondent, on December 14, 1988 entered into an agreement with the complainant for supply of two evaporator systems valued at Rs. 25,98,473/-. Under the agreement the complainant was to make 100% advance payment to the second respondent on the condition of second respondent furnishing the Bank Guarantee. In the complaint address of the second respondent was given that of Okhla Industries Area, Phase-I, New Delhi. However, second respondent was having its business operations at Saharanpur, U.P. On the request of the second respondent Union Bank of India, Saharanpur Branch on December 19, 1988 gave a Bank Guarantee for a sum of Rs. 25,98,475/-. This Bank Guarantee was reduced on August 14, 1989 to Rs. 10,53,735/-. The Bank Guarantee was in favour of the complainant and was sent directly by the Bank to Skopbank, Helsinki, Finland. We are not concerned with the conditions of the Bank Guarantee except to note that it was invoked by the complainant on December 19, 1989.

5. The Bank Guarantee was extended upto December 31, 1989. Claim was made in a sum of Rs. 10,53,735/-. Skopbank also sent a telex message to the Central Office of the Bank at Bombay for immediate payment of the amount under the Bank Guarantee. Skopbank was informed by telex message dated January 12, 1990 by the Central Office of the Bank that the matter was receiving attention and sought clarification as to why the claim had been specified to Rs. 10,53,735/- instead of rupee value of 26792. Skopbank was also asked to look into its liability to pay proceeds of certain bill dated October 7, 1988 which had fallen due for payment on March 14, 1989, payment of which was guaranteed under its guarantee letter No. 91037668 for 55,000. Notices to the bank were sent by advocate for the first respondent claiming the amount under the Bank Guarantee. Since no reply had been received from the Skopbank regarding 55,000, it appears, the matter rested at that. Bank was, however, tol

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1999 Supreme(SC) 1106

Cases Referred (1)