The main legal point established in the judgment is that under Section 45A of the Act, the furnishing of security by way of an indemnity bond is not sufficient compliance, and the provision requires furnishing of security in addition to an indemnity bond to indemnify in case of any loss.

ORDER :

Ashok Bhan, J.

M/s. ITC Limited, agriculture business division, Secunderabad applied to the State Bank of India, appellants herein, for issue of a bank draft for a sum of Rs. 27,98,500/- and the other for a sum of Rs. 1,63,28,500/- in favour of M/s. Soya Udyog Ltd., the respondent herein. Acting on the request of M/s. ITC Ltd. the appellants herein issued demand draft No. 150683 on 16.1.1993 for a sum of Rs. 27,98,500/- and another demand draft No. 150865 dated 18.1.1993 for Rs. 1,63,28,500/-. The aforesaid two demand drafts were handed over by the appellants to the purchaser M/s. ITC Limited. M/s. ITC Limited, in turn, handed over the said demand drafts to the respondent herein towards consideration for supply of de-oiled cake, which was the business transaction.

2. It is alleged by the respondent that the aforesaid two demand drafts were lost in transit when one of its directors was coming from Secunderabad to Indore. It is also alleged that on 23.1.1993 the first information report in regard to the loss of the aforesaid two demand drafts was lodged with the police station. The respondent thereafter wrote to the appellants herein for issue of duplicate drafts in lieu of the original two demand drafts. On receipt of the said letter, the appellants herein, asked for furnishing security for the said sum in addition to indemnity bond for issuing duplicate demand drafts. However, the respondent insisted for furnishing indemnity bond only and there was exchange of letters in this regard between the parties. Ultimately, the respondent deposited a sum of Rs. 47,81,750/- as a margin money with the appellants for issue of duplicate demand drafts for the aforesaid amount. The appellant on deposit of the aforesaid money issued the two duplicate demand drafts in favour of the respondent.

3. Not contended with the issue of the duplicate two demand drafts, the respondent filed a complaint under Section 21 of the Consumer Protection Act, 1986 before the National Consumer Disputes Redressal Commission (hereinafter referred to as 'the commission). In the said complaint, it was alleged by the respondent that it was due to deficiency of services of the appellant that the money of the respondent was blocked which resulted in loss of interest on the aforesaid amount covered by the two demand drafts.

4. The commission was of the view that the respondent having furnished indemnity bond, there was sufficient compliance of Section 45 of the Negotiable Instruments Act and the appellant was negligent in rendering service to the respondent. Accordingly, the commission awarded compensation by allowing interest on the amount of Rs. 1,91,27,000/- at the rate of 15 per cent per annum for the period 26.1.1993 to 4.5.1993 and expenses quantified at Rs. 50,000/-. In that view of the matter, the complaint stood allowed. It is against the said order of the commission; the appellants have preferred this appeal.

5. The short question that arises for consideration in this case is whether under Section 45A of the Act the furnishing of security by way of indemnity bond is sufficient compliance or not. A perusal of Section 45A of the Act shows that where a bill of exchange has been lost before it is overdue the person who was the holder of it may apply to the drawer to give him another bill of the same tenor, giving security to the drawer, if required to indemnify him against all persons whatever in case the bill alleged to have been lost shall be found again. What the aforesaid provision requires is furnishing of security in addition to indemnity bond to indemnify in case of any loss. Since the respondent did not furnish the security to indemnify any loss, the appellants cannot be said to be negligent or deficient in service.

6. For the aforesaid reasons, this appeal deserves to be allowed. The order passed by the commission is, accordingly, set aside and the appeal is allowed.

7. There shall be no order as to costs.