CHAIRMAN Vs. S.S. MILLS

JUDGEMENT

(1.) The present Appeal has been filed against the Order dtd. 30/7/2013 passed by the State Consumer Disputes Redressal Commission Tamil Nadu, Chennai (hereinafter to be referred to as "State Commission"), whereby the Complaint filed by M/s. S.S. Mills, (hereinafter referred to as the Complainant) was allowed and the Jammu and Kashmir Bank Limited (hereinafter referred to as the Opposite Party Bank) was directed to pay a sum of Rs.8,34,000.00 to the Complainant on the basis of the letter of credit dtd. 23/3/2004. The Opposite Party No. 1 and 2 Bank were also directed to pay Rs.1,50,0000.00, in total, towards mental harassment/agony and litigation cost of Rs.10,000.00 to the Complainant within six weeks from the date of Order failing which the Complainants would be entitled to claim the same alongwith interest @6% p.a. from the date of default till the date of realisation.

(2.) Brief facts of the case as narrated in the Complaint are that the Complainant is the manufacturer and exporter of knitted garments at Tirupur. M/s. Lynx Trading Co. Ltd. (hereinafter referred to as the 3rd Opposite Party) placed a supply order with the Complainant for supply of 21,000 blue cotton basic T-Shirts at a total sale consideration of Rs.11,34,000.00 by paying a sum of Rs.3,00,000.00 as advance and for remaining Rs.8,34,000.00 the third Opposite Party obtained letter of credit dtd. 23/3/2004 from the Jammu and Kashmir Bank Ltd, Bangalore (hereinafter referred to as the 2nd Opposite Party). As per terms of the letter of credit, the Complainant has to supply the goods to the M/s. Sheriff and Sons (hereinafter referred to as the 4th Opposite Party), i.e., agent of the third Opposite Party. After supplying the goods the Complainant has to submit the documents for negotiation with Syndicate Bank, (hereinafter referred to as the 5th Opposite Party) for payment of Rs.8,34,000.00. The 5th Opposite Party was entitled for necessary charges for forwarding the documents submitted for negotiation to the 2nd Opposite Party Bank. The Complainant delivered the goods as per supply order to the 4th Opposite Party, i.e., agent of the 3rd Opposite Party on 25/3/2004. The said goods were duly received and accepted by the 3rd Opposite Party on 26/3/2004. The Complainant submitted the documents to 5th Opposite Party for negotiation on 26/3/2004. The said documents were forwarded to the 2nd Opposite Party Jammu and Kashmir Bank, Bangalore on 24/4/2004. Despite receiving the documents, 2nd Opposite Party Jammu and Kashmir Bank, Bangalore, failed to honour the letter of credit of Rs.8,34,000.00 issued by them. Only on the basis of this letter of credit issued by 2nd Opposite Party Jammu and Kashmir Bank, Bangalore, guaranteeing the payment of Rs.8,34,000.00, the Complainant supplied the goods to the agent of the third Opposite Party. After supplying the goods, the 2nd Opposite Party Jammu and Kashmir Bank, Bangalore denied the payment of Rs.8,34,000.00 to the Complainant on the basis of some discrepancies in the documents submitted by the Complainant and advised the 5th Opposite Party to set right the discrepancies through the Complainant. It was alleged that the said discrepancies does not empower the 2nd Opposite Party to deny payment of Rs.8,34,000.00 to the Complainant as per letter of credit dtd. 23/3/2004. Undisputedly, the Complainant supplied the goods on 25/3/2004, which was received by the 3rd Opposite Party on 26/3/2004 and the documents for negotiation submitted to the 5th Opposite Party on 26/3/2004 and so the documents were received by the 2nd Opposite Party on 24/4/2004, within 30 days as per terms and conditions of the invoice and thereby the Complainant claimed the amount from the 2nd Opposite Party which was not materialized. Legal notice was also issued on 5/6/2004 but having no response, alleging deficiency in service on the part of the Opposite Parties, the Complainant filed a Consumer Complaint before the State Commission.

(3.) The Opposite Party Jammu and Kashmir Bank contested the Complaint before the State Commission by submitting that payment under Letter of Credit was refused by the Jammu and Kashmir Bank on account of discrepant documents forwarded by the Syndicate Bank. According to the Complainant the goods were dispatched on 25/3/2004, the documents were negotiated with Syndicate Bank on 27/3/2004 which in turn dispatched the documents for presentation to Jammu and Kashmir Bank vide letter dtd. 24/4/2004 and the same were received by J&K Bank only on 26/4/2004, which as per terms of the Letter of Credit were to be received on or before 6/4/2004. Therefore, the presentation of the documents was after the expiry of the credit. Hence the documents having been received by J&K Bank after due date, the discrepancy raised by the Appellant Bank is genuine. It was further submitted that the bill of exchange was drawn at 30 days DA whereas the draft submitted by the Complainant was for 30 days DA after LR date. Further, invoice did not certify goods strictly as per beneficiary invoice no. 75 dtd. 19/3/2004 and invoice mentioned payment terms as 100% LC at sight instead of LC at 30 days. Therefore, the documents being discrepant as compared to terms and conditions in Letter of Credit. It was further submitted that there was no deficiency in service on their part and it was prayed that the Consumer Complaint be dismissed.