Research › Search › Judgment

Madras High Court · body

2003 DIGILAW 2065 (MAD)

UCO Bank v. DIGBOI REFINDERY Indian Oil Corporation Ltd. & Another

2003-12-16

K.P.SIVASUBRAMANIAM

body2003
Judgment :- The petitioner/UCO Bank prays for a writ of certiorari to call for the records as per the award dated 31.03.1999, passed by the Banking Ombudsman/the second respondent herein in favour of the first respondent and against the petitioner. The petitioner/UCO Bank seeks to quash the orders of the Banking Ombudsman. 2. The first respondent has executed two bank guarantees. The first one bearing No.579 of 1994 dated 06.12.1994 which was periodically extended up to the Midnight of 05.03.1998. The second bank guarantee bearing No.387 of 1996 dated 18.12.1996 was periodically extended up to the Midnight on 07.03.1998. 3. The contention of the petitioner bank is that in terms of Clause VII of the terms of the bank guarantee, the guarantee was to remain in force until the date of expiry and that unless the written claim under the guarantee is filed in the Bank before the date of expiry, all the rights under the said guarantee shall be forfeited and that the bank shall be released and discharged from all liabilities there under irrespective of whether or not the original guarantee is returned to the bank. 4. In the present case, in respect of both the bank guarantees, the communication of the claim by the first respondent though dated 25.02.1998, were actually posted on 28.02.1998, and the same reached the petitioner bank on 09.03.1998. Therefore, according to the petitioner, the first respondent cannot invoke the bank guarantee considering that the first bank guarantee was extended only up to 05.03.1998 and the second bank guarantee was extended up to 07.03.1998. 5. The dispute went before the Banking Ombudsman/ second respondent, who on a discussion of the terms of the agreement, held that the post office was an agency of the parties and therefore, the first respondent having intimated the claim on 28.02.1998 itself, the same was sufficient and the objection of the petitioner bank cannot be sustained. Hence, the above writ petition. 6. The learned counsel for the petitioner contends that it was the duty of the first respondent to have intimated the claim before the stipulated date. There is no specific authority by the petitioner to the first respondent to treat the post office as an agency. Hence, the above writ petition. 6. The learned counsel for the petitioner contends that it was the duty of the first respondent to have intimated the claim before the stipulated date. There is no specific authority by the petitioner to the first respondent to treat the post office as an agency. It is the duty of the first respondent to intimate the claim on or before the date of expiry and therefore, the observation of the Banking Ombudsman treating the post office as agency of the petitioner cannot be sustained. 7. The learned counsel also relies on the Judgment of the Supreme Court in The Central Bank of India, Ltd., Vs. The Hartford Fire Insurance Company Ltd., (AIR 1965 Supreme Court 1288). Reliance is placed on the observation that it is the court's duty to give effect to the bargain of the parties according to the intention of the parties which is in writing and the intention has to be looked for in the words used, unless they are such that one may suspect that the actual intention is not conveyed correctly. 8. I have also heard Mr.Rahul Balaji, learned counsel appearing for the respondents. He raises a preliminary objection in the context of the directions of the Supreme Court in Oil and Natural Gas Commission and another Vs. Collector of Central excise (JT 1991(4) SC 358). The Supreme Court had directed the Government of India to set up a Committee consisting representatives from the Ministry of Industry, and other authorities to monitor the disputes between the Ministry and public sector undertakings in between themselves, to ensure that no litigation comes to Court or to a Tribunal without the matter having been first examined by the Committee and its clearance. 9. On the basis of the said Judgment, the learned counsel for the respondent contends that the petitioner ought to have taken up the issue before the committee as directed by the Supreme Court to be formed / constituted by the Government and hence the above writ petition is not maintainable. 10. I am unable to sustain the said objection for at least two reasons. Firstly, this writ petition has been admitted in the year 2000 itself. Therefore, there is no justification for considering the said objection, at this distance of time. 10. I am unable to sustain the said objection for at least two reasons. Firstly, this writ petition has been admitted in the year 2000 itself. Therefore, there is no justification for considering the said objection, at this distance of time. Secondly, the committee as contemplated under the Judgment of the Supreme Court is only at the stage of the inception of the dispute. In the present case, the dispute had arisen at an earlier stage and had gone before the Banking Ombudsman for reference and he has rendered his decision. Therefore, I am unable to entertain the objection as regards the maintainability. 11. Coming to the question of merits of the issue raised for consideration, I am unable to find any error in the decision of the Banking Ombudsman/second respondent. It is not disputed by the learned counsel for the petitioner that there is no prohibition for the parties for forwarding the claim extending the bank guarantee by post. No specific methodology is contemplated for seeking for the extension. In fact, Clause VII which is relied upon by the petitioner requires the claim to be in Writing. The requirement that it should be "filed" before the bank does not mean that it should have been physically filed before the bank. As long as the process for forwarding the claim through the postal department is not excluded, then there is no reason for not treating the post office which is an official source as an agent of the petitioner. In this context, the learned counsel for the petitioner has rightly relied on Clause 27 of the General Clauses Act, 1897, which reads as follows: "Meaning of Service by Post:- Where any (Central Act) or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression "service" or either of the expression "give" or "send" or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post." 12. Therefore, I do not find any error in the order of the second respondent treating the post office as an agent of the writ petitioner. Therefore, I do not find any error in the order of the second respondent treating the post office as an agent of the writ petitioner. 13. In the result, there are no merits in the writ petition and hence it is dismissed. No costs.