STATE BANK OF INDIA Vs. PRAFUL JAIN

JUDGEMENT

(1.) This first appeal has been filed by the State Bank of India against the order passed by the State Consumer Disputes Redressal Commission, UP dated 2.7.1999 directing the Bank to reverse the debit entries of Rs. 4,80,985/- in the account of respondent. The respondent in this appeal was the complainant before the State Commission. He filed a complaint against the State Bank of India seeking directions to reverse the debit entries of Rs. 7,70,000/- with regard to eight Bank Drafts. The controversy has arisen from the following facts.

(2.) The complainant had an account with the State Bank of India at Kanpur. According to the complainant there was mutual agreement between the complainant and the Bank, Cantonment Branch, Kanpur under which the facility of cash credit hypothecation limit was sanctioned to the complainant. Under the facility of cash credit, the stocks were to remain hypothecated with the Bank. During the course of business, Shri Mool Chand as representative of Firm, M/s. Harish Chandra Jaiswal of Kunda Distt. Pratapgarh contacted the complainant for purchase of iron goods and payment was offered through Bank Draft No. 272154 dated 15.3.1994 for Rs. 98,000/- drawn upon the State Bank of India of Baba Ganj Branch, Pratapgarh. Since the said party was unknown to the complainant, complainant agreed to deliver the goods only when the Bank Drafts were encashed. Mool Chand delivered the draft to the Bank on 16.3.1994. The Bank after satisfying the genuineness of the Bank Draft credited the proceeds thereof in the complainant's account on 18.3.1994 whereafter the complainant prepared a bill for Rs. 89,433/- in the name of M/s. Harish Chand Jaiswal and delivered the goods on the same date. Mr. Mool Chand further purchased iron goods from the complainant after offering other Bank Drafts. Those Bank Drafts were sent to the opposite party. The Branch Manager after full verification credited their proceeds in the complainant's account whereafter the bills were prepared and the delivery was made in the name of M/s. Harish Chand Jaiswal. There were eight Bank Drafts in all, five of Rs. 98,000/- each and two of Rs. 93,000/- each and one for Rs. 94,000/-. The delivery of the goods could not be made in respect of three drafts amounting to Rs. 94,000/- and Rs. 93,000/- each. The State Bank of India informed the complainant on 13.4.1994, that the Bank Drafts were forged and as such the complainant should withhold the delivery of the goods against the said three forged Bank Drafts. The Bank started claiming the refund of the said eight Bank Drafts, from the complainant but the complainant informed that as regards five Bank Drafts, the complainant had already sold and delivered the goods after the Bank Drafts were encashed and credited in the complainant's account by the Bank and as such there was no question of refunding of the amount of the said five Bank Drafts. Complainant, however, offered to refund the amount in respect of remaining three Bank Drafts against which the delivery was withheld on the condition that if the Bank furnished an Indemnity Bond to secure the complainant in case the customer claimed goods from the complainant or refund of the amounts in respect of those three Bank Drafts. The Bank did not accept the condition of Indemnity Bond and on the contrary the Bank arbitrarily and unilaterally reversed the credit entries of the eight Bank Drafts. In these premises, the complainant claimed that the opposite party be directed to reverse the debit entries of Rs. 7,70,000/-.The interest also be paid and further directed to pay Rs. 7,70,000/- with interest towards damages for not making available the Bank Account for further operation.

(3.) Notice on the complaint was given to the opposite party Bank. The Bank filed a power of attorney but it did not appear thereafter. Therefore, the Bank was proceeded ex-parte.