M/S.Shriram Investments Limited, Rep. by their Authorized Representative, T. Srinivasa Reddy Vs. the Branch Manager, Corporation Bank and Others - Court Judgment

ORAL ORDER: (Per Sri K. Satyanand, Hon'ble Member .)

The facts of this appeal filed by the complainant as gleaned from the pleadings, affidavits and the submissions lie within a very narrow compass. It seems opposite party No.4 was indebted to the complainant. Presumably in discharge of the said debt, opposite party No.4 obtained a D.D.bearing No.753997 dated 20-4-2004 from opposite party No.2 in favour of the complainant payable at opposite party No.1. Opposite party No.1 and opposite party No.2 are branches at different places of the same Corporation Bank. Opposite party No.3 is a formal party, the Chairman and Managing Director, of the Corporation Bank. In due course the complainant presented the said D.D. for encashment obviously from opposite party No.1 but to his utter disappointment, it seems the bank refused to pay the amount in violation of the provisions of the Negotiable Instrument Act particularly Section 85 (a). Opposite party No.1, however, took the plea that it so stopped payment on the instructions of opposite party No.4, who it seems represented that the D.D. was misplaced. The bank also contended that in as much as opposite party No.4 submitted that he misplaced the D.D., the proceeds of the said D.D. at his instance on cancellation of the D.D. were remitted back to opposite party No.4 after taking a due indemnity bond from him. In this view of the matter, the bank pleaded that it was entitled to be absolved from any liability including a charge of deficiency in service. Aggrieved by the stand taken by the opposite parties, the complainant filed the present complaint praying for the D.D. amount as also damages for the inconvenience caused to it besides costs and consequential reliefs.

As already pointed out, opposite parties 1, 2 and 4 filed separate counters. Opposite party No.3 remained silent. It is the case of opposite parties 1 and 2 that the complainant hardly answers the description of ‘consumer technically so called under the provisions of Consumer Protection Act, 1986 in as much as it was doing business for a commercial purpose and therefore questioned the maintainability of the complaint itself. In fact they also tried to justify the payment, claiming that they heeded the drawer of D.D. to stop payment to the person in whose favour the D.D. was obtained.

Some events that occurred during the pendency of this complaint acquired importance as those developments were tried to be harnessed by both parties in order to substantiate their respective stands. It is especially the complainant that tried to rely very heavily upon the flow of events during the pendency of the complaint. In that view of the matter, it is necessary to advert to those events though they do not in fact impact the just adjudication of the matter in the final analysis.

Along with the complaint, the complainant filed an I.A. numbered as I.A.No.214/2004 praying exparte adinterim orders from the District Forum seeking a direction to the bank to deposit the D.D. amount pending further orders. It is pertinent to extract the said prayer in I.A.No.214/2004 which reads as follows:

“For the reasons stated in the accompanying affidavit, it is therefore prayed that the Honble District Forum may be pleased pass an Ad-Interim Exparte Order directing the Respondent/Opp.parties 1 and 2 to deposit into the Honble Forum the amount of the Bank

Draft of Rs.1,24,750/- to be retained in an interest bearing account, pending disposal of the main C.D., in the interest of justice”.

The District Forum immediately attended to that prayer and passed the following order:

“Dt.18-10-2004

The brief case of the complainant that the R-4 obtained a loan from him under hire purchase agreement and he repaid the sum amounts. The R-4 has sent a D.D. for Rs.1,24,750/- dt.20-4-2004 in the name of the complainant towards payment instalment of under the said agreement. The complainant presented the D.D. through his banker namely ING Vysya Bank Limited for encashment. R-1 who is the drawee bank failed to pay the amount covered by the above said D.D. Hence, this complaint. The complainants Advcoate urged that under Section 85(a) of NI Act the R-1 ought to have honour the above said D.D. But he failed to do so. Further the complainant filed a petition for interim orders directing the respondents to deposit the above said D.D. amount with this Honble Forum, otherwise they will be put to irreparable loss and in justice. In the above circumstances, notice to respondents dispensed with and ad interim order granted directing the opposite parties 1 and 2 to deposit the D.D. amount of Rs.1,24,750/- of D.D.No.753997, dt.20-4-2004 issued by the 2nd opposite party in the name of Sriram Investments, Kadapa with the Honble Forum on or before 20-10-2004. Issue urgent notice by 20-10-2004”.

In as much as the above order specifically indicated that it was only an adinterim order, by ordering routine notice in the petition it is evident that the said order was marked to be operative till the said petition was disposed of on merits. Subsequently the opposite parties had come up with a counter urging the same points as it had taken in the main counter and also submitting that the amount which was directed to be deposited identified with reference to the D.D. in question had already been paid to opposite party No.4 and in that view of the matter there was no possibility of complying with the order of the District Forum as that particular amount was out of their hands. But prior to the appearance of the opposite parties and their contest, the complainant filed a penalty petition under Section 27 of the Consumer Protection Act, 1986 seeking punishment of the opposite parties for their disobedience of the exparte interim order dated 18-10-2004. The opposite parties contested the said P.P. also exactly on the same grounds. After hearing both sides, the District Forum even while taking cognizance of the fact that the bank did not deposit in terms of its exparte interim order passed an order virtually condoning their omission on the ground that the bank had already parted with the money in question paying it to opposite party no.4 though after obtaining some indemnity from opposite party No.4. In that view of the matter, the District Forum dismissed both the I.A.No.214/2004 as also P.P.No.104/2004 by two separate orders on the same day i.e. 30-11-2004.

Aggrieved by the said orders, the complainant/petitioner filed revision petitions 26 and 27 of 2005 before this Commission. This Commission passed a combined order taking into account the fact that the bank had, on its own, after receiving notice deposited the amount and closed the matter giving permission to the complainant to withdraw the said amount by furnishing third party security. Later the main C.D. itself had come up for enquiry.

In support of its case, the complainant filed an affidavit of its branch Manager designated as P.W.1. They relied upon documentary evidence marked as Exs.A1 to A7. On the other hand, opposite parties did not file either affidavit evidence or documentary evidence. However, as could be seen from the order, both sides addressed arguments.

The District Forum on a consideration of the evidence adduced came to the conclusion that there was no deficiency in service and that the bulk of the claim was satisfied in as much as the complainant had withdrawn the principal amount of Rs.1,24,750/- in terms of the orders of the State Commission and what all that remained was in regard to interest, costs and compensation. The District Forum after having particularly found that there was no deficiency in service refused to give any relief in respect of those residuary claims and accordingly dismissed the complaint without costs.

Aggrieved by the said order, the complainant filed the present appeal contending that the order of the District Forum was erroneous and devoid of merits and therefore unsustainable. The District Forum grossly erred in passing the impugned order holding that there was no deficiency on the part of the respondents even while noting the fact that the opposite parties admitted its mistake. The District Forum unnecessarily misled itself on the extraneous considerations relating to hire purchase transactions etc. The District Forum ignored the case law cited. The District Forum failed to appreciate the law laid down by the Supreme Court in AIR 2005 SC 446 holding that the finding rendered in the earlier proceedings in the same case was binding in the subsequent proceedings so much so that it dismissed the complaint contrary to the implied finding of the State Commission in that regard. The appellant finally urged that the order of the District Forum was liable to be set aside and consequently the complaint be allowed.

The counsel for the complainant not only addressed oral arguments but also filed written arguments. The respondents though given an opportunity to file written arguments taking a lenient view of their absence on the day the matter was called, finally failed to take the said opportunity. However, on a perusal of the entire record, the following points emerge for determination.

1. Whether the complainant is a consumer technically so called under Section 2(1)(d) (ii) of the Consumer Protection Act, 1986 as amended by Act 62 of 2002 which came into force with effect from 15-3-2003, in order to validly maintain this complaint on the ground of deficiency in service on the part of opposite parties 1 and 2 in the matter of non payment of the money covered by D.D.No.753997 dated 20-4-2004 drawn in favour of the complainant obtained by opposite party No.4 at opposite party No.2 bank and payable at opposite party No.1 bank?

2. Whether the exparte order dated 18-10-2004 in I.A.No.214/2004 of the district Forum Kadapa read with common order dated 7-10-2005 in R.P.No.26/2005 on the file of A.P.State Commission against the order in P.P.No.104/2004 in I.A.No.214/2004 in C.D.No.253/2004 of District Forum Kadapa and in R.P.No.27/2005 on the file of A.P.State Commission against the interlocutory order on merits dated 30-11-2004 in I.A.No.214/2004 in C.D.No.253/2004 of District Forum Kadapa would operate as res judicata as against the two main issues in the C.D. namely the maintainability of the C.D. and the liability of opposite parties 1 to 3 who represent the same bank sought to be rendered mainly accountable for not honoring the D.D. in question, on presentment by the complainant, shutting them out from wriggling out of the liability, if any, pursuant to the allegedly wrong payment to opposite party No.4 already made and the concomitant implied or deemed or constructive admission of the charge of deficiency in service to that extent, as contended by the complainant/appellant?

3. Assuming for a while that the complainant was a competent consumer under the C.P.Act, whether he could make out a case of deficiency against opposite parties 1 to 3?

4. Whether there are any good grounds to interfere with the order of the District Forum?

5. To what relief?

Admittedly the cause of action in this case has arisen on 20-4-2004 going by the date of bank draft in question. It is therefore obvious that this is a case that has arisen subsequent to the amendment to the Consumer protection Act, 1986 that came into effect from 15-3-2003 by virtue of Act 62 of 2002. It is also not in dispute that the subject matter of this case centers round the availment of service namely the financial service in this case by the complainant from the opposite party bank which was clothed with transmitting the money through the device of a demand draft . In such an event, it is necessary for the complainant on the face of it, an incorporate company, again doing business in financial sector to show that it answers the description of ‘consumer technically so called under the provisions of Consumer Protection Act, 1986. As, unless the complainant, first shows that it was a ‘consumer at the relevant point of time within the meaning of the Act, it cannot claim to maintain any complaint under this Act. In this process, it is therefore necessary to construe the definition of consumer as found in Section 2(1)(d). The said definition has two parts, one in the context of buying of goods and the other in the context of availing of services. Before analyzing the definition of consumer in so far as it related to the availment of service, it is necessary to examine the definition of service. The definition of service is found in Section2(1)(o) in the following terms:

“service” means service of any description which is made available to potential (users and includes but not limited to, the provisions of) facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both (housing construction,) entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;”

In the present matter, ‘service envelopes, among other things, banking, finance etc. Therefore when such ‘service is claimed to be availed by the complainant, it is incumbent upon the complainant to show that he is a ‘consumer qualified to maintain the complaint. In this context, the definition of the ‘consumer in so far as it relates to availment of service becomes all the more relevant. The said relative part of the definition is therefore reduced hereunder:

(ii) (hires or avails of) any service for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who (hires or avails of ) the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person (but does not include a person who avails of such services for any commercial purpose):

(Explanation: For the purposes of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood be means of self employment”.

The said section precludes the persons availing such service for any commercial purpose from the scope and ambit of definition of a consumer. No doubt the clause ‘commercial purpose is also defined and the definition is appended by way of explanation. The cloud of ‘commercial purpose is marked to be cleared only in case the services are availed exclusively for the purpose of earning livelihood by means of self employment. Clearly this is not a case and could not also be a case of the complainant for claiming carrying on business for self employment or livelihood as the very structure of the complainant is antithetical to such kind of assertion. It is available only in the case of individuals or some small proprietorship and partnership firms doing business for livelihood. It is not available to a huge players in the money market like the complainant. It is therefore clear that the complainant cannot claim to be exempt from the embargo contained in the definition by way of ‘commercial purpose. An endeavour is, however, made to show that the demand draft in question would not come any nearer to ‘the merchandise which the complainant deals in. But the word ‘commercial when construed literally by adverting to dictionary conveys the meaning ‘ having to do with commerce.

Here the commercial activity of the complainant is definitely doing commerce in money as shown by the complainant himself by adverting to the genesis of the cause of action namely, that by way of D.D. in question, the opposite party No.4 intended to discharge the debt that he had taken from the complainant in the context of a hire purchase or some such dealing. So the complainant itself is very much a dealer in money or financial service. It is also quite evident that the activity of the complainant by no stretch of imagination can be impressed with the character of doing business for livelihood or by way of self employment. So viewing from any angle, it is crystal clear that the complainant would not clearly come under the four corners of the definition of a ‘consumer of service as enshrined in the Consumer Protection Act . In other words, we have no hesitation to hold that the complainant hardly answers the description of ‘consumer and therefore it lacks the qualification to further assert that he comes within the definition of consumer as in order to become complainant one has to first become a ‘consumer in a case like this as it did not come under any other category contemplated by the definition of complainant on the face of it. This issue is answered accordingly.

The second point arises mainly on the basis of the contention of the complainant that in as much as he succeeded to get back the money under the interim orders, which became possible only by a concession on the part of the opposite party to the effect that its refusal to oblige the complainant for encashment of the D.D. was a mistake and such a concession would amount to a finding, recognizing the deficiency in service and such finding can hardly be disturbed in the final disposal of the C.D. as was done by the District Forum. For the purpose of substantiating this line of argument, he relied upon the theory of the decisions in the R.Ps. operating as res judicata even against the finding that are marked to be arrived in the final disposal of the C.D. The counsel tried to muster support for this argument from the decision in AIR 2005 SC 446 and we are at a loss to understand as to how the said decision is applicable here as the finality of any interim order as after all what was turned out in the R.Ps. was only an interim order pending disposal of the C.D. could operate as res judicata against the final order in the C.D. It is a matter of common knowledge that the interim orders, however, enduring they might be cannot over reach the termination of the proceedings from out of which they arise. In other words, orders in the interim applications cannot out live the main matter. The learned counsel relied upon the Supreme Court judgement only to emphasize that the orders in interlocutory application would operate as res judicata in the subsequent stages of the very same matter. There is absolutely no disputing the proposition; but here in this case while disposing of the R.Ps., the learned State Commission did not give a finding of deficiency of service against the bank, it only pushed through an adhoc arrangement of some urgent relief to the complainant. We are not at all on that question. But the fact remains that an adhoc arrangement made by virtue of the revision petition against an interlocutory order cannot eat into the merits of the C.D. itself in its final adjudication on merits. The line of argument of the learned counsel appears to have made an effort to show that if once the plaintiff succeeds in an interim application, for example temporary injunction in contra distinction to an interim injunction say in a civil suit for permanent injunction, the finding in his favour in respect of temporary injunction would operate as res judicata and therefore sets at naught any further contest on the part of the defendant in the main matter. Definitely that can never be the intendment of any decision much less the decision of the Honble Supreme Court, so the decision cited by the learned counsel is not applicable to the proposition that the learned counsel for the appellant tried to make out in his favour in this appeal. We are, therefore, not convinced that the successful order that the complainant got in the revision petitions and in pursuance thereof the money under the D.D. did bear testimony to a finding of deficiency in service passed by the State Commission well in advance shutting out the District Forum from in any way resiling from such decision of the State Commission. This kind of argument is utterly unheard of. It is our bounden duty to mention here that in the present case penalty petition in relation to an interim order had been entertained without taking notice of the change in law. After 2002 amendment, no P.P. under Section 27 lies for execution of an interim order. It is only Sec.25(1) and (2) as amended that are applicable in such cases.

This issue is cast in the form it is presented here only to pave way for deciding the merits in the actual transaction. In the actual transaction, we have no hesitation to hold that the case of the complainant is on a sound footing. As per the admitted facts, the complainant was in possession of a D.D. in his own favour and he was denied fruits of the D.D. by the bank surely on grounds that can hardly be justified by law as also facts as presently shown. As the complainant rightly relied upon Section 85 (a) of the Negotiable Instruments Act, a person in whose favour the D.D. is taken out and who presents the D.D. in due course has a better right to get the encashment than a person who no doubt procures the same. In the instant case, the D.D. was in favour of the complainant. The complainant himself presented the D.D., in such a case, such D.D is not amenable to be withdrawn or interdicted by any ‘stop payment order. This position is rather clearly acceded to by the other side even before the State Commission. Apart from this, the law is very clear, the stopping of payment to the complainant is undoubtedly illegal to say the least. Therefore, we have no hesitation to answer this issue in favour of the complainant; but at the same time the recognition of the right is one thing and the administration of remedy is another thing. In order to get remedy, the mere right is not sufficient. Over and above the vested right, a further right to agitate in a given Forum has also to be established. In the present case, there is a clear wedge between these two rights possessed by the complainant. Though the complainant has a right to get the encashment for the D.D. in supercession to the rights of opposite party No.4 to get it stopped, its right to agitate and get relief for the same in this Forum is definitely vague as discussed in the foregoing discussion because he hardly answers the description of ‘consumer technically so called under the Consumer Protection Act, 1986.

The District Forum dismissed the complaint. Though we do not fully agree with the finding of the District Forum yet in order to upset the order of the District Forum, the most essential ingredient that has to be satisfied is the complainant being qualified to maintain this complaint. In that regard, it is already held under issue number 1 that it has no such qualification being not a ‘consumer technically so called under the C.P.Act, that means though it had a right its remedy cannot be agitated in this Forum. It does not mean that it has no remedy elsewhere. So, in as much as it is found to be not entitled to maintain this complaint, we have no occasion to alter the result. In other words, we do not see any grounds to justify our interference with the impugned order. For the reasons cited above, we cannot give relief to the appellant in this appeal and therefore the appeal is liable to be dismissed.

Accordingly the appeal is dismissed but without costs in the circumstances of the case.