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2007 (2) CPR 371 (NC)
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
M.B. Shah, President; Dr. P.D. Shenoy, Member
M/s. Sun Pharmaceutical
Industries Ltd.—Complainant
versus
State Bank of India & Anr.—Opp. Parties
Original Petition No. 197 of 1995
Decided on 23-5-2007
(ii)Consumer Protection Act, 1986—Section 21(a)(i)—Negotiable Instruments Act, 1881—Section 14—Uniform Customs and Practice for Documentary Credits,1993—Articles 2, 10, 13, 14—Negotiation. Held: SB has merely forwarded documents to the HSBC without giving value of letter of credit, therefore, it does not constitute negotiation either under Section 14 of Negotiable Instruments Act or Article 14 of UCP. (Paras 36, 37, 51 and 52)
(iii)Consumer Protection Act, 1986—Sections 21(a)(i), 2(1)(g) and 14(1)(d)—Delay on the part of the SBI—SBI negotiating Bank for LC—HSBC issuing Bank of LC—HSBC pointing discrepancies to SBI—SBI not removing, neither informing complainant to remove in time—LC dishonoured—Complaint for compensation against SBI—Whether SBI is liable to pay entire amount lost by complainant? (No) (Paras 57, 58)—What amount be paid by SBI?—Only interest charged from complainant—Complaint allowed in part accordingly.
Held: The question would be whether for this delay in sending communication to the Complainant, State Bank of India is liable to pay the entire amount lost by the Complainant?
In our view, the contention of the Complainant cannot be accepted.
Delay was due to intentional or unintentional mistake of HSBC, in sending telex message at main Branch of the State Bank of India even though it was specifically mentioned by the State Bank of India in its communication dated 28.10.94 that all the proceeds of LC be sent to the Shivsagar Estate Branch of the State Bank of India.
Secondly, the telegram was required to be sent by HSBC to the Shivsagar Estate Branch.
Thirdly, delay in sending the reply has not prejudiced the case of the Complainant because the goods were already delivered on 30th or 31st October, 1994 to the consignee. Therefore, that consignee was not prepared to accept the documents on alleged ground of discrepancies which was an excuse made out by the HSBC.
Thereafter, the State Bank of India branch and the Complainants sent various communications to the HSBC for honouring the LC. But, that was not done, and the State Bank of India failed to convince the HSBC to honour the LC. Therefore, as stated above, the State Bank of India is not liable to pay the entire amount.
However, there was delay in communicating the alleged discrepancies to the Complainant by the Shivsagar Branch of the State Bank of India. The Complainant was informed only on 29th November, 1994 and thereafter the Complainant wrote letter to the HSBC on 30th November, 1994 pointing out that there were no discrepancies. That was not accepted by the HSBC even though the due date for payment as per the LC was 15th February, 1995. Therefore, it is apparent that the alleged discrepancies were mere excuse in not honouring the LC.
However, deficiency in service on the part of the State Bank of India for delay in communicating to the Complainant with regard to receipt of the letters dated 8.11.1994 and 15.11.1994 and in not dealing with the documents promptly, State Bank of India is required to pay compensation. In the facts of the present case, it would be just and reasonable to direct the State Bank of India to pay the amount of Rs.1,17,212 which it has received as interest from the Complainant.
In the result the complaint is allowed partly. The State Bank of India is directed to pay the sum of Rs.1,17,212 to the Complainant with interest at the rate of 9% p.a. from the date of the complaint, namely, 7.12.1995 till the date of payment. There shall be no order as to costs. (Paras 59, 60, 61, 62, 63, 64, 65, 66 and 67)
Result: Complaint allowed in part accordingly.
M.B. Shah, President—It is the case of the complainant, M/s.Gujarat Lyka Organics Ltd., now merged with M/s. Sun Pharmaceutical Industries Ltd., that it deals in production and sale of antibiotics and life saving drugs and is enjoying a global market. It is the say of the complainant that it had appointed the State Bank of India (hereinafter referred to as SBI for short), Opp. Party No. 1, as a negotiating bank for the purpose of a Letter of Credit (hereinafter referred to as L.C. for short) opened at the request of one M/s. Condea Chemical Trading Company, Honkong, (hereinafter referred to as M/s. Condea for short) by Hongkong and Shanghai Banking Corporation Ltd. (hereinafter referred to as HSBC for short) in favour of the complainant. It is contended that as the negotiating bank, the SBI offered to render services to the complainant in the matter of the said L.C. for consideration agreed to be paid by the complainant. The bank had undertaken to pay the complainant an amount of US $ 1,41,000 as mentioned in the L.C.
2. The complainant despatched the goods in October, 1994 as per the terms of the contract to the consignee, M/s. Condea Chemical Trading Company, and on 26.10.1994, handed-over all the necessary documents to the SBI. The SBI accepted the documents, and, after scrutiny, paid the entire amount to be received under the L.C. to the Complainant by means of credit on 28.10.1994 against the export bills discounting facility enjoyed by the complainant with the SBI. The documents were forwarded to the HSBC.
3. On 8.11.1994, the issuing bank, HSBC, sent a telex message to the SBI pointing out certain discrepancies in the documents. The issuing bank also sent another telex message on 15.11.1994 seeking reply from the SBI and stating that pending the reply they would return the documents. Finally, the HSBC returned the documents which were received by the SBI on 19.11.1994.
4. On 8.12.1994, the SBI re-presented the documents clarifying and disclaiming all discrepancies pointed out by the HSBC. Thereafter, on 24.12.1994, the SBI requested the issuing bank for confirmation of acceptance, which was refused by the HSBC on 25.12.1994. It is pointed out that on 17.2.1995, the documents were again presented to the issuing bank by the SBI but the same were returned to the negotiating bank, i.e., SBI on 8.3.1995 disclaiming the liability under the L.C. Hence, the SBI reversed the credit given to the complainant and also recovered interest amounting to Rs.1,17,212 from the complainant’s account.
5. It is contended that it was the duty of SBI as a negotiating bank, to scrutinize the documents and to verify whether the same were in order in accordance with the terms and conditions of the L.C. Further, the SBI did not respond promptly to the correspondence addressed to them by the issuing bank. It is also contended that the L.C. was irrevocable one, but the complainant had to suffer due to negligent attitude of the SBI because it was the duty of the SBI to identify the discrepancies and to notify the same to the complainant, well in time, in order to enable them to rectify and correct the same. It is further contended that the complainant was never informed about the telex message dated 8.11.1994 sent by the HSBC. If the complainant was informed about it, it would have removed the discrepancies within the time. Thereafter, the HSBC sent another telex on 15.11.1994 to SBI stating that it had not received reply to the earlier telex dated 8.11.1994 and in the absence of the reply, the documents would be returned and on 19.11.1994, the documents were returned by the issuing bank.
6. It is, therefore, contended that there is deficiency in service by the SBI on the following counts:
(a) That the SBI did not take effective steps to rectify the discrepancies nor did it inform the complainant about the same in time in order to enable the complainant to rectify discrepancies, if any.
(b) Had the SBI informed the complainant about the di
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