CENTRAL BANK OF INDIA vs Ms International Cargo Movers and Ors on 10 June 2025

FINAL ORDER

This original application has been filed by the applicant banks, on 14.07.2017 through Shri Radhir Singh, Authorized Officer of the applicant bank, under Section 19 ofthe RDB Act, 1993 against the defendants for recovery of a sum of Rs.20,68,775l- together with cost, charges and pendentellite and future interest @17.70o/o from date of filing of this O.A. till the realization in full.

2. The brief facts of the case are that the defendant no. 2 being the proprietor of M/s International Cargo Movers, defendant no. 1 deposited a Foreign Cheque No. 42337 of USD 26450 in their account No' 3030608772, which was sent for collection through Parliament Street Branch, New Delhi, of the applicant Bank. The amount of Rs.16,28,3291- was credited in the account of the defendants g !4.03.2015 in due course. e}.

The said payment was advanced money from the importer of the supply of goods. The defendants purchased the goods after the amount was credited in the account from the authorized dealers and made payment through RTGS from the said account. Thereafter, the defendants again deposited cheque No. 43337 dated 25.03.2015 for USD 42000, which was deposited in the account for collection. But this time, the cheque was returned unpaid with the reasons (forged cheque) and it was also conveyed by the Foreign Bank to the international branch of the applicant Bank that the earlier cheque for USD 26,450 bearing No. 42337 was also forged and would be returned shortly. Thereafter, on 17.04.2015 on the instructions of International Division of the applicant bank that foreign bank has debited the NOSTRO account of the applicant banlg the amount of Rs.16,51,698/- was debited from the current account of the defendants, as the same was claimed by the Parliamentary Street Branch of the applicant bank through C2C. Thereafter, the applicant informed the defendants vide letter dated 18.04.2015 and were asked to return the debit amount. It is submitted that the applicant bank was not aware that the alleged foreign cheques deposited by the defendants were forged and it was only when the said cheque were sent for encashment, the foreign bank informed the international Branch of the applicant bank that cheque for USD 26450 bearing No. 42337 and foreign cheque No. 43337 dated 25.03.2015 for USA 42000 were forged cheque. Not only this, the foreign bank has debited the NOSTRO bank account of the applicant Bank. It is submitted that the defendants were aware that the alleged cheques yere forged and he q intentionally and deliberately deposited the same with the applicant bank. It is further submitted that as the cheques in question were forged as such the entire transaction in respect of the forged cheque was void ab-inito and as such there is no legal obligation of the applicant bank to honour such malafide transaction. Immediately after debiting the current account of the defendants, the applicant bank vide letter dated 18.04.2015 informed the defendants to refund the amount which is a public money. The defendants intentionally and deliberately deposited the foreign cheques with the applicant bank with the intention to cause the wrongful loss to the applicant bank and wrongful gain to themselves. The defendants have also filed the complaint before the Bank Ombudsman, but the same was dismissed by the Ombudsman on 05.06.2015. It is submitted that the defendants have not challenged ombudsman order dated 05.06.2015 which has final and binding on both the parties. The ombudsman has specifically mentioned in the said order that there is no mistake on the part of the applicant Bank. The applicant bank vide letters dated 18.04.2015, 24.04.2015 and reply dated 24.09.2015 requested the defendants to deposit the amount against the forged cheques, but they failed to do so, therefore, the applicant bank has filed the present OA before this Tribunal.

3. It is further submitted that the defendants enjoyed and utilized the Loan facility, but failed to maintain the financial discipline and failed to repay the due amounts. The applicant bank requested the defendants to regularize the loan account by visits and letters, but there was no response from the defendants. CA

TANOl294l2024 4 Therefore, the applicant bank served a notice dated 18.04.2015 and24.04.2015 to the defendants but failed to recover the same Thus, the present O.MI-A is preferred by the applicant bank to recover its dues.

4. On notice by this Tribunal, the defendants put appearance through counsel and filed written statement and evidence.

5. In their written statement the defendant nos. 1 & 2 have denied the facts mentioned in the OA. It is submitted that Mr. Richard accepted the proposal of the defendants and in October 2014, the defendant firm got a Cheque of USD 26,450 from Mr. Richard in its name. However, the name of defendant's firm was wrongly mentioned as "Internal Cargo Movers" instead of International Cargo Movers. The same was informed to Mr. Richard through an e-mail who after receiving the message issued a new cheque dated 9u January, 2015 bearing no.042337 of Capitol Underground, Middleton Community Bank, Middleton Wisconsin for the sum of USD 26450 i.e. Rs.16,28,329/-. The cheque was received by the defendant through TNT courier company vide AWB no. TNT 634983L71on 13h January 2015. It is submitted that after receiving the cheque on 31$ January, 2015 the defendant firm deposited it to the applicant bank for clearance. On depositing the cheque, the defendant on inquiring about time period, was told by the applicant bank's official that the cheque will be send for clearance through their associate International bank and after clearance the amount will be kept with the applicant bank for 21 days as cooling period, and after that only the -amount will be credited 9,\

TANOl294/2024 in the account of defendant. It is fufther submitted that as per the terms of the applicant bank and waiting for the cooling period, it was on 4h March, 2015 i.e. after 31 days that the defendant received the message that an amount of Rs.16,28,329/- has been credited in defendants' account. It was only after receiving the confirmation from the applicant bank that the defendant procured the items from their authorized dealers and made the payment through RTGS from the said current account. The items were exported through FEDEX vide Air way Bill No. 023- 67698503, tracking no' 635237226628 dated 12h March, 2015 and Shipping Bill No. 8370584 dated 14h March 2015 which was duly received by Mr. Richard, M/S Zilidamu GeneralTraders on 20th March, 2015' It is submitted that after receiving the requisite items, Mr. Richard, M/s Zilidamu General Traders again placed an order with the defendant and issued another Cheque bearing no'-43337 dated 25u March 2015, of Capitol Underground, Middleton Community Bank, Middleton Wisconsin for a sum of USD 42,000 as an advance. It is submitted that prior exporting the goods, said cheque was deposited with the applicant bank for clearance on 30th March 2015 as per the trade norms. On 16h April 2015, the defendant Firm received a call from the applicant bank official that the cheque of USD 42,OOO has been returned unpaid being forged and also the amount Rs'16,28,3291' credited earlier against the cheque of USD 26,450 deposited on 31* January, 2015 will also be debited, as said cheque was also forged' It is submitted that after receiving the message, the defendant contacted the applicant bank's Branch Manager, who assured defendant that the amount of earlier cheque of USD 26,450 i.e. Rs. 16,28,3291- willrot be debited as the 6).

TANO129412024 amount already has been credited against the defendant account after receiving the confirmation from the associate bank i.e. International Bank and that too after the cooling period of 21 days, purpose of which is to wait on account for possible return of the cheque by the drawee bank, before giving credit to the customers. It is submitted that even after the above assurance by applicant bank's Manager, the defendant was shocked to know that an amount of Rs. 16,51,689/- (amount of the Cheque along with the bank charges) has been illegally debited from the account of defendant on 18h April, 2015 declaring the earlier cheque of USD 26,450 forged after the expiry of the 21 days of cooling period' It is further submitted that as per the norms and, after receiving the confirmation from the applicant bank and after due enquiry from its official as regards the payment procedure and chances of cheque being returned, the defendant Firm, procured the items from its dealers. It was only after the applicant bank credited the amount in defendanfs account that the goods were exported' Despite following the entire procedure, the applicant bank has illegally debited the defendant account with the amount of Rs.16,51,689/-. The applicant bank after illegally debiting the amount has also stopped clearing the cheques of the defendant Firm issued to various organizations and individuals. Because of the gross negligence on the part of the applicant bank, the defendant company is facing a lot of hardship' It is submitted that because of the cheques not being cleared the reputation of the defendant firm is lowered in business society and is causing huge losses to them' It is submitted that the act of the applicant bank has damaged the reputation of thgdefendant in the eyes of q

'f ANOt294l2024

its customer/clients/market. All the cheques issued by the defendant had been bounced. Hence, the defendant is liable to pay a sum of Rs.2,00,000/- as damages to the defendant. It is further submitted that it is clearly made out that the defendant is made to suffer without any fault of it. The defendant has always been working in accordance with the rules and guidelines of the applicant bank and despite that it is made to suffer. The applicant bank could not have debited, more so as the defendant had taken action in furtherance of executing the contract. Had the defendant known that the applicant bank would carry out such illegal debit after the cooling off period, the defendant would not have incurred expenses towards execution of the contract, and fufther would not have supplied the goods to M/s Zildamu Gen. Traders. The defendant would have also not issued cheques to the third parties. It is submitted that after the above act the defendant firm wrote to the applicant bank through its letter dated 18h April, 2015 requesting the applicant bank to credit the alleged amount back and to clear the pending cheques. In response to the said letter the applicant bank replied that it received the message from their Nostro bank i.e. the associated International Bank that the said cheque has been returned due to forgery and accordingly they were instructed to debit the amount from the Defendant's account. It is further submitted that if such an act of applicant bank is permitted then what is the purpose serued by cooling period. As mentioned before the time of 21 days as cooling period is just to wait that there are no chances of cheque being returned, then why the fact of cheque being forged was not discovered during the above period. Thus, th-e act of applicant bank of (,\

TANOI294/2024 8 declaring the cheque forged that too after waiting for cooling period and further period of one month is void, arbitrary and illegal. Hence, they are liable to credit back the defendant account with the alleged amount illegal debited by the applicant bank. The defendant had made a complaint dated April 22"d 2015 against M/s Zilidamu General Traders. Despite this, the defendant had even written to High Commission of Uganda, and Foreign Import Export Organization through emails. On 27th April, 2015 again the defendant wrote to the defendant requesting them to credit back the amount illegally debited by them and also further to clear all the pending cheques as due to such an act of defendant, the defendant was suffering huge losses and its reputation was being damaged' However, all these requests were ignored' On 29h April, 2015 the defendant wrote the complaint to the Bank Ombudsman under the Banking Ombudsman Scheme, 2006 praying applicant bank to credit back the amount wrongfully debited and to compensate the defendant for damages suffered on account of business and reputational loss. It is further submitted that in response to the above complaint bearing Complaint No' 201415014011083 the Banking Ombudsman submitted that the complaint was outside its purview, not falling under any of the ground mentioned under clause 8(1) & 8(2) of the Banking Ombudsman Scheme, 2006 and thus the complaint was closed under clause 13(a) of the said scheme. The Ombudsman further wrongly contended that there was no mistake on the part of the applicant bank because as per their findings the drawee bank could return a cheque up to one year for the reason of fraud on the face of the instrument' However, nothing about this was ever conveyed by the applicant ^'

bank officials when the defendant inquired them about the procedure for clearance. It is submitted that the defendant sent a legal notice dated 9b September, 2015 to the applicant bank, which was duly served to the Applicant Bank for making payments of Rs. L6,5L,6891- and Rs.2,00,000/- towards damages, for lowering the reputation of the defendant. Despite the seruice of the demand notice upon the applicant bank has failed to comply the demand made in the legal Notice. Thus, the defendant is constrained to file the Civil Suit No. 3712016 against the applicant bank before the District Courts, Saket, New Delhi for recovery which is pending adjudication. It is submitted that the that applicant bank is liable to pay a sum of Rs. 16,51,689/- along with an interest @18o/o per annum till realization of the payment, to the defendant being the total amount illegally debited from the defendant's account by the applicant bank. The applicant bank is liable to pay a sum of Rs.2,00,000/- along with an interest @18o/o per annum till realization of the payment, to the defendant as damages for lowering the reputation. The applicant bank is also liable to pay interest @ 18o/o Per annum which rate is the normal commercial lending interest rate in such like transaction. Despite defendant's several requests to the applicant bank for clearing the above said amounts, the applicant bank has failed and neglected to make payment which is due and owing from the side of the applicant bank to the defendant. The written statement was filed by the applicant bank. Thereafter, the rejoinder has been filed by the defendants. It is further submitted that the defendant had also filed police complaint with the police authorities and also wrote to Uganda High Commission in India and India High Comqlrggjon at Uganda. In one 4>t'

TANO/29412024 10 of the replies, the India High Commission at Uganda vide their mail dated 21.04.2015 has clearly stated that "I have discussed your case with experts in the banking sector. According to them, and as per available details, the Central Bank will have to pay you the money as it is the Bank's error". It is submitted that the defendants have also approached the Reserve Bank of India and the applicant bank have failed to provide any concrete information about the alleged forgery and the kind of forgery and even failed to provide the status of original cheques. Furthermore, it is submitted that the applicant bank in its own whims and fancies have closed one OD account of the defendant and remaining amount from the said account have illegally credited in the present account. Immediately the defendants enquired about the same from the applicant bank vide letter dated 05.09.2016, but the applicant bank failed to reply for the same, which itself shows their malafide intentions qua the defendants. It is further submitted that the applicant bank also wrote a letter to NOSTRO Reconciliation International Division on 18.04.2015 stating that "They received the value date as 10.02.2015 and on completion of cooling period of 21 days, the credit was picked up on 03.03.2015 and proceeds were sent to the concerned branch." The applicant bank branch wrote that "The matter be taken up with Deutche Bank for debiting their NOSTRO account after a period of one month of the cooling period." This means that the applicant banks themselves admitted that this could not happen as the procedure laid down was adopted and after such a period, this sort of action could not be taken up: This strengthens the stand of the defendants as they after getting credit in their account upon completion of cA

TANO/29412024 l1 cooling period, completed their paft of contract thereby purchasing the items and sending same to the foreign buyer. The applicant bank deliberately and malafidely did not filed the entire statement of account and filed the statement of account only from t7.04.20L5 whereas the payment after being credited in the account, the defendants made the part payments to the vendors through RTGS as well as by other modes and also various payments were also deposited / credited in the account of defendant which were subsequently debited in the account of the defendant by the applicant bank and the applicant bank deliberately did not filed the entire / complete statement of account for concealing the material facts. It is submitted that in the entire pleadings of the Original Application, the applicant bank has failed to disclose the fact that certain payments which were credited in the account of the defendants after the alleged incident have been debited and this fact deliberately not mentioned in the Original Application proceedings. It is prayed that this Hontle Tribunal may dismiss the Original Application.

6. Both the parties have filed their respective evidence and exhibited the documents.

7. Heard the Ld. Counsel of both the parties and perused the record.

8. From perusal of the record it is clear that the main contention of the applicant is that defendant no.2 being proprietor of defendant no.1. deposited foreign cheque tg TANO1294/2024 12 in their account which was sent for collection and the amount of Rs.16,28,3291- was credited in the account of defendants on 04.03.2015 in due course. The said payment was advance money from the importer of the supply of goods. The defendant again deposited a cheque of US Dollar 42,0001- dated 25.03.2015 which was again deposited in the account of the defendant. The said cheque was returned unpaid with the reason forged cheque. On 17.04.2015 the foreign bank has debited NOSTRO account of the applicant bank for Rs.16,51,698/- as the cheque was found to be forged cheque. The applicant immediately debited the account of the defendants and informed the defendants to refund the amount which is a public money. The defendant has failed to refund the amount and therefore, they are liable to pay the amount of cheque which has been credited in the account of the defendants which has been subsequently found forged and the amount was debited from the account of the applicant bank by the foreign bank. On the other hand the Ld. Counsel of the defendant has admitted that he has deposited the cheque bearing no. 042337 for amount of US Dollar 26,4501- i.e. Rs.16,28,3291-.The cheque was received by the defendant through courier and the defendant deposited the said cheque on 31.01.2015 with the applicant for clearance. On depositing the cheque the defendant was informed that the cheque will be sent for clearance through their associate international bank and after clearance the amount will be kept with applicant bank for 21 days as cooling period and after that only the amount will be credited in the account ofthe defendant. The defendant waited for the cooling period and after 31 days the defendant received the message that amount of './rl TANO/29412024 13 Rs.16,28,329l- has been credited in the account of the defendants. The defendant purchased the items and sent the items to the foreign buyer and made payment to the dealers from whom the defendant has purchased the items through RTGS. It is submitted that once the amount has been credited as per policy of the bank after cooling period of 2l days, the bank cannot debit the amount from the account of the defendant. From perusal of the pleadings it is clear that the admitted facts are that defendant received a cheque from a foreign company and deposited the same with the applicant bank. The applicant bank after cooling period of 30 days credited the amount of the cheque in the account of the defendants. The defendant utilized the credited amount for purchase of goods ordered by the foreign company. Subsequently the bank got an information that the cheque is forged and the amount of the cheque was debited by the foreign bank through NOSTRO bank account. Therefore, it is clear that the amount that has been credited in the account of the defendant has been debited from the account of the bank by the foreign bank. It is submitted by the bank that as per poliry of the US the amount can be debited within one year if the cheque is found forged. Therefore, as per foreign policy the cheque could be dishonoured within a period of one year if it is found to be forged. In the present matter the cheque was found to be forged, therefore, the foreign bank debited the amount from the account of the applicant bank. In consequence the applicant bank debited the amount from the account of the defendant. The submission of the defendant is that once the applicant has credited the amount after cooling period, the applicant bank cannot reverse the amount and cannot debit the same, +

TANO/29412024 t4 The admitted position is that amount has been debited by the foreign bank from the account of the applicant bank as the cheque was found to be forged. Ifthe amount has been debited from the account ofthe ban( the applicant bank is entitled to debit the same from the account of the defendants. The bank cannot be directed to bear the amount that has been debited from the account merely because the amount has been credited in the account of the defendant after cooling period. The fraud has been committed by the foreign firm with the defendants. The applicant bank cannot suffer the consequences of the fraud committed by the foreign company with the defendants. Therefore, the amount has been rightly debited by the applicant bank from the account ofthe defendants and defendants are liable to refund the same to the applicant bank. The contention of the defendants that the amount has been credited after expiry of the cooling period and therefore, the bank cannot debit the account cannot be accepted. As per foreign policy the cheque can be dishonoured within a period of one year if it is found to be forged and as per policy the foreign bank has debited the amount from the account of the applicant bank. In such circumstances the applicant bank is entitled for the recovery of the amount. As the amount has been debited on account of the fraud committed by the foreign company, therefore, the bank cannot charge interest on the amount and can only seek for the recovery of the amount that has been credited on the basis of forged cheque. If the defendants pay the amount within 30 days from the date of order, no interest will be payable to be bank. If the defendants fail to pay the amount within 30 days to the applicant x\

TANO/29412024 15 bank, the bank will be entitled to claim interest @LZo/o p.a. from the defendants. In the light of the above discussions, the present TA deserves to be allowed.

ORDER

1) I hereby allow this T.A. of the Applicant Bank and direct the defendant nos. 1 & 2 to pay jointly and severally to the applicant bank within 30 days from today, a sum of Rs.16,28,329l- along with cost, expenses. If the defendants pay the amount within 30 days from the date of order, no interest will be payable to be bank. If the defendants fail to pay the amount within 30 days to the applicant bank, the bank will be entitled to claim interest @L2o/o p.a. from the defendants from the date of the passing of this order.

2) In case of failure to deposit the above amount within the stipulated period, the same shall be recovered from the sale of the personal movable and immovable assets of the defendant nos. 1 & 2.

3) Recovery Certificate be issued forthwith and be sent to Recovery Officer, Debts Recovery Tribunal-Il, Delhi.

4) The registry of this Tribunal is hereby directed to issue free copy of the order and send the same to both the pafties. <,\

TANO1294/2024 t6

5) Pafties are direct to appear before the Ld. Recovery Officer, DRT-II, Delhi on 11.08.2025. Pending IAs, if any, stand disposed of. File be consigned to records. Date: 10.06.2025 lsJ.- (susHr L rul.rnn RAsroGr) PRESIDING OFFICER DRT-II, Delhi This judgement has been signed, dated and pronounced in open court. Date:10.06.2025 S) (SUSHIL KUMAR RASTOGI) PRESIDING OFFICER DRT-II, Delhi T