Page 259 - DMGT306_MERCANTILE_LAWS_II

Mercantile Laws – II

Notes However, failure to provide nursing and financing facilities to a small scale industry which
consequently became sick cannot be said to constitute deficiency in service as in matters of grant
or withholding of further advances and insisting on margin money, banks may exercise their
discretion and act in accordance with their best judgement after taking into account various
relevant factors. Therefore, the proper forum to agitate such grievances is a civil court (Special
Machines v. Punjab National Bank, Original Petition No. 32/1989 decided on 22.12.1989; M.L. Joseph
v. SBI, O.P. No. 2/1989 decided on 31.8.1989). It has also been held by National Commission in
the case of Mrs. Anumati v. Punjab National Bank (2003 CTJ 921 (CP) (NCDRC) that the financial
institutions have every right to protect their interests by taking conscious decisions. There shall
be no deficiency in service where the bank takes conscious decision to adjust the fixed deposit of
the joint holders against the loan taken by a third party when the FDR has been mortgaged as
guarantee for loan.
In Pradeep Kumar Jain v. Citi Bank [1999(g) SCALE 662] the appellant purchased a car by taking a
loan from the respondent bank, and gave post dated cheques to the bank not only in respect of
repayment of loan installments but also of premium of insurance policy for succeeding years.
On the expiry of the policy the bank failed to get the policy renewed. In the meantime the car
met with an accident. The Supreme Court held that there is no deficiency in service because the
obligation to renew the policy was on the appellant alone. But merely passing on two cheques
to the bank for being paid to the insurance company the appellant would not absolve himself of
his liability to renew the policy. The appellant also have certain duties to discharge in the matter
of obtaining the policy and can not merely pass the blame to someone else.

Failure of a Housing Board to give possession of the flat after receiving the price and after
registering it in favour of the allottee was held to be deficiency in service in the case of Lucknow
Development Authority v. Roop Kishore Tandon F.N. No. 54/1990 decided on 10.10.1990.
Cancellation of train services by the railways due to disturbance involving violence so as to
safeguard the passengers as well as its own property was held by the National Commission as
not constituting deficiency in service on the part of the Railway. [Dainik Rail Yatri Sangh (Regd.) v.
The General Manager, Northern Railway - I (1992) CPJ 218 (NC)]. Failure of the Railways to provide
cushioned seats in the first class compartments as per specifications laid down by the Railway
Board and to check unauthorised persons from entering and occupying first class compartments
was held to be deficiency [N. Prabhakaran v. General Manager, Southern Railway, Madras - I (1992)
CPJ 323 (NC).

In Bhaskar Chowdhary v. Dr. Pramod Kumar Aggarwal [1999 CCJ 31 (NCDRC)], the complainant
passenger was holding confirmed air-conditioned class tickets from Allahabad to Howrah by
Kalka Mail. The train was late. Since another train, Chambal Express going to Howrah was on
the platform; the complainant approached the conductor and requested him to allow him to
travel by that train. Since there was no air-conditioned class coach in that train, he was allowed
to travel in first class compartment. An endorsement to that effect had been made on the tickets.
While travelling anti fraud squad forced him to pay penalty as passenger without ticket.
The State Commission held that there was a deficiency in service by the railways. The National
Commission on revision petition held that, as far as the complainant was concerned, he was
under the bona fide impression that he was permitted to travel by Chambal Express on the basis
of endorsement on the ticket he had obtained. The endorsement created an estoppel on the
railway authority. The railway can not turn around and challenge its own action at a later stage.
In Union Bank of India v. Seppo Rally OY (1999) 35 CLA 203, the Supreme Court held that delay in
payment of an unconditionally guaranteed amount by a bank in India to a non-resident in
Finland in foreign currency can not be attributed to any deficiency in the service of the bank
when the banks stand is that the delay is caused by the failure of a bank in Finland, to which the
remittance was to have been made under the non-residents instructions to reply to the Indian

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