Delayed bank guarantee remittance is not deficiency in service without proven negligence or loss; jurisdiction follows cause of action

Mere delay by a bank in remitting payment under an unconditional bank guarantee does not, by itself, amount to deficiency in service under the Consumer Protection Act, 1986, absent proof of fault, negligence, or compensable loss. The guarantee is treated as an independent contract, and payment obligations arise on invocation, subject to the facts showing no breach in discharge of contractual or statutory duties. Territorial jurisdiction of a State Commission is governed on the same basic principles as section 11(2), turning on where the opposite party carries on business, has a relevant branch, or where the cause of action arises. On the facts, the relevant acts occurred at Saharanpur, not Delhi.

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Issues: (i) whether the bank's delayed remittance under an unconditional bank guarantee amounted to deficiency in service under the Consumer Protection Act, 1986; (ii) whether the Delhi State Commission had territorial jurisdiction to entertain the complaint.

Issue (i): whether the bank's delayed remittance under an unconditional bank guarantee amounted to deficiency in service under the Consumer Protection Act, 1986.

Analysis: Service under section 2(o) includes banking facilities, and deficiency under section 2(g) means fault, imperfection, shortcoming, or inadequacy in the performance required to be maintained. The bank guarantee was an independent contract and, once invoked, the guaranteed amount had to be paid. The delay was attributed to correspondence with the foreign bank and the need for Reserve Bank of India permission for foreign exchange remittance. The record did not show any fault or negligence in the bank's discharge of its statutory or contractual obligations. Compensation under section 14(1)(d) is attracted only where loss or injury flows from negligence, which was not established here.

Conclusion: The bank was not guilty of deficiency in service.

Issue (ii): whether the Delhi State Commission had territorial jurisdiction to entertain the complaint.

Analysis: Section 11(2) of the Consumer Protection Act, 1986 expressly governs territorial jurisdiction of District Forums, and the Court read the same principle into section 17 for State Commissions, since otherwise absurd results would follow. Territorial jurisdiction must be linked to the place where the opposite party carries on business, has a branch office relevant to the dispute, or where the cause of action wholly or in part arises. The relevant acts occurred at Saharanpur: the branch issued the guarantee there, the guarantee was invoked there, and payment was also made through that branch. No part of the cause of action arose in Delhi.

Conclusion: The Delhi State Commission lacked territorial jurisdiction.

Final Conclusion: The complaint could not be sustained either on merits or on jurisdiction, and the bank succeeded in the matter.

Ratio Decidendi: Under the Consumer Protection Act, 1986, mere delay in honouring a bank guarantee, without proven fault or negligence causing loss, does not constitute deficiency in service, and territorial jurisdiction of a State Commission must be determined on the same basic principles as section 11(2), including the place where the cause of action arises.

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