ORDER
B.K. Taimni, Member
1. These two appeals arise from a common order passed by the West Bengal State Consumer Disputes Redressal Commission, where the respondents in both the appeals, Mr. Asit Sen Gupta had filed a complaint alleging deficiency in service on the part of both the appellants, namely, Export Credit Guarantee Corpn. Ltd. (E.C.G.C.) and UCO Bank.
2. Briefly stated the facts of the case are that the complainant Mr. Asit Sen Gupta entered into a three year export contract with M/s. MIG Enterprises, Dubai, for which he received three export orders. The first two consignments were sent in time and there was no problem. It is only with regard to the third consignment about which the export order was received on 22.2.2003 for US $ 8840, which is the subject matter of controversy. The further undisputed facts of the case are that the complainant had obtained a policy cover from Export Credit Guarantee Corporation Ltd. (appellant in F.A. No. 198/1997), in the instant case of Rs. 3,00,000. The complainant had also obtained export package credit of Rs. 4 lakh from the UCO Bank (appellant in FA No. 191/1997). The case of the complainant before the State Commission was that having obtained the orders from importer in Dubai for tea bags, he sought policy cover c from E.C.G.C. on ‘payment’ ‘terms’ – DA 180 days open delivery. This was required as per the requirement of the importer, whose letter of credit had come to end in Jan. 1993; as per the importer, he was to make the payment on the goods being sold by the importer. Hence, in ” these circumstances, what was required was from E.C.G.C. was policy based on payment terms on “open delivery basis.” Whereas the E.C.G.C. initially issued a policy covering the risk on ‘DA within 180 days from the day of ‘Shipment’ which was not as per the application made by the complainant. When this was brought to the notice of the E.C.G.C, they amended the Policy but sent it to the old address of the complainant whereas he had already communicated to E.C.G.C. his new address, with a clear advice that henceforth correspondence be made with him at the new address. Since this revised policy was never received, he could not export the consignment which was ready for despatch. This was a clear case of deficiency on the part of the E.C.G.C. resulting in total loss of the export order and the goods in question, resulting in loss to him. As far as UCO bank is concerned, it is stated that they took no pains to rectify the error committed by the E.C.G.C. and also did not help the complainant in disposing of the tea bags which were lying with the manufacturer Balmer Lowriec & Company, resulting in total loss to him. UCO Bank did not help them in retrieving the situation nor did they help the requisite assistance firstly by rectifying/obtaining afresh the revised policy from the E.C.G.C. and secondly not helping them in disposing of tea bags, when the export order could not materialize on account of deficiency on the part of E.C.G.C
3. It is in these circumstances, alleging 5 deficiency in service, a complaint was filed before the State Commission, who after hearing the parties and perusal of material on record, directed the E.C.G.C. to pay an amount of Rs. 10,00,000 as compensation to the complainant and also directed UCO Bank to pay Rs. 3,00,000 c as compensation to the complainant and with a further direction not to charge any interest on this amount. Both the appellants were also directed a cost of Rs. 5,000 each to the complainant. Aggrieved by this order, these two separate appeals have been filed before us.
4. We heard the learned Counsel for the parties at considerable length and perused the material on record.
First Appeal No. 198/1997
5. The main grouse of the complainant before the State Commission was that firstly, the policy was not issued by E.C.G.C, as per request and secondly on being pointed out, E.C.G.C. took long time to rectify the error and the letter containing rectification was sent to a wrong address. By which time, the export order had lapsed, thus frustrating the whole effort of the complainant to export and resulting in loss caused by deficiency in service on the part of the appellant E.C.G.C.
6. We have very carefully gone through the material on record and find that as per FAX message dated 29.4.1993, received by the complainant, it clearly stated that the payment was to be made after sale of goods and the contract for export order in question was to be expired in August 1993 but when we see the ‘Credit Limit Application’ filed by the complainant on which the whole issue hinges, we see that the payment terms in Column 6 indicate “DA 180 days openillegible”. Again in Column 9(a) terms of payment it is clearly written ‘DA 180 days. If based on this application, the E.C.G.C. has issued the policy on 25.6.1993 on the terms “payment after acceptance of documents, but within 180 days from the date of shipment”, we see no deficiency on the part of the appellant. Admittedly, this was received by the complainant on 25.6.1993. Admittedly, the complainant brought this discrepancy to the notice of the E.C.G.C. only on 27.7.1993. Taking this as a request, the E.C.G.C. issued a fresh policy on 25.8.1993 clearly specifying the term as “on open delivery basis for a period of 180 days subject to the condition that Corporation’s liability will be restricted to goods delivered to and accepted by the buyer”. It is non-receipt of this letter, on which the complainant has tried his base case and State Commission agreeing with it has returned the finding of deficiency in service on the part of the E.C.G.C. As per record the Credit Limit Application Columns 6 & 9(a) deal with payment terms while under one head it is written DA 180 days openillegible. Column 9(a) the terms of payment have been written as DA 180 days. If in these circumstances, E.C.G.C. issued the policy on DA 180 days, we cannot find fault with E.C.G.C. It is admitted position that the initial policy was issued and received by the complainant on 25.6.1993 showing the terms as ‘DA within 180 days’. We are more than surprised to see the belated reaction to this by the complainant, i.e., only on 27.7.1993. It has to be understood that the E.C.G.C. dealing with large number of cases would take some time to issue a revised policy which it did on 25.8.1993. There is no disputing the fact that it was sent at the old address and was not received by the complainant but we are unable to appreciate as to what was the complainant exporter doing all this time, firstly by late reaction of over one month in bringing this discrepancy, (if it be treated as one), and then not following it with E.C.G.C, to obtain the revised terms of policy, for the simple reason, that as per export order the last date of export was to expire by end August 1993. If anything, we see that it was the complainant who was deficient in pursuing his own case knowing fully well that he was in Kolkatta, whereas the main decision has to be taken by the E.C.G.C. Headquarters at Bombay. Any prudent and concerned person in this situation, would have made lot of noises to either get the policy rectified or get it rejected but nothing was done by the complainant to follow up the letter dated 27.7.1993. Coming back to the credit limit application, prima facie, we do not find any deficiency on the part of the E.C.G.C. by issuing the policy in May 1993, specifying the terms as per Col. 9(a) of the Application which was changed/modified later on. The complainant did not follow up at any level except writing a letter after a period over one month bringing it to the notice of the E.C.G.C. for rectifying the alleged error. Be that as it may, we have been taken through the policy cover issued by the E.C.G.C. In our view, two things come out very clearlyfirstly, that this policy cover related to ‘shipment’ which never materialised and secondly, what was covered was ‘non-payment’ which is not the case here as no export materialised. Learned Counsel for the respondent/complainant was unable to satisfy us as to under which provision of the heading risk insured does he fall?
7. In the aforementioned circumstances, after hearing the learned Counsel for the respondent/complainant at length we find that no deficiency can be fastened on the E.C.G.C. appellant in FA No. 198/97.
First Appeal No. 191/1997
8. Basic facts of the case are not disputed, hence are not reproduced. Two allegations have been made against the UCO Bank by the complainantone that the Bank did not take care of the complainant’s interest by ensuring that a correct policy is issued by E.C.G.C. and secondly, failure on the part of the Bank to protect the interest of the complainant in minimising the loss by helping them in disposing of the goods within the country.
9. As far as the first part is concerned, after perusal of the material on record, and the correspondence brought on record, we cannot fasten any deficiency in service on the part of the Bank, vis-a-vis, acts of omission and commission on the part of the E.C.G.C. As per material on record, the ‘Export Packing Credit Facilities’ and ‘Foreign Bill Discounting Facility’ was entered into between the Bank and the complainant, it was a bilateral agreement which is on record. It does not envisage any third party interest as far as bank is concerned. Hence, we see no merit in this plea and we agree with the argument advanced by the appellant that they cannot be held responsible for any act of omission and commission on the part of the E.C.G.C.
10. Coming to the second leg of the contention of the complainant, learned Counsel for the appellant relies on two terms of Hypothecation Agreement which for purposes of facility, we reproduce as under:
2. That the hypothecated goods and all sales, realisation and insurance d proceeds thereof shall be held as the bank’s exclusive property especially appropriated to this security and the Borrowers will not create any mortgage charge, lien or encumbrance affecting the same or any part thereof nor do anything which would prejudice this security and the Borrowers shall not part with the hypothecated goods save by way of sale in the ordinary course of the Borrower’s business and as hereinafter provided nor shall any sale be made after prohibition in writing from the Bank against selling.
3. That the Borrowers shall with previous consent of the Bank be at g liberty from time to time to sell or dispose of in any manner the hypothecated goods or any part there of provided the advanced value of such goods is paid in the said account or goods of a similar nature to those mentioned in the Schedule hereto, or any of the same, and of at least equal value, are substituted for the goods so sold, or disposed of after approval of the Bank obtained in writing.
11. After going through this provision carefully, we find that the term 2 of Hypothecation Agreement reproduced above, shall have no bearing in this case but term 3 will have great relevance in this case. In this regard two documents are very important. One is the letter dated 30.11.1993 from the complainant addressed to the UCO Bank, we reproduce this letter as under:
To,
The Chief Manager,
UCO Bank, I.F. Branch,
3 N.S., Road
Calcutta-700001.
Reg. Proposal for repayment of our outstanding Export Packing Credit.
Dear Sir,
Against hypothecation of our stock and other co-lateral securities as per terms of sanctions, we avail packing credit and could effect despatch for US $ 8416.00 and proceeds have been received through banking channel in appropriate manner. For the balance despatch and some additional despatch, along with this lot, though L/C was opened for US $ 14132.00, we could not effect despatch for reasons already intimated to you. Since E.C.G.C. could not allow us to deliver goods to our buyer in open delivery terms for which we applied to E.C.G.C. in time our buyer is not communicating us regarding the manufactured lot. At this stage we have got the following options:
1. To wait for another Foreign Buyer for which we are trying. Product will be in good condition for another six months or so, since the Tea Bags have been prepared as per International specification. We now request you to extend the Packing Credit Limit for another six months. We also request you to inform us whether you are in a position to release further Packing Credit which will be necessary for repacking etc. against specification of New Buyer.
2. If you do not allow the option No. (1), we have no alternative but to go distress sale of our goods. We are already trying to sell the goods and making negotiations with retailer or distributors. The distributors are asking for 10 to 12% discount. We request you to let us know whether you are agreeable to pay the discount from the sale proceeds directly deposited to you since the goods are hypothecated to you. Please provide us suitable time, so that we can choose satisfactory buyers.
3. If you want to adjust our packing credit loan without further delay, you are hereby authorised to take possession of the hypothecated goods and sell the same at present market rate. We also authorise you to liquidate the balance money by encashing some other co-lateral securities assigned in your favour as we have no other funds to adjust your packing credit.
4. We propose to liquidate the E.P.C. loan, if extension of said loan is allowed as mentioned in option No. (1) above in the following manner:
(a) Allow us to take delivery of partial goods for sale with proposition of discount as mentioned in option No. 2.
(b) Release LIC Policy No. 35025304 against down payment of Rs. 52,530.
(c) Against this LIC Policy our Managing Partner will take loan from LIC and will deposit Rs. 50,000 in E.P.C. A/c and take release of one U.T.I. certificate whose face value is Rs. 50,000.
(d) Against this U.T.I. certificate loan from friends will be raised and deposited to E.P.C. A/c and take release of the 2nd UTI certificate against which loan/transfer to friend will be raised and deposited to E.P.C. A/c.
(e) From (a) to (d) reveals that nearly 1.5 lac will be deposited in E.P.C. A/c and by that time we are confident that we will be able to sell 75% of our stock amounting 1.8 lacs approximately.
On receipt of your opinion/suggestion and guidance we will decide our future course. We admit that we availed the Export Credit and tried to earn foreign currecny for our country, we were succeed partially, but unfortunately, in spite of our best efforts we could not effect despatch in time. We trust you will take this into your consideration while expressing your opinion/suggestions/decisions and guidance.
Thanking you
Yours faithfully
(emphasis supplied)
12. To this letter learned Counsel for the appellant wishes to rely upon the reply to the Legal Notice dated 7.12.1994, the relevant portion of which is reproduced as under :
I have been further instructed to call upon you to immediately sell the said hypothecated Tea Bags and pay the sale proceeds thereof to my client in protento satisfaction of your dues to the Bank and also to pay the balance amount forthwith as demanded in my letter dated 27th July, 1994 addressed to you. In default necessary legal step will be taken for recovery of Bank dues from you.
13. Read together, i.e., letter dated 30.11.1993, reply to the legal notice dated 7.12.1994 and term 3 of the Hypothecation Agreement (all are reproduced above), we find that the UCO Bank has been clearly deficient in rendering service. Letter dated 30.11.1993 clearly spells out that as late as November 1993, product will be in good condition for six months and seeks permission to extend the packing credit limit to allow them to make distress sale and finally authorising the Bank to take the possession of Hypothecated goods and sell the product at present market price. There was no reply to this letter till the Bank replied to the legal notice dated 7.12.1994. As clearly spelt out in the letter dated 30.11.1993 by the complainant to the Bank the tea still had shelf life of 6 months which expired approximately in May 1994 and till that time no response, one way or the other was given to the complainant, leaving him in limbo. Reliance of the appellant on the reply given to the legal notice dated 7.12.1994 and Clause 3 of the Hypothecation Agreement, in e our view, are misplaced. The letter dated 7.12.1994 had lost its significance because tea by that time had lost its shelf life, that means the market value. Coming to the term 3 of the Agreement reproduced earlier, it is clear that the borrower in this case, the complainant, could sell or dispose of the hypothecated goods only with the previous consent of the Bank which was conditional to the depositing/paying of the advanced value of such goods. A person who has lost every thing, how was he expected to obtain money and deposited with the Bank in order to enjoy this facility? This provision, literally, in the facts and circumstances of the case, clearly envisaged the previous consent of the Bank which was sought by letter dated 30.11.1993 but which was not responded to by the Bank enabling the complainant to dispose of the goods or the Bank disposing of the goods and adjusting this amount against the limit of loan sanctioned to the complainant, thus, resulting in total loss to the complainant. This, in our view, is a glaring case of deficiency in service on the part of the appellant UCO Bank. In view of above, we are in no position to interfere with the order passed by the State Commission, qua the appellant UCO Bank.
14. In view of the above discussions, First Appeal No. 198/1997 filed by E.C.G.C. is allowed and order passed against them by the State Commission is set aside. We see no merit in First Appeal No. 191/1997 filed by UCO Bank, which is dismissed.
15. Both the appeals stand disposed of in above terms.