As litigation is tedious, costly and time-consuming, people try to resolve a grievance amicably. However, the wait for a resolution should not stretch too long. Otherwise, the claim would be time-barred.
M Sivaraj's Belgique Fashions had exported garments to an Italian buyer in Milano in January 2001. There were four separate bills for this shipment. The export documents were negotiated through Indian Overseas Bank (IOB). These were to be released to the buyer within 120 days from the date on the bill of lading.
IOB sent the documents to Bank Credito Italiano for collecting payment from the buyer. The buyer was entitled to a 10 per cent discount if the bill was paid within 120 days. Since the buyer failed to make the payment by the due date, the discount was cancelled. The buyer later paid the value of three bills for which the Italian bank wrongly allowed a 10 per cent discount, while the amount of the fourth bill was not paid at all. Yet, IOB permitted the Italian bank to hand over all the documents to the buyer.
Belgique explained the disputed transaction arose in 2001. Since the relationship with IOB had been ongoing since 1992, attempts were made to resolve the issue with the bank. In response to various letters written by Belgique, the bank gave verbal assurances that the issue would be sorted. The bank thus prolonged the matter without putting anything in writing. Ultimately, Belgique had a legal notice issued, after which the bank replied on August 27, 2005, disowned its liability.
Belgique contended that refusal to resolve the issue gave rise to a complaint. Filed on October 30, 2006, it would be within limitation. Belgique argued that even if the commission concluded there was a delay in filing the complaint, it should be condoned in view of the ongoing correspondence.
IOB opposed the application.
In its judgment on March 16, 2015, delivered by V K Jain for the Bench with B C Gupta, the commission noted Belgique sent a letter to IOB on September 18, 2001, in which legal action for compensation had been threatened, and this was followed with reminders. The commission observed that cause of action for deficiency in service arises when deficiency occurs or when it comes to the knowledge of the consumer, whichever is later. Here, Belgique was aware of the deficiency and had threatened legal action as early as in 2001. The two-year limitation period expired on August 18, 2003. There is no plausible explanation why legal action, though threatened, was not initiated till 2006.
The commission did not agree that limitation would run from the date of denial of liability by the bank. A complaint cannot be considered to be within limitation merely because liability is not denied, as such an interpretation would extend the limitation indefinitely when a party remains silent. Once the period of limitation has started to run, a subsequent reply that the matter is under scrutiny would not extend it. Only an admission of liability would extend the limitation period.
The commission observed this interpretation was in consonance with the Supreme Court's judgment in State Bank of India v/s BS Agriculture Industries, where the apex court had set aside concurrent judgment of the district consumer forum, state commission and the national commission, and had ruled that correspondence does not extend the period of limitation.
The commission concluded there was no justification in simply corresponding with the bank, awaiting rejection. It refused to condone the delay. The complaint was accordingly dismissed as being time-barred.
Consumers must, therefore, be vigilant about exercising their rights. Waiting for a long time for a response from the other side could prove disastrous to litigation.
The author is a consumer activist
M Sivaraj's Belgique Fashions had exported garments to an Italian buyer in Milano in January 2001. There were four separate bills for this shipment. The export documents were negotiated through Indian Overseas Bank (IOB). These were to be released to the buyer within 120 days from the date on the bill of lading.
IOB sent the documents to Bank Credito Italiano for collecting payment from the buyer. The buyer was entitled to a 10 per cent discount if the bill was paid within 120 days. Since the buyer failed to make the payment by the due date, the discount was cancelled. The buyer later paid the value of three bills for which the Italian bank wrongly allowed a 10 per cent discount, while the amount of the fourth bill was not paid at all. Yet, IOB permitted the Italian bank to hand over all the documents to the buyer.
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Belgique Fashions held IOB negligent for the loss caused of Rs 3,74,64,930. A complaint was filed before the National Consumer Disputes Redressal Commission on December 30, 2006, for claiming this amount, along with interest, compensation and costs. The national commission summarily dismissed the complaint as time-barred. The order was challenged before the Supreme Court, which observed that such dismissal without considering the delay condonation application was not justified. The Supreme Court remanded the complaint to the national commission, to consider the delay condonation application after issuing a notice to the bank and considering its submissions.
Belgique explained the disputed transaction arose in 2001. Since the relationship with IOB had been ongoing since 1992, attempts were made to resolve the issue with the bank. In response to various letters written by Belgique, the bank gave verbal assurances that the issue would be sorted. The bank thus prolonged the matter without putting anything in writing. Ultimately, Belgique had a legal notice issued, after which the bank replied on August 27, 2005, disowned its liability.
Belgique contended that refusal to resolve the issue gave rise to a complaint. Filed on October 30, 2006, it would be within limitation. Belgique argued that even if the commission concluded there was a delay in filing the complaint, it should be condoned in view of the ongoing correspondence.
IOB opposed the application.
In its judgment on March 16, 2015, delivered by V K Jain for the Bench with B C Gupta, the commission noted Belgique sent a letter to IOB on September 18, 2001, in which legal action for compensation had been threatened, and this was followed with reminders. The commission observed that cause of action for deficiency in service arises when deficiency occurs or when it comes to the knowledge of the consumer, whichever is later. Here, Belgique was aware of the deficiency and had threatened legal action as early as in 2001. The two-year limitation period expired on August 18, 2003. There is no plausible explanation why legal action, though threatened, was not initiated till 2006.
The commission did not agree that limitation would run from the date of denial of liability by the bank. A complaint cannot be considered to be within limitation merely because liability is not denied, as such an interpretation would extend the limitation indefinitely when a party remains silent. Once the period of limitation has started to run, a subsequent reply that the matter is under scrutiny would not extend it. Only an admission of liability would extend the limitation period.
The commission observed this interpretation was in consonance with the Supreme Court's judgment in State Bank of India v/s BS Agriculture Industries, where the apex court had set aside concurrent judgment of the district consumer forum, state commission and the national commission, and had ruled that correspondence does not extend the period of limitation.
The commission concluded there was no justification in simply corresponding with the bank, awaiting rejection. It refused to condone the delay. The complaint was accordingly dismissed as being time-barred.
Consumers must, therefore, be vigilant about exercising their rights. Waiting for a long time for a response from the other side could prove disastrous to litigation.
The author is a consumer activist