Case nº First Appeal No. 1446/ 1452 Of 2014, (Against the Order dated 27/10/2014 in Complaint No. 33/2008 of the State Commission Punjab) With Ia/9111/2014 of NCDRC Cases, March 15, 2017 (case 1. Bank Of India 2. Punjab & Sind Bank Vs Punjab Hide Co. & Ors.)

JudgeFor Appellant: Mr. R.K. Dhawan, Advocate, Mr. Pallav Saxena, Advocatea and Mr. Gaurav Srivastava, Advocate and For Respondents: Mr. Rajvir Singh Sihag, Advocate
PresidentDr. B.C. Gupta,Presiding Member
Resolution DateMarch 15, 2017
Issuing OrganizationNCDRC Cases


Dr. B.C. Gupta, Member

  1. These two first appeals have been filed under section 19 read with section 21(a)(ii) of the Consumer Protection Act, 1986 against the impugned order dated 27.10.2014, passed by the Punjab State Consumer Disputes Redressal Commission (hereinafter referred to as ''the State Commission'') in Consumer Complaint No. 33/2008, by which the said complaint was allowed in favour of the complainant M/s Punjab Hide Company.

  2. The complainant M/s Punjab Hide Company is stated to be a registered partnership firm, engaged in manufacturing and supply of wet glue and finished leather, having office at Amritsar, Punjab and branch office/works at Jalandhar, Punjab and Hapur (U.P.). The complainant is stated to have supplied certain goods to opposite party (OP) No. 3 M/s. Bawa Shoes Limited having their registered office at Goindwal Sahib and Corporate Office at Jalandhar. As a security for payment of the goods, the buyer M/s. Bawa Shoes Limited opened three irrevocable letters of credit in favour of the complainant with OP-1, Punjab & Sind Bank. Credit No. 21/76/03 for a sum of `8,50,000/- was opened on 14.11.2003 with expiry on 10.12.2003. Credit No. 21/80/03 for a sum of `4,00,024/- was opened on 25.11.2003 with expiry on 15.12.2003 and third, credit No. 21/82/03 for a sum of `10,00,787/- was also opened on 25.11.2003 with expiry on 15.12.2003. Under the heading "documents required" on these letters of credit, it has been stated as follows:-

    "Documents Required

  3. Beneficiary''s draft drawn on applicant at 60 days from the date of bill.

  4. Beneficiary''s signed invoices in 3 copies.

  5. Lorry receipt alongwith one copy evidencing goods consigned to PUNJAB & SIND BANK IBD, JALANDHAR showing freight to pay.

  6. Insurance on account of applicant.

  7. Despatch by IBA approved transport company only."

    Under the heading "additional conditions", it has been stated as follows:-

    Additional Conditions:

    1. All banking charges, other than our bank, for beneficiary''s A/c.

    2. Reimbursement will be made on due date only if documents are received by us strictly in accordance with the terms of L/C.


  8. The OP-2 Bank of India is the collecting bank on behalf of the complainant M/s. Punjab Hide Company. It has been stated that the complainant sent some goods to OP-3 as per terms of contract between them and the said goods were received and acknowledged by it. They issued two certificates dated 28.11.2003 and one letter dated 2.12.2003, saying that the goods dispatched under the letter of credit had been received by them.

  9. The complainant, after the dispatch of the goods and receipt of the same by the OPs negotiated the letters of credit, amounting to a total of `22,50,811/- with OP-2 Bank of India being its banker and the OP-2, vide its letter dated 06.12.2003 submitted the required documents to OP-1 Punjab & Sind Bank for getting the letters of credit honoured. On the other hand, the complainant got the letter of credit discounted on 27.01.2004 for a sum of `20 lakh from the OP-2 Bank of India and in the process, paid a commission of `2,50,811/- to the said bank.

  10. The complainant was then informed by OP-2 that the OP-1 Punjab & Sind Bank had returned the letters of credit alongwith original documents vide their letter dated 25.02.2004 which was received by the OP-2 on 06.03.2004. The OP-1 returned the documents on the ground that these were not accompanied by a lorry receipt and the goods were not dispatched through IBA (Indian Banking Association) approved transport company. The OP-2, Bank of India sent reply to OP-1 Punjab & Sind Bank vide letter dated 08.03.2004 and requested them to reconsider its decision in view of the fact that the consigned goods had been received by the OP-3 buyer. The OP-1 Punjab & Sind Bank replied vide letter dated 18.03.2004 that they had taken-up the documents, purely on collection basis and in case, the payment was received from the OP-3 buyer, the same shall be sent to OP-2 Bank of India. Further, the OP-2 Bank of India, debited the account of the complainant with a sum of `20,27,521/- towards the discounted value and interest on the same. The complainant served notice dated 07.03.2005 upon OP-1&2 banks, alleging deficiency in service on their part and acting against banking practices. The complainant also filed complaint against OP-1 & 2 with the Banking Ombudsman, which conveyed to them vide letter dated 14.12.2005 that in view of the discrepancies pointed out by the OP-1 Bank, they were not pursuing the matter further. The said decision of the Ombudsman was challenged by the complainant by way of a writ petition No. 13045/2006 before the Punjab & Haryana High Court. Vide order dated 14.12.2006, the Hon''ble High Court allowed the Writ Petition and remitted the matter back to the Banking Ombudsman to decide the same as per law. However, the Banking Ombudsman rejected the complaint vide their order dated 23.03.2007. The complainant again filed a Writ Petition No. 3984/2008 before the Punjab & Haryana High Court. The said petition was dismissed as withdrawn vide order dated 14.03.2008 of the High Court and liberty was given to the complainant to avail other alternative remedies. The complainant filed the present consumer complaint dated 28.05.2008 before the State Commission, seeking directions to OP-1 & OP-2 Banks jointly and severally to honour the three letters of credit, amounting to `22,50,811/- alongwith interest @18% p.a. from the due date of their payment till realisation and also demanded a sum of `1,50,000/- for mental harassment etc.

  11. In the reply filed before the State Commission, the OP-1 Punjab & Sind Bank stated that they had rejected the documents submitted by the complainant through their Bank, OP-2 and returned the same, as the payment had not been made by OP-3 buyer, even on collection basis. The OP-2 Bank returned the documents through letter dated 03.09.2004 to the complainant. The cause of action had, therefore, occurred at the most in favour of the complainant on 03.09.2004. It was, therefore, their duty to file the consumer complaint within 2 years of the cause of action, i.e., by 03.09.2006 as per Section 24A of the Consumer Protection Act, 1986. It was submitted that the order dated 14.03.2008 passed by the High Court or the order of the Ombudsman does not imply that the period of limitation had been extended. The OP-1 also stated that the issuance of letter of credit creates a contractual relationship between the parties and hence, the complainants if aggrieved, could have gone to the Civil Court for seeking remedy. The OP Bank asserted that under the law of letter of credit, the Bank deals with documents only and...

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