PUNJAB NATIONAL BANK Vs. MAHAJAN ENGINEERING WORKS

JUDGEMENT

(1.) This is defendants appeal against the judgment and decree of the Additional District Judge, Ludhiana, dated 9th January, 1979, whereby the appeal, of the plaintiff-firm was accepted; thereby decreeing its suit.

(2.) The brief facts of the case are that the plaintiff firm filed suit for recovery of Rs. 3010.75 which were illegally debited to its Cash Credit Account No 378 with the Punjab National Bank, Millarganj Branch, Ludhiana, on 9th December, 1971. The plaintiff also claimed recovery of Rs. 1080/- as interest on the above amount and recovery of Rs. 730/- with regard to interest illegally debited by the Bank pertaining to the transaction of forward exchange contract $ 930/6/9, i.e. for Rs. 4820.75. The plaintiff-firm was granted a licence for import of industrial scrap sheet, cuttings and so they placed an order for supply of these licensed goods with M/s Elgred Howard and Company Ltd., London. The plaintiff opened letter of credit with Punjab National Bank, Millarganj Branch, Ludhiana, on 16th February, 1967 for $ 930/6/9. This letter of credit was valid upto 30th April, 1967. The foreign suppliers, however, expressed their inability to supply the goods within the stipulated period and, accordingly, the Plaintiff requested the Bank vide letter dated 10th May, 1967 for cancellation of the letter of credit No. 2513-P dated 16th February, 1967. The plaintiff also prayed that margin money deposited in this account be also transferred to its cash credit account. The plaintiff further made request that foreign exchange purchase for forward exchange contract 1413 DS may, be counted in L/c No. 2547-P. However it so happened that despite the request made by the plaintiff to cancel its letter of credit vide letter dated 10th May, 1967, the same was not cancelled for the ostensible reason that reasons for getting the limit cancelled had not been assigned. The defendants however vide letter dated 13th March, 1968, called upon the plaintiff to pay a sum of Rs. 3010.75 on account of difference of rupee equivalent to $ 930/6/9 at the contract rate and current buyer rate for cancellation of the contract. Simultaneously the Bank informed the plaintiff that a sum of Rs. 1215.30 was due towards the plaintiff on account of interest due on the aforesaid contract. The plaintiff averred that the defendants illegally debited a sum of Rs. 3010.75 and a sum of Rs. 1080.00 as interest to its account and thus sought recovery of the same.

(3.) The defendant put in appearance and controverted the averments made in the plaint. The reason assigned for debiting the amount was that there was a difference of devaluation equivalent of $ 930/6/9 at the contract rate and the current buyer's rate for cancellation of the contract. It was specifically pleaded that difference arose due to devaluation of Pound Sterling over which the Bank had no control. This amount was recoverable under Foreign Exchange Rules.