TaxTMI 
TaxTMI 
TaxTMI 
2013 (5) TMI 67
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....service was of sub-standard quality and that the respondents have adopted unfair and deceptive practices while rendering the same and had also coercively recovered Export Outstanding Charges ('XOS charges' in short) and it had neglected and failed to return original title deeds of the properties entrusted to the respondent bank as a collateral security inspite of having been fully paid all the debts given to the complainant. It was inter-alia stated in the complaint that the complainant firm was engaged in manufacture and export of ready made garments and started banking with the respondent bank in the year 1984 through its different branches at Janpath, Connaught Circus, Parliament Street and Vijaya Building Branch. It was pointed out that in the first four years i.e. between 1984 to 1987 it had not opted for any financial assistance from the respondent bank and had conducted export business from its own resources. However, in the year 1988, the complainant approached the respondent bank for credit facility and the respondent granted Adhoc Packing credit limit of Rs.30 lakhs and the bank guarantee limit of Rs. 25 lakhs against three collateral securities, they being :- &nbs....
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.... was to secure respondent in case of non-payment. Secondly, the collateral security was multiple time value, the remaining bank guarantee should have been returned by the respondent bank at least in part. The complainant kept on requesting, but the respondent bank did not release collaterals even without considering the proposal of Vysya Bank for counter guarantee. The complainant relied on the letters dated 08.07.1994 and 20.08.1994. The respondent bank instead of releasing of collaterals, raised a plea that the original bank guarantees should be released to enable them to consider the release of collaterals. The complainant admitted that these bank guarantees had expired on 30.10.1994 and no claim was filed by AEPC during the validity of the same. The complainant, therefore, urged that the bank had no right to withhold the collateral security particularly because the bank guarantee period had expired. The complainant then made a reference to a letter dated 25.04.1995 for release of collaterals and margin money kept against the bank guarantee which had expired. However, no response was received from the respondent bank. On complainant's not being able to fulfill its assurances to ....
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....e relatable to the collection of the bills and therefore, there was no question of collecting the XOS charges. On the intervention of RBI, however, the respondent bank stopped debiting XOS charges. According to the complainant, the respondent bank had recovered XOS charges which was neither permissible in law nor in accordance with RBI/FEDAI Guidelines. The complainant has made a reference to the letters dated 30.07.1998, 21.05.1999 and 31.05.1999 with reference to the respondent's letter dated 09.07.1998. The complainant then goes on to state that because of all this he suffered financial debacle. The complainant states that in doing all this the bank had mala fide intentions. Ultimately, it is reported that the complainant got collaterals released in March 2001. The complainant therefore, claimed that the respondent bank had unnecessarily denied to raise the credit limit of the complainant and then when their business was shifted to other bank, it had illegally refused to part with the collaterals and instead went on recovering the XOS charges which were not payable at all. In the later part of the complaint, the complainant has shown as to how the respondent bank had erred in re....
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....actices or restrictive trade practices pending before the Monopolies and Restrictive Trade Practices Commission (in short the "MRTP Commission") on or before the commencement of this Act, including the cases in which unfair trade practices have also been alleged, shall on commencement of the Competition Act, shall stand transfer to Competition Commission of India and shall be adjudicated by that Commission in accordance with the provisions of repealed Act, as if that Act had not been repealed. The objection is that since the respondent bank specifically excluded under Section 3(b) and (g) of the MRTP Act, the present complaint is not maintainable and it deserves to be dismissed. The second ground on which the maintainability objection is raised is that the complaint made, does not constitute either monopolistic or restrictive or unfair trade practices within the meaning of the MRTP Act. It is pointed out in this behalf that even if all the allegations are taken to be true, they do not come within the mischief of Section 2(i) or Section 2(o) or unfair trade practices within the meaning of Section 36A of the MRTP Act. In this behalf, the learned counsel further points out that the co....
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....s consistently took the stand that XOS charges had been recovered pursuant to the complainant's own authorisation letters and therefore, the charges could not be refunded. These letters dated 02.06.2003, 03.03.2006 are on the record. On this account, the learned counsel points out that even after the complaint was filed in 2007, the complainant kept on insisting upon the refund in that behalf the learned counsel contended that on 09.02.2009 the RBI wrote to the bank about its decision to permit the bank to write-off unrealized export bills amounting to Rs.9,05,90,272/- from its books after verifying satisfactory documents evidencing surrender of export incentives availed of by the said exporter in respect of export transactions pertaining to him, of course without prejudice to action that may be taken by the Directorate of Enforcement. It is pointed out by the bank that the Reserve Bank had specifically informed that those transactions could not be reported in XOS to the concerned Regional Office "henceforth". This letter of Reserve Bank dated 09.02.2009 is also on record. Infact even after this letter, the complainant on 12.06.2009 again sought refund of XOS charges to which the b....
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....the original bank guarantees were not returned to it by the complainant. In the absence of the original bank guarantees, the bank was not absolved from the liability thereunder in view of Section 28(b) of the Indian Contract Act, 1872. For this purpose, the learned counsel relied on the judgement of the Hon'ble Supreme Court in Food Corporation of India v. New India Assurance Co. Ltd. [1994] 3 SCC 324. The learned counsel pointed out that though the loan was liquefied, there were substantial outstandings on account of XOS charges account, which again were not cleared. According to the learned counsel, this is clear from the bank's letter dated 25.03.1997. The bank acted on the letter of the complainant dated 09.06.1998 in which the complainant himself had stated "after release of demand money to AEPC the excess amount lying in margin money may be adjusted towards XOS charges due to you. In case there is any shortfall then we shall arrange to deposit the same with you and only on clearance of this amount you may release the collaterals held by you to us". It is pointed out that on 09.07.1998, the complainant wrote a second letter wherein it was stated "we request you to release marg....
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....arges and the deduction thereof. Nothing has been pointed out that the bank was not within its right to firstly levy those charges or that it was acting beyond the rules. In levying those charges, the bank has fully justified as it relied on the Reserve Bank Rules and the banking practice. After all the bank had to maintain the accounts and it was by way of an agreement between the complainant and the bank that the bank was levying Rs.250/- per bill per quarter. Therefore, on this account we do not find any fault on the part of the bank. 10. A point regarding the jurisdiction on account of the non-applicability of the Act against the financial institutions was however, not pressed. 11. That leaves us with the refusal to return collateral securities. The bank has firstly pointed out that the collateral securities were actually returned in March 2001 itself. The bank has justified retaining the collateral securities on the ground that the bank guarantees given by it to AEPC were not returned back. The learned counsel pointed out that unless and until those bank guarantees were returned back to the bank they kept on, being the liability of the bank as per the reported decision in Fo....