Forum asks Allahabad Bank to pay relief for negligence

The textile company had a current account in the Bhuleshwar branch of the Central Bank of India, where they also availed the bill purchase facility. According to the facility, the bank finances outstation consignments against the transporter’s receipts. These receipts are sent to that branch of the bank where the business deal is accomplished. Theopposite party then pays the promised amount to the outstation branch which in turn transfers the amount back to the bank which had financed the deal.

In this case, the Central Bank claimed that two bills were outstanding and unless the fate of those bills were decided, the cloth company will not avail of the bill purchase facility. The Central bank had sent the bills to the Maskanwa branch of the Allahabad bank. No money had come from the company’s business partner, the Central Bank claimed.

Threatened with cancellation of the bill purchase facility, the company stopped taking fresh textile orders. They wrote to the business party in Uttar Pradesh about the unpaid bill. The party informed them that money had been deposited in the Maskanwa branch. Correspondence with the Allahabad Bank did not give any results. The company then asked the Central Bank to adjust the proceeds of a fixed deposit amount against the unpaid dues. Therefore, the bank debited one of their fixed deposits to their credit.

In July1994, the Central Bank informed Babulal that Allahabad Bank had overlooked the demand drafts received from Babulal’s business partner. The Central Bank returned the fixed deposit to Babulal after receiving the amount. However, the bank insisted on payment of interest on the principal amount. But the company questioned why it should pay, as it was the Bank’s mistake. The Central Bank did not entertain the company’s arguments and recovered the interest amount.

Prabhatkumar Poddar, one of the partners of the company approached the Reserve Bank of India. He filed a complaint in the consumer forum against the compulsion of payment of interest. When the forum’s notice was received by the Allahabad bank, it paid the interest to the company, but this was a year later.

The case went on for the next four years. The forum has now ordered the bank to pay compensation of Rs 2,000. “I am happy that the prolonged litigation ultimately bore fruit,” Poddar said. “The bank has been ordered to pay for its mistake,failing which they will be made to pay 18 per cent interest per annum on the promised amount from 1994. The bank did not bother to give written replies to the court’s notices. I hope it follows the court order now.”