2000 Supreme(SC) 863

2000(4) Supreme 486
SUPREME COURT OF INDIA
(From National Consumer Disputes Redressal Commission, New Delhi)
S. Saghir Ahmad & D.P. Wadhwa, JJ.
Vimal Chandra Grover -Appellant
versus
Bank of India -Respondent
Civil Appeal No. 15701 of 1996
Decided on : 26-4-2000
Counsel for the Parties :
For the Appellant : U.U. Lalit, Advocate.
For the Respondent : Krishnan Venugopal, Ms. Tania Bery, Ms. Nina Gupta, Vineet Kumar and Ms. Namita Sood, Advocates.

Headnote:(i) Consumer Protection Act, 1986-Section 2(d) r/w Section 2(o) -Consumer-Definition of-Overdraft facility to customer-Customer seeking release of part of shares, on the security of which O.D. given for sale and clear O.D.-Delay in release and consequent loss on account price of share falling down-Bank s plea claimant was not consumer-Untenable-When Bank is granting D.D. facilities to its client it is providing service to customer-Release of shares part of service-Claimant definitely a consumer.

       Held : The argument that the appellant is not a consumer or that the Bank is not rendering service is an argument in description. No such plea was raised before the National Commission. Overdraft limit prescribed by the Bank was not without consideration. Bank is rendering service by providing overdraft facilities to a customer which is not without consideration. Bank is charging interest and other charges as well in providing the service. Provision for overdraft facility is certainly a part of the banking and its service within the meaning of clause (o) of Section 2 of the Act. When Bank is engaged in different types of business as mentioned in Section 6 of the Banking Regulation Act, it is apparent that when bank is granting overdraft facilities to its client which is a customer, it is providing service to him. Request for sale of part of the pledged shares for getting overdraft facilities and which is agreed to by the Bank is certainly part of the service connected with the grant of overdraft facilities. Appellant as a consumer was hiring service of the Bank for consideration by way of payment of interest for the overdraft facilities received by him by pledging the shares of different companies. We reject the argument that the appellant is not a consumer or that the Bank is not providing any service to the appellant. (Paras 7, 8 & 9)

       (ii) Consumer Protection Act, 1986-Section 2(1)(g)-Deficiency in service-Damages for-Bank-Overdraft facility to customer against pledge of shares-Customer requesting Bank to arrange of part of shares and to clear O.D.-Bank agreeing but delay in releasing shares-Meantime share price coming down-Delay in locating where share lay-While share lay in branch of Bank which granted O.D. Bank communicating with Head Office if share lay there-Delay in release of share due to negligence of Bank-Customer entitled to differential price between one he desired to be sold and price of share which came to be dipped-Bank s defence taking recourse to Sections 172 to 177 not sustainable-Plea of contributory negligence on part of customer rejected.

       Held : There cannot be any doubt if action had been taken by the Bank promptly or within a reasonable time appellant would have been able to clear his overdraft account. About the prevalent price of the share as claimed by the appellant there cannot be any dispute. Prima facie it does appear to us that Bank has failed to honour its commitment resulting in loss to the appellant. (Paras 4 & 6)

       The appellant is a consumer and Bank is provider of the service. Appellant s case is simple. He did not want his shares back. He only wanted part of the shares to be sold and for the bank to keep the money to liquidate part of his overdraft account. Bank agreed. Each branch of the bank is independent. The Bank has taken two principal pleas : (1) it was not obliged to sell the shares as under law Bank is not bound to follow the instructions in view of the provisions regarding pledges as contained in Sections 172 to 177 of the Indian Contract Act; and (2) It was the appellant who misled the Bank by saying that the shares were lying in the head office of the Bank at Bombay. That the Bank has a right under the law to retain the pledged goods is not in dispute. But once the Bank having agreed to sell part of the pledged goods, it could not fall back on those very provisions to raise a plea of its right under the law to retain the pledged goods. Bank says it was misled by the appellant that the shares were lying in Bombay when in fact these were lying in the Nagpur branch itself where the appellant had the overdraft account. Could not the Bank verify as to where the pledged shares were kept when on the basis of those very shares as security overdraft facility was granted? We think that the Bank is just firing a shot from the shoulders of the appellant to hide its own defaults, ney negligence. As far as the appellant is concerned, he has clearly stated, which has not been denied, that the pledged shares were to be transferred in the name of the Bank and sufficient number of blank transfer forms duly signed by him were submitted to the Bank and further that the Share Department of the Bombay Head Office of the Bank was centralised for handling all matters concerning shares and that bonus shares in this very case were received by the Bombay Head Office of the Bank. Bank also advanced a plea that the appellant was guilty of contributory negligence by which the Bank tacitly admitted its own negligence on its part as well. That the appellant suffered loss because of the delay in not disposing of his shares as agreed to by the Bank cannot be disputed. In these days of revolution in information technology Bank is merrily going on corresponding with its customer, the appellant, and also its own Head Office. It was not difficult for the Bank to find out on receipt of the letter dated April 23, 1992 of the appellant where the pledged shares were lying. It took 12 days to transmit the request of the appellant to its Head Office. When the Nagpur Branch received letter dated June 19, 1992 from the Head Office that the shares were not lying there, it took another 40 days to inform the appellant of this fact by its letter of July 29, 1992. Then the Nagpur Branch finds that the shares are lying with it and then it is too late. It is true that the Bank is not expected to process the request of its customer at once but within reasonable time and certainly promptness and diligence is required which we find lacking in the present case. Whatever may be the fault of the appellant being not regular in his account with the Bank, all these pleas raised by the Bank are merely afterthoughts in order to hide its own default and inefficiency. Once the Bank agreed to sell the part of the shares on request by the appellant and without any pre-conditions, it cannot fall back on other alleged defaults of the appellant in his dealing with the Bank. The plea of the Bank that it could dispose of the shares only through its own broker is without substance as it never apprised the appellant this fact. We, therefore, find ourselves unable to agree with the view of the National Commission that there was no negligence on the part of the Bank or that the Bank was not bound to dispose of the shares. (Para 22)

       The indicative price at which the appellant requested the Bank to sell the shares of Castrol Ltd. was Rs. 2,400/- to Rs. 2,500/- per share. As to what is the price of share on any day is known to the Bank and for that matter to any person interested in knowing value of the share. On July 29, 1992 the price of the share of Castrol Ltd. had fallen to Rs. 700/- per share, though it was more than the value of the share at the time these share were pledged with the Bank. The appellant has arrived at the figure of Rs. 8,50,000/- as the loss occasioned to him. On June 30, 1992 his overdraft account showed debit balance of Rs. 3,40,962.53 with the Bank. The appellant, therefore, said that he suffered a loss of Rs. 5,09,037.47 after deducting the debit balance, which he thus claimed with interest and other charges like damage for loss of long standing business due to non renewal of letter of credit; for non-releasing of securities; undue and unjust harassment thus making a total of Rs. 29,56,264.76. On the face of it apart from the claim of damages for loss in selling of shares other claims are too much overblown to be considered at all. The appellant would, thus, be entitled to the award of Rs. 5,09,037.47 with interest at the rate of 11 per annum from August 1, 1992. (Para 23)