BANK OF INDIA Vs. H C L LIMITED

JUDGEMENT

(1.) THIS is an appeal against the Order dated 30th December, 1993 passed by the State Consumer Disputes Redressal Commission, Delhi in the complaint filed by the present respondent No. 1, H.C.L. Ltd. (for short 'the Company') against the present appellant, Bank of India (for short the Bank) which had been arrayed as opposite party No. 1 in the complaint and M/s. Dealwell Estates Pvt. Ltd. (for short the Firm) who was opposite party No. 2. By the impugned order the State Commission awarded Rs. 38,150/- to the Complainant against the Bank as interest. Future interest from 5.9.1991 at the rate of 16% per annum till the date of payment and costs amounting to Rs. 2,000/- were also awarded. It may be mentioned here that the amount payable under the Bank guarantee issued by the Bank on behalf of the Firm had been paid to the complainant during the pendency of the complaint.

(2.) THE brief facts are that the Company, who is engaged in the business of manufacturing, leasing and selling computers had entered into an agreement with the Firm (now respondent No. 2), where -under the complainant supplied a computer system to the said respondent. A schedule of payment was fixed in the said agreement according to which respondent No. 2 was to make a down payment of Rs. 9,450/-, a quarterly rental of Rs. 5,340/- and a security deposit of Rs. 68,500/-. The rent duration was for a period of 60 months commencing from 1st August, 1986. In consideration of the supply of equipment to the Firm by the Company, the Firm got issued an irrevocable bank guarantee dated the 8th December, 1986 through the Bank in favour of the Complainant. The bank guarantee was valid upto to 4th December, 1991. Under the bank guarantee the liability of the Bank was restricted to Rs. 59,000/-. The Company invoked the bank guarantee for the first time on 16th November, 3 987 and asked the Bank to make the payment. At that time the Bank did not make any payment. In August, 1991, the Company filed the complaint before the State Commission claiming Rs. 1,01,940/- with future interest till the date of payment plus Rs. 10,000/-on account of mental pain and agony. During the pendency of the complaint the Bank paid the amount of Rs. 59,000/- to the Company on 5th September, 1991. According to the State Commission the Complainant Company was deprived of the use of the money for 4 years and 15 days i.e. from 18th August, 1987 to 15th September, 1991 and as the Bank had utilised this amount during this period, the Bank was liable to pay interest at the rate of 16% per annum to the Complainant on the said amount for the aforementioned period. The State Commission did not award any damages to the Complainant as interest by way to damages had been granted. Feeling aggrieved by the said order the Bank has come before us by way of this appeal.

(3.) THE main thrust of the argument advanced on behalf of the Bank is on the question of limitation. It is submitted that the complaint had been filed beyond the period of limitation as the company had first invoked the guarantee on 16th November, 1987, while the complaint was filed on 13th August, 1991 i.e. after more than 3 years of the date of invocation of the guarantee. It was also submitted that any payment made subsequent to the expiry of period of said period of 3 years would not extend the period of limitation when the original claim itself stood extinguished. It will be useful to reproduce here paragraph No. 6 of Bank Guarantee which reads as follows: