IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH FRIDAY, THE FOURTEENTH DAY OF NOVEMBER TWO THOUSAND AND FOURTEEN Present HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No.17684 of 2014 Between:
P. Siddaiah, S/o. Deevanna, Aged about 44 years, Occ: Managing Director, Sri Sneha Builders & Developers, R/o. Flat No.103, Viswanath Apartments, Nehru Nagar, Kurnool.
.. Petitioner AND The Branch Manager, Industrial Development Bank of India Ltd (IDBI), Budhawarpet, Kurnool & 2 others .. Respondents The Court made the following:
HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No.17684 of 2014 ORDER:
The petitioner is the customer of the Industrial Development Bank of India Limited, Budhawarpet Branch, Kurnool District. On 31.01.2014, the petitioner purchased Demand Draft bearing No.007090 for an amount of Rs.14,60,000/- from the respondent Bank drawn in favour of the Global Associates, Chennai. The case of the petitioner is that he has a landed property which he intended to develop by borrowing funds. The Global Associates, Chennai, came forward and offered to extend loan facility. The petitioner was informed that the Global Associates, Chennai, have sanctioned the petitioner an amount of Rs.6 crores and for the purpose of releasing that amount, the petitioner should pay initially an amount of Rs.14,60,000/- as margin money for processing the loan. The Demand Draft obtained by petitioner was handed over to the Global Associates, Chennai. On 01.02.2014, the Global Associates, Chennai, issued a Demand Draft bearing No.398078, dated 04.01.2014, for an amount of Rs.1,20,00,000/- drawn on Andhra Bank, Anna Nagar Branch, Chennai, in favour of the petitioner. On the same day, the Global Associates, Chennai, handed over a cheque bearing No.257998, dated 03.02.2014, for Rs.1,80,00,000/- drawn on Dhanalakshmi Bank Limited, HRBR Branch, Bangalore, which was not used.
2. The petitioner presented the Demand Draft before the Allahabad Bank, Kurnool Branch, on 03.02.2014. The petitioner was informed that it was a fake Demand Draft. Surprised and shocked by this, on the same day, the petitioner submitted a representation to the respondent Bank requesting not to honour the Demand Draft even if it was presented, to cancel the Demand Draft and to refund the money to the petitioner. The respondent Bank was also informed that having realized that a fraud was committed by the Global Associates, Chennai, a criminal complaint is lodged and registered as Crime No.56 of 2014 and the same is under investigation.
3. The grievance of the petitioner necessitating institution of this writ petition is that in spite of making a specific request to refund the money by cancelling the Demand Draft, the respondent Bank has not refunded the money causing undue hardship and suffering to the petitioner.
4. Learned counsel for the petitioner submits that the Demand Draft was obtained by the petitioner and as the Demand Draft was not encashed by the person in whose favour the Demand Draft was drawn, it is incumbent upon the respondent Bank to refund the money. The validity of the Demand Draft is for a period of three months and as three months period expired, the Demand Draft is no more valid and, therefore, there should not have been any impediment in releasing the money and it is illegal on the part of the respondent Bank in not releasing the money and retaining the money. It amounts to undue enrichment on the part of the respondent Bank.
5. Learned Standing Counsel representing the respondent Bank, based on the averments contained in the counter affidavit and the additional counter affidavit, submits that as per the norms enabling the issuance of Demand Drafts which are codified in the Master Circular, dated 01.04.2014, the amount which was the subject matter of a Demand Draft cannot be returned to the purchaser unless the original copy of the Demand Draft is furnished to the Bank and if the draft was not encashed by the person in whose favour the Demand Draft was obtained. Since the petitioner has not submitted the original copy of the Demand Draft, the respondent Bank is unable to refund the money. It is also contended that investigation is pending in Crime No.56 of 2014 and, therefore, at this stage the amount claimed by the petitioner cannot be refunded.
6. Clause 1.6 of the Master Circular deals with cancellation of Demand Draft. In terms of sub-para (a) of this clause, for cancellation of a draft, an application stating the reasons for cancellation along with the original Draft to be cancelled should be obtained from the purchaser. After following the due formalities, on such application and if the draft is still unpaid/remained outstanding and after obtaining the discharge from the purchasers, the amount can be refunded. According to para 1.7 of the Master Circular, the validity period of Demand Draft was originally six months and with effect from April 01, 2012, it is reduced to three months only from the date of issuance. If a Demand Draft has lapsed, the purchaser can apply for validating the Demand Draft. As per Clause 1.7 (c) the beneficiary of a draft can also file an application for revalidation, if such beneficiary is a Central/State Government Department or Undertaking, large Corporate House etc. Clause 1.7 (c) of the Master Circular is not applicable to Global Associates. Therefore, only a purchaser/customer of the bank can approach for revalidation of an expired Demand Draft. In the instant case, the Demand Draft issued on 31.01.2014 expired by 01.05.2014. The Demand Draft is not encashed before the expiry period. The purchaser of the Demand Draft has not applied for revalidating the Demand Draft. Therefore, as on today, it is a dead instrument. No doubt, as per Clause 1.6 (a) of the Master Circular, it is necessary for the cancellation of the Demand Draft for production of original copy, in the peculiar facts of the case, as contended by the learned counsel for the petitioner, the petitioner is unable to produce the original copy of the Demand Draft since the persons belonging to the Global Associates, Chennai, are not available and their whereabouts are not known and it is not possible for him to obtain the original copy. He further submitted that the investigation is concerning the allegation made by the petitioner and cheating the petitioner and trying to knock away his money and, therefore, it is nothing to do with the instrument issued by the respondent Bank.
7. In the peculiar facts of the case, insistence of production of original Demand Draft which is impossible of compliance amounts to arbitrary exercise of power. More so, when the instrument has lapsed and it is not valid after 01.05.2014 and as per the Master Circular, the person in whose favour the Demand Draft was drawn is not entitled for revalidation. Therefore, it is a dead instrument. However, in order to protect the interests of the respondent Bank, the petitioner should execute an Indemnity Bond to the satisfaction of the respondent Bank. Learned counsel for the petitioner readily agrees to give Indemnity Bond to the extent of the value of the Demand Draft.
8. Having regard to the submissions made and in view of the peculiar facts of the case, the Writ Petition is disposed of directing the Respondent Bank to release the amount, which was the subject matter of Demand Draft No.007090, dated 13.01.2014, i.e., to an extent of Rs.14,60,000/- to the petitioner subject to the petitioner executing an Indemnity Bond to the extent of the amount which is sought to be released by cancelling the Demand Draft No.007090, dated 13.01.2014. The amount shall be credited to the account of the petitioner and thereafter, the petitioner is entitled to withdraw the same. There shall be no order as to costs. Miscellaneous petitions, if any, pending in this writ petition, shall stand closed.
P.NAVEEN RAO, J Date: 14th November, 2014 Note: Issue C.C. in one (1) week. (B/o.) KL HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No.17684 of 2014 Date: 14th November, 2014 KL