UNION BANK OF INDIA Vs. SEPPO RALLY OY

JUDGEMENT

(1.) THIS first appeal is directed against the Order dated 21.7.93 passed by the Delhi State Commission accepting the complaint and directing the opposite party to pay an amount of pound 11,234 with interest at the rate of 15% per annum from the date of complaint i.e. 27.5.92 till the date of the payment besides costs of Rs. 2,500/ -.

(2.) THE facts in the complaint may briefly be noticed. M/s. Dany Dairy & Food Engineers Ltd., the third opposite party before the State Commission entered into an agreement with M/s. Sappo Rally OY (complainant) on 14.12.88 whereby the third opposite party agreed to supply two evaporator systems valued at Rs. 25,98,473/ - within a period of four months from the date of the order. Under the agreement the complainant paid 100% advance payment to the third opposite party in Pound Sterling subject to the condition that they would furnish Bank guarantee for the amount of advance. The third opposite party obtained Bank guarantee dated 19.12.88 from the Union Bank of India (opposite party No. 2 a branch of the Union Bank of India) and furnished the same to the complainant. The contract was partially executed and in consequence thereof the Bank guarantee stood reduced to Rs. 10,53,735/ - to cover the value of the goods not supplied. The Bank guarantee was extended from time to time and the last extension was upto 31st December, 1989. The com - plainant invoked the Bank guarantee on 19.12.89 and asked the Bank to pay to them Rs. 10,53,753/ - equivalent to £39,000 in consequence of the default of the third opposite party in fulfilling the contract. After obtaining the permission of the Reserve Bank of India, a Bank draft for £29,062 was handed over on 4.3.91 to the complainant. The complainant alleged that he had invoked the Bank guarantee and called upon the Bank on 10.12.89 to pay £39,000 equivalent to Rs. 10,53,735/ - but the Bank short paid £9,938. The complainant alleged that all payments were to be made by the complainant in fulfilment of the performance guarantee and since the delay was occasioned due to wilful lapse of the Bank, therefore, there is deficiency and negligence in service which the Bank was duty bound to perform in due course of business with care and prudence. After the receipt of the amount, the complainant filed a complaint alleging deficiency in service and prayed that the bank be directed to pay the amount £9,938 alongwith interest at the rate of 18% per annum from the date of invocation of the Bank guarantee till the date of the actual payment.

(3.) THE State Commission came to the conclusion that it had territorial jurisdiction to entertain the complaint as the Bank guarantee was furnished by the third opposite party who is a necessary party to the present proceedings, to the complainant at Delhi. The contract between the third opposite party and the complainant in pursuance of which Bank guarantee was given took place at Delhi and thus a part of cause of action arose at Delhi. The State Commission also rejected the contention of the Bank that the complainant is not a beneficiary from the third opposite party. The Bank guarantee was furnished by the third opposite party to the complainant and thus the latter availed of this guarantee with the consent of the former. The complainant was held to be a beneficiary and falls within the definition of the word consumer as defined in Section 2(1)(d)(ii) of the Act. The State Commission after considering the facts and circumstances of the case came to the conclusion that the amount was to be paid by the Bank in Pound Sterling under the Bank guarantee. The State Commission then determined the amount payable to the complainant. The State Commission took the date as 20th January, 1990 after one month of the invocation of the Bank guarantee and on which date the exchange rate was Rs. 28.20. The State Commission held that the complainant became entitled of £37,366 whereas only £29,062 were paid and thus the complainant was held entitled to the balance amount of £8,304. The complainant was also granted interest from 20.1.90 to 27.5.92, the date of filing of the complaint. The complaint was allowed directing the Bank to pay an amount of £11,234 with interest at the rate of 15% per annum from the date of the complaint i.e. 27.5.92 till the date of payment besides costs of Rs. 2,500/ -.