Radha Mohan Prasad, J.
1. In this writ petition, the claim of the petitioner is for refund of Rs. 28,087.50 from the respondent-State Bank of India which was debited from its account on account of guarantee fee paid to D.I.C. G.C. for opening of Letters of Credit by the petitioner.
2. In short, the relevant facts are that the petitioner is a private limited company running its business at Nagala., Patna City. The petitioner was earlier getting wheat from the Food Corporation of India (hereinafter referred to as 'the Corporation') for production of Aata, Maida, Sujji, etc. In the regular course of business, the Corporation used to supply wheat to the petitioner and for that they required irrevocable Letters of Credit from the petitioner to the extent of the value of the goods supplied by the Corporation, and the said Letters of Credit was required as a guarantee for payment of the amount to the Corporation. The petitioner made an application to the State Bank of India for opening irrevocable Letters of Credit in favour of the District Manager of the Corporation, Exhibition Road, Patna in the prescribed form a photo copy whereof has been annexed as Annexure-1.
3. The case of the petitioner is that irrevocable Letters of Credit opened in the name of the District Manager was never operated upon the whenever the goods were supplied to them, the payment was made through cheque on the following date. However, for opening of the said Letters of Credit the Bank had realised from the petitioner the guarantee and service charges as fixed by them being 1% of the amount for which the guarantee was given by the Bank. The petitioner was surprised to receive debit advice issued by the Branch Manager, State Bank of India, Patna Main Branch on 29.4.1989 which showed debit of the aforementioned amount being the amount of guarantee fee paid to D.I.C.G.C. on account of Letters of Credit opened for the period December 1985 to December, 1988.
4. The petitioner approached the Branch Manager to find out about the details and when no response was received, he sent Advocate's notice on 25th July, 1989. The petitioner had also written to the General Secretary, Bihar Chamber of Commerce, Patna and also to the Chairman of the Bihar Industries Association, Patna for taking up the issue as the said debit was made without there being any authority of law. In response to it, the General Secretary, Bihar Chamber of Commerce wrote to the Chief General Manager reiterating that the charging of guarantee fee from retrospective effect is wholly arbitrary and without any authority of law. A photo copy of the said letter has been annexed as Annexure-4. The Secretary of the Bihar Industries Association also wrote to the General Manager (Operation), State Bank of India about the illegal action taken by the bank, vide Annexure-5. The Bihar Chamber of Commerce and the Bihar Industries Association also took up the issue with the Reserve Bank of India and again wrote to the General Manager (Operation), State Bank of India enclosing the clarification issued by the Reserve Bank of India, but the State Bank of India interpreted the letter of the Reserve Bank of India only in relation to fund limit and stated that the same to do not cover the Letters of Credit of Bank guarantee. The Bihar Chamber of Commerce also took up the matter with the Deposit Insurance and Credit Guarantee Corporation (D.I.C.G.C.) with respect to the fee charged to the borrowing units, vide Annexure-14 to the supplementary affidavit filed on behalf of the petitioner and the Assistant General Manager of D.I.C.G.C, in reply, vide Annexure-15, clarified that D.I.C.G.C. fee is chargeable on fund based limit and not on non-fund based limit. It is not disputed that the facility regarding opening of irrevocable Letters of Credit in the case of the petitioner is based on non-fund based limit. As such, according to the petitioner, the respondent-Bank was not legally justified in charging any fee for deposit of the same with the D.I.C.G.C. Thus, according to the learned Counsel for the petitioner, the debit of Rs. 28,087.50 from the account of the petitioner on account of guarantee fee for payment to D.I.C.G.C. for opening of Letters of Credit by it was wholly Unauthorised and in view of the law settled by the Apex Court in the case of M/s Hyderabad Commercials v. Indian Bank, reported in : AIR1991SC247 , it is a fit case for issuing direction to reaccredit the said amount in the present writ proceedings.
5. Mr. Sinha, learned Senior Counsel appearing for the respondent-Bank submitted that as in this writ petition the disputed question of facts are involved and that too on account of contractual obligation between the parties in course of their commercial dealings, the present writ is not maintainable, especially after the appointment of 'Banking Ombudsman' as per the Banking Ombudsman Scheme, 1995 framed in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 (10 of 1949), before whom the dispute can be effectively resolved. He further submitted that in any view of the matter, the petitioner is not entitled for any relief, as prayed. According to him the cash credit facility is fund based loan account in which the Bank provides its fund for the business of the loanee on the terms and conditions agreed upon. The petitioner requested the Bank to open two Letters of Credit to the limit of Rs. 8,35,000/- and Rs. 6,20,000/- total being Rs. 14.55 lacs on their behalf in favour of the Corporation and the same: was established in their cash credit account with the Patna Main Branch. According to the Bank, the facility of Letters of Credit is based on non-fund based credit, i.e. no fund is provided by the Bank in such type of facility. The Bank merely guarantees the payment of such amount agreed under the Letters of Credit arrangement. It is submitted that the Bank has issued Circular No. SIB/SSI/7 dated 1.2.1986 of Local Head Office, Panta, according to which, guarantee fee for the half yearly period ending December, 1985 to December, 1988 in question is payable by the borrower in case of non-fund based credit facility like the one in question. It is, thus, submitted that the respondent-Bank has correctly debited the requisite amount towards the arrears of guarantee fees as per the terms and conditions of such letters of credit facilities and as per law. In this regard, he referred to the aforementioned circular, contained in Annexure-A.
6. This Court does not find any force in either of the two submissions advanced by the learned Senior Counsel appearing for the respondent Bank. The facts are not in dispute in the present, case. The only dispute involved in the present case is as to whether the guarantee fee is chargeable on the facility of Letters of Credit which is based on non-fund based credit facility, i.e., no fund is provided by the Bank in such type of facility. The Bank merely guarantees the payment of such amount agreed under the letters of credit arrangement. In view of the law settled by the Apex Court in the case of M/s Hyderabad Commercials v. Indian Bank (supra) and the facts which are not in dispute, this Court does not find any difficulty in entertaining the present writ petition. D.I.C.G.C. in its letter dated 22nd.March, 1999, addressed to the Secretary, Bihar Chamber of Commerce, contained in Annexure-15 to the supplementary affidavit filed on behalf of the petitioner on 31.1.2000 clarified the D.I.C.G.C. fee is chargeable on fund based limit and not on non-fund based limit. Admittedly, the facility of Letters of Credit is based on non-fund based limit.
7. From the circular of the State Bank of India dated 1st February, 1986, contained in Annexure-A to the counter-affidavit, it appears that prior to the said circular, the Letters of Credit guarantee fee payable to D.I.C.G.C. in respect of SSI and SB units irrespective of the quantum of credit limits availed of by them was being borne by the Bank with effect from 1st April, 1985. However, the said policy was reviewed and it was decided that credit guarantee fee payable to D.I.C.G.C. in respect of fund based limits relating to SSI and SB units would be borne by the Bank irrespective of the quantum of credit limits availed of by them and in respect of non-fund based limits like Letters of Credit, guarantee etc., the relative credit guarantee fee would be recovered from the borrowing units in SSI & SB sub-segments irrespective of the quantum of credit limits availed by them. The said policy was made effective from 1st January, 1986. The credit guarantee fee on non-fund based limits was made recoverable from the borrowing units from the half year January-June, 1986, based on the relative guaranteed amounts as on the last Friday of December, 1985. I fail to appreciate as to how the respondent Bank could charge guarantee fee when as per the clarification issued by the D.I.C.G.C., contained in Annexure-15, such fee is chargeable on fund based limit and not on non-fund based limit. Moreover, the respondents have failed to bring to the notice of this Court any such instructions either from the Reserve Bank of India or from the D.I.C.G.C. that such fee is chargeable even on the facility of Letters of Credit which is based on non-fund based credit facility. This Court is unable to appreciate as to how any amount can be debited from the account of the account-holder in the absence of any instructions either specific or even in the form of agreement.
8. Learned Counsel appearing for the Bank has failed to show that there was any term in the agreement under which such debit was permissible. However, he has referred to the clause of the application and guarantee form for irrevocable letter of credit (Annexure-1) and contended that as per the said clause, the petitioner gave full authority to the Bank to have a lien on all goods, documents and policies and proceeds thereof for any obligations or liabilities present or future incurred by the Bank under or arising out of the said credit. Accordingly, it was contended that as per the liability with the D.I.C.G.C., the respondent-Bank was justified in charging guarantee fee payable to D.I.C.G.C. Nothing has been brought on the record to show that any such fee was ever paid to D.I.C.G.C., which could be realised from the petitioner even assuming that the said clause of Annexure-1 created obligation on the part of the petitioner to pay the same. Moreover, under the aforementioned scheme introduced by the Reserve Bank of India, No. D.I.C.G.C. fee is chargeable on non-fluid based limit as per Annexure-15 and admittedly, the petitioner was allowed to avail the facility of letters of credit based on non-fund based credit facility. Under such circumstances, the respondent-Bank was not justified in debiting the amount in question from the account of the petitioner.
9. Accordingly, this writ petition is allowed and the respondents are directed to reaccredit the disputed amount in question to the account of the petitioner within two weeks along with the interest, if any, due on the aforesaid amount. In the facts and circumstances, however, there shall be no order as to costs.