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2007 DIGILAW 1129 (AP)

HSBC Limited, Hyderabad v. K. Shiva Kumar

2007-11-19

GOPALA KRISHNA TAMADA

body2007
JUDGMENT : An interesting point is raised by the learned counsel for the appellant, which can as well be a precedent for the Courts below in deciding this type of cases falling under Section 138 of the Negotiable Instruments Act. 2. Before going into the point raised by the learned counsel for the appellant, it is germane to refer to a few facts of the case. The complainant/appellant Bank is a scheduled Bank registered with Reserve Bank of India and is governed by Banking Regulations Act. The appellant Bank, apart from usual activities, offers production/services to its customers by way of car loans, housing loans, credit cards, etc. During the course of the said business transactions, the first respondent approached the appellant-Bank and submitted an application to avail credit card facility and on consideration of necessary documents furnished by the first respondent, the appellant Bank allotted credit card bearing account No.5548 5135 0250 3329 to the first respondent and he was using the said card for his requirements and was making payments to the appellant Bank as and when the amount is due as per the statement of account furnished by the Bank. Towards partial discharge of his liability against the above credit card, the first respondent issued a cheque bearing No.082414 dated 29.06.2002 for a sum of Rs.10,000/- drawn on ICICI Bank, S.D. Road branch in favour of the appellant Bank. On presentation, the said cheque was dishonoured for the reason "insufficient account balance", vide cheque return memo dated 01.07.2002 and the appellant Bank got issued a legal notice dated 13.07.2002 demanding the first respondent to pay the amount covered by dishonoured cheque within fifteen days from the date of receipt of notice, as provided for under Section 138 of the Negotiable Instruments Act. Though the first respondent received the notice on 15.07.2002, he did not pay the said amount. Hence, the appellant Bank filed a complaint under Section 138 of the Negotiable Instruments Act on 27.06.2003. 3. Though the first respondent received the notice on 15.07.2002, he did not pay the said amount. Hence, the appellant Bank filed a complaint under Section 138 of the Negotiable Instruments Act on 27.06.2003. 3. In support of its case, the appellant Bank got examined its legal officer as P.W.1 and got marked Ex.P1, cheque bearing No.082414 dated 29.06.2002, Ex.P2- cheque return memo dated 01.07.2002, Ex.P3-office copy of legal notice dated 13.07.2002, Ex.P4-postal receipt dated 13.07.2002, Ex.P5-postal acknowledgement dated 15.07.2002, Ex.P6-certified copy of substitute power of attorney dated 05.12.2006, Ex.P7-statement of account for the period from 30.06.2002 to 13.10.2003 and P8- certified copy of General Power of Attorney dated 26.07.2004. No oral and documentary evidence was adduced on behalf of the first respondent. 4. The trial court, on consideration of the entire material on record held that the appellant Bank failed to establish that the cheque in question was issued in respect of legally enforceable debt and that the statutory notice covered by Ex.P3 dated 13.07.2002 was not issued within the statutory period of one month from the date of Ex.P2 cheque return memo, and thereby dismissed the complaint. Hence, this Criminal Appeal. 5. Despite service of notice on the first respondent, the first respondent has not chosen to put in his appearance either in person or through counsel. 6. Heard the learned counsel for the appellant and the learned Additional Public Prosecutor for the State. 7. Learned counsel for the appellant Bank while drawing my attention to the dates mentioned in Ex.P1 cheque and Ex.P2 cheque return Memo tried to contend that though the date mentioned in the cheque is 29.06.2002 and is to be read in Indian Parlance as the bank ICICI bank which is an international bank, the said date mentioned in the cheque return Memo is 07.01.2002 cannot be read in similar fashion and it is to be read as 01.07.2002. Card Account Deal TXNDATE PDATE TXN AMT MERCHA- CITY Number NT NAME 554851 100-011147-06 Interest 1/12/2002 1/12/2002 -2077.55 13502503329 554851 100-011147-06 Service 1/12/2002 1/12/2002 -262.5 13502503329 Tax 554851 100-011147-06 CSF 1/18/2002 1/18/2002 -210 13502503329 554851 100-011147-06 Interest 2/13/2002 2/13/2002 -2299.15 13502503329 554851 100-011147-06 Service 2/13/2002 2/13/2002 -262.5 13502503329 Tax 554851 100-011147-06 CSF 2/18/2002 2/18/2002 -210 13502503329 554851 100-011147-06 Interest 3/13/2002 3/13/2002 -2090.79 13502503329 554851 100-011147-06 Service 3/13/2002 3/13/2002 -262.5 13502503329 Tax 554851 100-011147-06 CSF 3/19/2002 3/19/2002 -210 13502503329 8. In view of the contention raised by learned counsel for the appellant, now it is to be seen that when the cheque is dated 29th June 2002, how can there be a cheque return memo on 7th January, 2002. 9. No doubt, in Indian parlance, it is true that the date comes first and then the month followed by the year, and may be that alone prompted the trial court to come to the conclusion that the said cheque is dated 29.06.2002 and the cheque return memo is dated 07.01.2002 and thus it is not in accordance with the conditions stipulated under the provisions of Section 138 of N.I.Act. The crucial fact, which was missed by the trial court, is that in international standards the month comes first and then the day followed by the year. Here, the presenting Bank and the Bank to which the cheque was presented were HSBC and ICICI Bank, which are following international norms/standards. In fact, HSBC means, the Hongkong and Shanghai Banking Corporation Limited, the Bank incorporated in HongKong SAR with limited liability. As per the statement of account prepared by the said Bank, the month is shown initially and thereafter the day followed by the year. It may be relevant to refer to some of the items of the said statement of account, which is as under: 10. Similar is the statement of account insofar as ICICI Bank is concerned. When the said practice is applied it is clear that the date i.e., 29.06.2002 mentioned in the cheque shall be read as 29th June 2002 and the cheque return memo dated 07.01.2002 shall be read as 1st July, 2002, in which event, definitely the cheque was dishonoured within eight days from the date of its presentation and thereafter, statutory notice under Section 138 of the N.I.Act was issued on 13th day of July, 2002, which is within fifteen days, as provided for under the N.I.Act. This aspect was wrongly interpreted by the Court below. Hence, this Court is of the view that the appellant Bank filed the complaint strictly in accordance with the procedure provided for under Section 138 of the N.I.Act. 11. This aspect was wrongly interpreted by the Court below. Hence, this Court is of the view that the appellant Bank filed the complaint strictly in accordance with the procedure provided for under Section 138 of the N.I.Act. 11. Another aspect canvassed by the learned counsel for the appellant is that the Court below ought not to have given any credence to the norms dated 21.11.2005, prescribed by the Reserve Bank of India with regard to credit card operations of the Banks, as the said norms came into force in the year 2005, whereas the transaction covered by the cheque in question relates to the year 2002. 12. I find force in the said submission also. It may be apt to refer the relevant norm, which reads as follows- "Unsolicited cards should not be issued. In case, an unsolicited card is issued and activated without the consent of the recipient and the latter is billed for the same, the card issuing bank/NBFC shall not only reverse the charges forthwith but also pay a penalty without demur to the recipient amounting to twice the value of the charges reversed." 13. The cheque in question is dated 29.06.2002, whereas the said norms, which were relied on by the Court below, are dated 21.11.2005. From a perusal of the said guidelines it is clear that nowhere it is mentioned that the said norms have retrospective effect. In the absence of any clause stating that the said norms have retrospective effect, it cannot be presumed that the said guidelines will affect the credit cards, which were issued prior to the date of the said guidelines. 14. Further, the credit card was issued to the first respondent on 30.06.2000, which is clear from the statement of account and thereafter, several transactions have taken place on the said credit card upto the year 2003. The said conduct of the first respondent in using the credit card for a period of three years from the date of its issuance clearly indicates that the first respondent accepted the said credit card. Having accepted the said credit card, it is not open again for him to canvass that the said credit card was issued without his request and as such the operations through the said credit card cannot be taken into consideration. Having accepted the said credit card, it is not open again for him to canvass that the said credit card was issued without his request and as such the operations through the said credit card cannot be taken into consideration. In fact, there is an implied consent and the said guidelines are issued only to safeguard the interests of the citizens, who are not willing to accept the credit cards. It has become a practice for the scheduled Banks particularly in the recent times to issue credit cards without even soliciting and probably that must have prompted the Reserve Bank of India to fix certain parameters such as issuance of the said guidelines. The said guidelines clearly prohibit issuance of unsolicited cards and if any cards are issued without there being any requisition, the issuing Bank/non-Banking financial company shall not only reverse the charges forthwith, but also pay a penalty without demur to the recipient amounting to twice the value of the charges reversed. As discussed above, having accepted the credit card and used it quite for some time, it is not open for the first respondent to say that it is an unsolicited card and hence, he is not entitled to pay the penalty or anything as provided for in the guidelines referred to supra. 15. For the foregoing reasons, the Criminal Appeal is allowed and the matter is remanded back to the Court of the XIV Additional Chief Metropolitan Magistrate, Hyderabad, for fresh disposal in accordance with law.