UNION BANK OF INDIAversusM/S. SEPPO RALLY OY AND ORS.

A                           UNION BANK OF INDIA
                                    v
                      MIS. SEPPO RALLY OY AND ORS.

                              SEPTEMBER 23, 1999

B              (S. SAGHIR AHMAD AND D.P. WADHWA, JJ.]

          Consumer Protection Act, 1986 :

        S.2(o) & (g)-Deficiency in service-Bank Guarantee-Invoked-Delay
C in payment of amount under Bank Guarantee-Delay on account of grant of
  permission from R.B.l. for remitting the amount in foreign exchange-Held,
  does 1101 amount to deficiency in service.

           Ss.9(b), 11(2), 17 and 18-Jurisdiction of State Commission-Bank
    Guarantee provided by Saharanpur Branch (U.P.) of the Bank-Guarantee
D   invoked and payment made by Saharanpur Branch-Complaint against
    delayed payment in De/hi-Maintainability of-Held, No part of cause of
    action arose in Delhi-Thus, State Commission at Delhi had no jurisdiction
    in the matter-Orders set aside.

          Interpretation of Statute
E
          Purposive interpretation-Reading down the provision-Applicability
    of

          Words and Phrases :

F          "Deficiency in service"-Meaning and scope of in the context of S.2(g)
    of the Consumer Protection Act, 1986.

          Appellant-Bank, Saharanpur Branch, provided a Bank Guarantee
    in favour of respondent No. 1 ·a foreign company. On invoking the Bank
G   Guarantee, there was delay in payment of amount guaranteed. Conse-
    quently, respondent No. 1 filed a complaint before the State Consumer
    Commission at Delhi, which was allowed. Appeal by Bank before National
    Consumer Commission was dismissed. Hence the present appeal.

         On behalf of the appellant-Bank it was contended that there was·no
H deficiency in service and the delay in payment was on account of delay in
                                         174
                                                                                   ,.,,
               UNION BANK OF INDIA v. SEPPO RALLY OY                    175

 grant of permission from RBI to remit the amount in foreign exchange;         A
 the Delhi State Commission had no jurisdiction to entertain the complaint
 as no cause of action arose at Delhi.

         Allowing the appeal, this Court

       HELD : 1. No deficiency in service provided by the Bank. The            B
 National Commission and State Commission erred in allowing the com-
 plaint of the respondent No. 1 holding that there is deficiency by appel-
 lant-Bank for delay in payment of amount under Bank Guarantee. [181-B]

         Consumer Unity and T111st Society, Jaipur v. Chainnan and Managing
. Director, Bank of Baroda Calcutta & Anr., [1995] 2 SCC 150, relied on.       c
       2.1. The State Commission at Delhi had no jurisdiction in enter-
 taining the complaint against the Bank as no cause of action arose at
 Delhi. [176-G]
                                                                               D
       2.2. Under S.9(b) of the Consumer Protection Act, 1986, State
 Commissions were established in each State to take cognizance of the
 dispute arising within that State. It cannot be the intention of the
 legislature that disputes arising in one State could be taken cognizance
 by other State. In the instant case, the Saharanpur Branch of the Bank
 situated in U.P. State provided the Bank Guarantee. The Bank Guaran·          E
 tee was invoked at Saharanpur and payment was also made by the said
 branch. Thus, no part of the cause of action has arisen in Delhi to
 entertain the matter. [176-E; 182-E-G-H; 183-A]

       3. S. 11 of the Consumer Protection Act dealing with jurisdiction of    F
 the District Commission, under sub-section (2) provides the local limits
 within which a complaint should be registered. However, there is no such
 similar provision in S. 17 of the Act, dealing with jurisdiction of State
 Commis8ion. In fact these are the basic provisions conferring territorial
 jurisdiction on a Tribunal, otherwise it will lead to absurd situations.      G
 Thus, by applying purposive interpretation, the provisions contained in
 sub-section (2) of S. 11 of the Act must be read into S. 17 of the Act with
 necessary modifications. [182-D; F]

         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 11440 of
 1996.                                                                         11
    176                  SUPREME COURT REPORTS [1999) SUPP. 3 S.C.R.

A        From the Judgment and Order dated 18.6.96 of the National Con-
    sumer Disputes Redressal Commission, Delhi in F.A. No. 434 of 1993.

         Dushyant A. Dave, U.A. Rana and Ms. Arshi Sohail for M/s. Gagrat
                                                                                   -
    & Co., for the Appellant.

B         J.P. Dhanda and P.N. Gupta (NP) for the Respondents.

          The Judgment of the Court was delivered by

          D.P. WADHWA, J. Appellant Union Bank of.India is aggrieved by
    the order dated June 18, 1996 of the National Consumer Disputes Redres-
C   sal Commission ('National Commission' for short) passed on appeal from
    the order dated July 21, 1993 of the State Commission of Delhi.

          State Commission had allowed the complaint of the first respondent
    Mis. Seppa Rally OY, a foreign company based in Finland against the
D   Union Bank of India, the appellant, directing the Bank to pay 11,234 with
    interest at the rate of 15% to the first respondent from May 27, 1992, the
    date when the complaint was filed. Bank was also burdened with cost of
    Rs. 2,500. The National Commission and the State Commission have been
    constituted under Section 9 of the Consumer Protection Act, 1986 (for
E   short the 'Act'). State Commission is established by the State Government
    in the State and the National Commission is established by the Central
    Government. Appeal filed by the Bank before the National Commission
    under Section 19 of the Act against the order of the State of Commission
    was dismissed. Now it was directed that the complainant, the first respon-
    dent, is entitled to an' amount of Rs. 3,01,103 with interest at the rate of
F   15% per annum from March 5, 1991 till the date of payment. National
    Commission said that the complainant was entitled to 37,336 whereas it was
    paid only 29,062 on March 4, 1991. An amount of 8,304 was paid less which
    is equivalent in Indian currency of Rs. 3,01,102 as on March 4, 1991.

          Two contentions have been raised by Mr. Dushyant Dave, senior
G counsel appearing for the Bank : (1) there was no deficiency in service as
  defined in clause (g) of Section 2 of the Act and (2) Delhi State Commis-
  sion had no· jurisdiction to entertain the complaint as no cause of action
  arose within Delhi, Central Office of the Bank was at Bombay and the
  branch office which issued the Bank Guarantee, subject-matter of the
H complaint, was at Saharanpur in the State of U.P.
   UNION BANKOFINDIAv. SEPPORALLYOY [D.P. WADHWA,J.] 177

       M/s, Dany Dairy and Food Engineers Ltd., who is impleaded as         A
 second respondent, on December 14, 1988 entered into an agreement with
 the complainant for supply of two evaporator systems valued at Rs.
 25,98,473. Under the agreement the complainant was to make 100%
 advance payment to the second respondent on the condition of second
 respondent furnishing the Bank Guarantee. In the complaint, address of
                                                                            B
 the second respondent was given that of Okhla Industrial Area, Phase-I
 New Delhi. However, second respondent was having its business operations
 at Saharanpur, U.P. On the request of the second respondent Union Bank
 of India, Saharanpur Branch on December 19, 1988 gave a Bank Guararitee
 for a sum of Rs. 25, 98,475. This Bank Guarantee was reduced on August
 14, 1989 to Rs. 10,53,735. The Bank Guarantee was in favour of the
                                                                            c
 complainant and was sent directly by the Bank to Skopbank, Helsinki,
 Finland. We are not concerned with the conditions of the Bank Guarantee
 except to note that it was invoked by the complainant on December 19,
 1989.
                                                                            D

         The Bank Guarantee was extended upto December 31, 1989. Claim
  was made in a sum of Rs. 10,53,735. Skopbank also sent a telex message
· to the Central Office of the Bank at Bombay for immediate payment of the
  amount under the Bank Guarantee. Skopbank was informed by telex E
  message dated January 12, 1990 by the Central Office of the Bank that the
  matter was receiving attention and sought clarification as to why the claim
  had been specified to Rs. 10,53,735 instead of rupee value of 26792.
  Skopbank was also asked to look into its liability to pay proceeds of certain
  bill dated October 7, 1988 which had fallen due for payment on March 14,
  1989, payment of which was guaranteed under its guarantee letter No. F
  91037668 for 55,000. Notices to the bank were sent by advocate for the first
  respondent claiming the amoun( under the Bank Guarantee. Since no
  reply had been received from the Skopbank regarding 55,000, it appears,
  the matter rested at that. Bank was, however, told by a telex message dated
  April 12, 1990 from Skopbank that it had paid on April 11, 1990, 55,000 G
  under its guarantee No. 2072002002 and that payment had been transferred
  according to Dany Dairy and Food Engineers Ltd.'s order to Grindlays
  Bank ANZ in New Delhi. Skopbank was informed by telex message dated
  April 19, 1990 from the Central Office of the Bank that the payment of
  GBP 55,000 had not so far been received by the Grindlays Bank ANZ. H
    178                  SUPREME COURT REPORTS (1999] SUPP. 3 S.C.R.

A Skopbank was requested to give instructions to Grindlays Bank ANZ for
    payment of the claim amount of 55,000 to the Saharanpur Branch of the
    Bank in the account of Dany Dairy and Food Engineers Ltd. On April 24,
    1990 Area Manager of the first respondent wrote to the Bank about the
    discussions he had with the officers of the Bank on April 19, 1990 when
B   the Bank had decided to release payment of Bank Guarantee of Rs.
    l0,53,735 and that the matter had been taken up with the RBI (Reserve
    Bank of India) to release the money in foreign exchange. Thereafter,
    correspondence went on with the RBI seeking permission to release the
    money and RBI seeking certain clarifications. Immediately after the RBI
C   had given its permission the amount was paid in the foreign currency which
    was equivalent to Rs. l0,53,735.

           The question that arises for consideration is : If there has been any
    deficiency in service provided by the Bank to the first respondent. Service
    under clause (o) of Section 2 of the Act means "service of any description
D   which is made available to potential users and includes the provision of
    facilities in connection with banking, financing, insurance, transport,
    proceeding, supply of electrical or other energy, board or loading or both
    housing construction entertainment, amusement or the purveying of news
    or other information, but does not include the rendering of any service free
E   of charge or under a contract of personal service". Deficiency under clause
    (g) of Section 2 of the Act means "any fault, imperfection, shortcoming
    or inadequacy in the quality, nature and manner of performance which is
    required to be maintained by or under any law for the time being in force
    or has been undertaken to be performed by a person in pursuance of a
p   contract or otherwise in relation to any service". It is not disputed by
    making available the Bank Guarantee bank provided service within the
    meaning of clause (o) of Section 2 of the Act but not making payment
    under the Bank Guarantee immediately after it was invoked was there any ·
    deficiency in service, is the question which requires consideration.

G
          To examine if there is any deficiency in service we have to see
    whether there has been any fault, imperfection, shortcoming or inadequacy
    in the performance of the service by the Bank. Bank Guarantee is a
    separate contract between the Bank and Seppa Rally of Finland. It is not
H   disputed that it is an unconditional Bank Guarantee and when it was



                                                                                   I
   UNION BANK OF INDIAv. SEPPO RALLY OY [D.P. WADHWA, J.] 179

invoked the amount guaranteed therein had to be paid to the account of          A
the first respondent. Bank has taken the plea that it did not fail in any way
and that if there was delay, firstly it was on account of the Skopbank not
replying to its query validly raised and secondly the RBI took time to grant
permission to remit the amount under the Bank Guarantee in foreign
exchange under the Foreign Exchange Regulation Act, 1973 (FERA).                B
Reference has been made to Sections 8, 9 and 24 of FERA to support the
submission that the Bank could not have of its own remitted the amount
under Bank Guarantee in foreign exchange. National Commission itself
modified the order of the State Commission, which had ordered the
remittance of the amount of the Bank Guarantee in foreign exchange              C
stating that the State Commission could order only payment in Indian
currency and thus arrived at the figure of Rs. 3,01,103. It may be noticed
that by virtue of Section 18 of the Act which prescribes procedure ap-
plicable to State Commission, Section 14 of the Act has been made
applicable. Under Section 14 when District Forum is satisfied that any of       D
the allegations contained in the complaint about the services are proved it
shall issue an order to the opposite party directing him to do one or more
following things, namely, -

        "(a) to (c) ....... .
                                                                                E
         (d) to pay such amount as may be awarded by it as compensation
             to the consumer for any loss or injury suffered by the con-
             sumer due to the negligence of the opposite party."

       In Consumer Unity and Trnst Society, Jaipur v. Chairman and              F
Managing Director, Bank of Baroda, Calcutta & Anr., [1995) 2 SCC 150 the
employees of the respondent Bank resorted to illegal strike which
continued for 54 days. In complaint filed before the National Commission,
it was urged that the Bank was liable to pay various amounts to the
customers like interest on overdrafts accounts to be reimbursed at lending      G
rate during the period the account was not operative; interest at the lending
rate on the negotiable instruments held in suspense during this period to
be reimbursed to the customers etc. This Court referred to the definitions
of "service" and "deficiency" appearing in clauses (o) and (g) of Section
2 of the Act and said that the expression "any deficiency" widens the ambit     H
    180                  SUPREME COURT REPORTS (1999] SUPP. 3 S.C.R.

A of service and extends it to any service and even though the depositors were
    deprived of the service of the Bank but the deficiency did not arise due to
    one of the reasons mentioned in clause (g). This is how this Court
    considered the question :

            "The short.:oming in the service by the Bank did not arise due to
B
            failure on the part of the Bank in performing its duty or discharging
            its obligations as required by law. Since the depositors were
            prevented to avail of the services of the Bank not because of any
            deficiency on the part of the Bank but due to strike resorted to by
            the employees who almost physically prevented the Bank from
c           functioning, the failure of the Bank to render service could not be
            held. to give rise_ to claim for recovery of any amount under the
            Act. Further, the power and jurisdiction of the Commission is to
            award compensation under Section 14(1)(d) of the Act as it has
            been made applicable to the Commission by sub-rule (b) of Rule
D           19 of the Rules framed under the Act. Clause (d) of sub-section
            (1) of section 14 is extracted below :

                   "to pay such amount as may be awarded by it as compen-
                 sation to the consumer for any loss or injury suffered by the
E                consumer due to the negligence of the opposite party."

                Each of these expressions used in the sub-section are of wide
            connotation and are fully comprehended both in common and legal
            sense. Negligence is absence of reasonable or prudent care which
F           a reasonable person is expected to observe in a given set of
            circumstances. But the negligence for which a consumer can claim
            to be compensated under this sub-section must cause some loss or
            injury to him. Loss is a generic term. It signifies some detriment
            or deprivation or damage. Injury too means any damages or wrong.
            It means "invasion of any legally protected interest of another".
G           Thus the provisions of Section 14(1)(d) are attracted if the person
            from whom damages are claimed is-found to have acted negligently
            and such negligence must result in some loss to the person claiming
            damages. In other words, loss or injury, if any, must flow from
            negligence. Mere loss or injury without negligence is not con:
H           templated by this section. The Bank has not been found to         a
•
       UNION BANKOFINDIAv. SEPPO RALLYOY {D.P. WADHWA,J.] 181

            negligent i~ dis2harge of its d~ties. Therefore, even if any loss or   A·
            damage was caused to any depositor but it was not caused due to
            negligence of Bank then no claim of damages under the Act was
            maintainable."

          Considering the stand taken by the Bank and the statement of law as
    spelled out in the aforesaid judgment it would be thus seen that there has     B
    not been any deficiency in service provided by the Bank and in our view
    National Commission and the State Commission were wrong in coming to
    the contrary conclusion. We would, however like to point out that when it
    is a question of remittance of foreign exchange and permission of RBI is
    required and there is a query raised by the RBI, it will be more appropriate   C
    to discuss the matter with the concerned official of the RBI than to have
    a prolonged correspondence.

            Next question is regarding jurisdiction of the State Commission
    constituted for the National Capital Territory of Delhi. Under clause (p)
    of Section 2 of the Act State Commission means a Consumer Disputes D
    Redressal Commission established in a State under Clause (b) of Section
    9 of the Act. Under this clause (b) of Section 9 a Consumer Disputes
    Redressal Commission to be known as the State Commission shall be
    established by the State Government in the State by notification. Section
    16 provides for composition of the State Commission and Section 17 for E
    its jurisdiction. Under Section 18, as noted above, procedure applicable to
    State Commission is same as contained in Sections 12, 13 and 14 and the
    Rules made thereunder for the disposal of the complaints by the District
    Forum which shall, with such modification as may be necessary, be ap-
    plicable to disposal of disputes by the State Commission.
                                                                                   F
          Section 11 deals with jurisdiction of the District Forum. Sub- section
    (1) provides that a District Forum will have jurisdiction to entertain
    complaints where the value of the goods or services etc. does not exceed
    rupees five lakhs. Sub-section (2) provides in which District Forum a
    complaint could be instituted. This sub-section is as under :
                                                                                   G
            "11(2) A complaint shall be instituted in a District Forum within
            the local limits of whose jurisdiction, -

            (a) the opposite party or each of the opposite parties, where
                there are more than one, at the time of the institution of the     H
                                                                                   •
    182                   SUPREME COURT REPORTS [1999) SUPP. 3 S.C.R.

A                 complaint, actually and voluntarily resides or carries on ·
                  business or has a branch office or personally works for gain;
                  or

            (b) any of the opposite parties, where there are more than one
                at the time of the institution of the complaint, actually .and
B               voluntarily resides, or carries on business or have a branch
                office or personally works for gain, provided that in such case
                either the permission of the District Forum is given, or the
                opposite parties who do not reside, or carry on business or
                have a branch office or personally work for gain, as the case
c               may be, acquiesce in such institution; or

            (c) the cause of action, wholly or in part arises."

          Under Section 17 of the Act a State Commission has jurisdiction to
D decide complaints of the value between rupees five and twenty lakhs but
  there is no such provision as contained in sub-section (2) of Section 11 of
  the Act applicable to State Commission. Section 18 of the Act does not
  make provision of sub-section (2) of Section 11 applicable to the State
  Commission. Each State has its own State Commission. There is purpose
  for it. First appeal of the District Forum situated within the State lies to
E the State Commission and then State Commission can take cognizance of
  the dispute arising within that State. It cannot be the intention of the
  Legislature that dispute arising in one State could be taken cognizance by
  State Commission of other State. We have to have purposive interpretation
  of the provisions and we have to hold that similar provisions as contained
F in sub--section (2) of Section 11 with modifications as may be necessary,
  shall be applicable to the State Commission. In fact these are the basic
  provisions conferring territorial jurisdiction on a tribunal otherwise it will
  lead to absurd situations. We must read into Section 17 the same provisions
  as contained in sub-section (2) of Section 11 of the Act subject to such
G modifications as may be applicable to a State Commission. It may also be
  noticed that under sub-clause (ii) of clause (a) of Section 17 appeals
  against orders are heard by the State Commission against the orders of any
  District Forum within that State. In the present case M/s. Dany Dairy and
  Food Engineers Ltd. approached the Saharanpur Branch of the Bank to
  provide Bank Guarantee which it did. The Bank Guarantee was invoked
H at Sharanpur and payment was also made by the Sharanpur Branch of the
  UNION BANKOFINDIAv. SEPPO RALLY OY [D.P. WADHWA,J.] 183

Bank. Saharanpur Branch is situated within the State of U.P. No part of           A
the cause of action has arisen in Delhi. It is difficult to agree with the view
of the State Commission and also of the National Commission that the
State Commission at Delhi had jurisdiction in the matter.

      We, therefore, uphold both the contentions of the appellant md set
aside the order of the National Commission as well as of State Commission.        B
The complaint filed by the first respondent is dismissed. There shall be no
order as to costs.

S.V.K                                                        Appeal allowed.