1999 (9) TMI 834 - SC - Companies Law

Whether there has been any fault imperfection shortcoming or inadequacy in the performance of the service by the bank? Held that - There has 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. In the present case Dany Dairy & Food Engineers Ltd. approached the Saharanpur Branch of the bank to provide bank guarantee which it did. The Bank Guarantee was invoked at Saharanpur and payment was also made by the Saharanpur Branch of the Bank. Saharanpur Branch is situated within the State of U.P. No part of 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. Therefore uphold both the contentions of the appellant and set aside the order of the National Commission as well as of State Commission. The complaint filed by the first respondent is dismissed.

Summary

Issues Involved:
1. Deficiency in service as defined in clause (g) of section 2 of the Consumer Protection Act, 1986.
2. Jurisdiction of the Delhi State Commission to entertain the complaint.

Issue-wise Detailed Analysis:

1. Deficiency in Service:
The primary issue revolves around whether there was a deficiency in service by the Union Bank of India in relation to the bank guarantee provided to the complainant, a foreign company based in Finland. The State Commission had ruled in favor of the complainant, directing the bank to pay Rs. 11,234 with interest and costs. The National Commission upheld this decision, modifying the amount to Rs. 3,01,103 with interest from 5-3-1991 till the date of payment. The bank contended that there was no deficiency in service as defined under clause (g) of section 2 of the Consumer Protection Act, 1986. The bank argued that any delay in payment was due to the Skopbank's delayed response and the RBI's requirement for permission to remit the amount in foreign exchange under the Foreign Exchange Regulation Act, 1973. The Supreme Court examined whether the bank's actions constituted a deficiency in service, considering the definitions of 'service' and 'deficiency' under clauses (o) and (g) of section 2, respectively. The Court concluded that there was no deficiency in service by the bank, as the delay was not due to any fault or negligence on the part of the bank but rather due to external factors beyond its control.

2. Jurisdiction of the Delhi State Commission:
The second issue pertains to whether the Delhi State Commission had the jurisdiction to entertain the complaint. The bank argued that no part of the cause of action arose within Delhi, as the bank guarantee was issued by the Saharanpur Branch in Uttar Pradesh, and all relevant transactions occurred there. The Supreme Court analyzed the jurisdictional provisions under section 11 and section 17 of the Consumer Protection Act, 1986. Section 11(2) outlines the jurisdiction of the District Forum, stating that a complaint can be instituted where the opposite party resides, carries on business, has a branch office, or where the cause of action arises. The Court noted that similar provisions should apply to the State Commission under section 17, with necessary modifications. The Court held that the Delhi State Commission did not have jurisdiction, as no part of the cause of action arose in Delhi, and the relevant transactions occurred in Saharanpur, Uttar Pradesh.

Conclusion:
The Supreme Court upheld the contentions of the appellant, Union Bank of India, and set aside the orders of the National Commission and the State Commission. The complaint filed by the first respondent was dismissed, with no order as to costs. The Court emphasized the importance of a purposive interpretation of jurisdictional provisions to avoid absurd situations and ensure that disputes are adjudicated by the appropriate State Commission.