Case: Corporation Bank  Vs. Navin J. Shah

shall be deposited by the buyer in the local currency with a correspondent bank in the buyers country on the date indicated against that column and proceeds are awaiting transfer to India. The claim was to the extent of 90% of the value of exports. While it is the contention of the appellants that the exporter had entrusted the bank to negotiate certain documents through a certain bank mentioned therein when in fact that bank had failed to collect the money in foreign exchange but collected only in local currency in the foreign country and not in the currency indicated in the documents and thus there was no liability at all on the part of the appellants, the respondent would submit that the appellants having purchased the documents in question were in fact collecting the monies for their own benefit and not for the benefit of the respondent when the documents had clearly indicated the manner in which the consignee get the goods except after payment of cash no delivery could have been made, the appellant bank had acted with negligence and, therefore, is liable to make good the loss suffered by it. We have adverted to the agreement between the parties. The consignee and the consignor have clearly indicated that the documents had to be negotiated through the foreign bank and the mode of payment was through the foreign bank. If that is so, the appellants were acting for and on behalf of the respondent when they sent the documents to the named bank for negotiations and collection of the money due under the agreement the appellants could not have sent the documents to any other agent inasmuch as payments had to be made only through that foreign bank and that foreign bank as was the usual practice realise (release ?) the documents against payment in local currency which was hitherto convertible in foreign exchange in U.S. Dollars could not be done on account of policy of the Sudan Government. If that is so, it is very difficult to perceive of a situation regarding the deficiency in the service rendered by the appellant bank. The appellant bank negotiated the documents as provided under the agreement; so did the foreign bank but the conversion of the local currency to U.S. Dollars became difficult on account of policy of the Sudan Government. When the realisation of the money in U.S. Dollars was frustrated by reason of the governmental action, we fail to understand as to how the appellants could be held to be responsible for the same. The Commission totally failed to appreciate this aspect. Whatever may be the position with regard to the collection procedure that by discount or purchase of the bills or otherwise, one thing is clear that all that was required to be done under the terms of the agreement and under the contract had been done by the two banks. Therefore, we do not think that the Commission was justified in having reached the conclusion the appellants services were deficient so as to attract the provisions of the Consumer Protection Act. 12. We may further notice that there is another strong reason as to why the claim made by the respondent should not have been granted. The transactions in question took place in the years 1979 and 1981. The difficulties in realisation of the amounts due from the consignee also became clear at the time when the claim was made before the Corporation and the claim had been made as early as on December 19, 1982. The petition before the Commission was filed on September 25, 1992 that is clearly a decade after a claim had been made before the Corporation. A claim could not have been filed by the respondent at this instance of time. Indeed at the relevant time there was no period of limitation under the Consumer Protection Act to prefer a claim before the Commission but that does not mean that the claim could be made even after unreasonably long delay. The Commission has rejected this contention by a wholly wrong approach in taking into consideration that foreign exchange payable to Reserve Bank of India was still due and, therefore, the claim is alive. The claim of the respondent is from the bank. At any rate, as stated earlier, when the claim was made for indemnifying the losses suffered from the Corporation, it was clear to the parties about the futility of awaiting any longer for collecting such amounts from the foreign bank. In those circumstances, the claim, if at all was to be made, ought to have been made within a reasonable time thereafter. What is reasonable time to lay a claim depends upon facts of each case. In the legislative wisdom, three years period has been prescribed as the reasonable time under the Limitation Act to lay a claim for money. We think, that period should be the appropriate standard adopted for computing reasonable time to raise a claim in a matter of this nature. For this reason also we find the claim made by the respondent ought to have been rejected by the Commission. 13. Further we also find that the contention raised by the appellants as to the locus standi of the respondent in laying the claim has not been dealt with by the Commission at all. In the cause title, the respondent is shown to be an individual whereas in the statement of facts, the respondent is described as a company which is registered as a partnership firm engaged in business of exports and in the petition reference is made to the firm or the company and not to the individual. As to how a single individual person could have laid a claim on behalf of a firm is not clear to us at all. Whether he was a partner of the firm or he had the authority of the firm to lay the claim is not clear to us as these facts have not been pleaded.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]10. When a bank, after purchasing or discounting an instrument from a customer, credits the customer with the amount of the instrument and allows the customer to draw against the amount as credited before the bill or instrument is cleared, then the bank would be collecting the money not for the customer but chiefly for itself. If the bills and the relevant documents presented by its drawer are accepted by a banker with endorsement in its favour and the same are immediately discounted by the banker without waiting for its collection, by giving full credit for the entire amount of the document, so presented, the banker itself becomes a purchaser and the holder thereof for full value. A banker discounts a bill as opposed to taking it for collection or as security for advances, when he takes it definitely and at once as transferee for value and that it does not matter that the amount of the bill, less discount, is carried to current account as in the case of a customer that is the usual course and where the transaction is really one of discounting, the banker is of course at liberty to deal with the bill as he pleases rediscounting or transferring it. Â37Â3  Å11. In the claim form filed with the Corporation, it was stated that the respondent had suffered a loss under the policy owing to a delay in transfer of the payment in respect of shipments in question. The said form was signed both by the consignor and the appellant bank. It has been declared therein that the amount shall be deposited by the buyer in the local currency with a correspondent bank in the buyers country on the date indicated against that column and proceeds are awaiting transfer to India. The claim was to the extent of 90% of the value of exports. While it is the contention of the appellants that the exporter had entrusted the bank to negotiate certain documents through a certain bank mentioned therein when in fact that bank had failed to collect the money in foreign exchange but collected only in local currency in the foreign country and not in the currency indicated in the documents and thus there was no liability at all on the part of the appellants, the respondent would submit that the appellants having purchased the documents in question were in fact collecting the monies for their own benefit and not for the benefit of the respondent when the documents had clearly indicated the manner in which the consignee get the goods except after payment of cash no delivery could have been made, the appellant bank had acted with negligence and, therefore, is liable to make good the loss suffered by it. We have adverted to the agreement between the parties. The consignee and the consignor have clearly indicated that the documents had to be negotiated through the foreign bank and the mode of payment was through the foreign bank. If that is so, the appellants were acting for and on behalf of the respondent when they sent the documents to the named bank for negotiations and collection of the money due under the agreement the appellants could not have sent the documents to any other agent inasmuch as payments had to be made only through that foreign bank and that foreign bank as was the usual practice realise (release ?) the documents against payment in local currency which was hitherto convertible in foreign exchange in U.S. Dollars could not be done on account of policy of the Sudan Government. If that is so, it is very difficult to perceive of a situation regarding the deficiency in the service rendered by the appellant bank. The appellant bank negotiated the documents as provided under the agreement; so did the foreign bank but the conversion of the local currency to U.S. Dollars became difficult on account of policy of the Sudan Government. When the realisation of the money in U.S. Dollars was frustrated by reason of the governmental action, we fail to understand as to how the appellants could be held to be responsible for the same. The Commission totally failed to appreciate this aspect. Whatever may be the position with regard to the collection procedure that by discount or purchase of the bills or otherwise, one thing is clear that all that was required to be done under the terms of the agreement and under the contract had been done by the two banks. Therefore, we do not think that the Commission was justified in having reached the conclusion the appellants services were deficient so as to attract the provisions of the Consumer Protection Act.