Caselaw Banking

Consumer Case Laws Series-4
CASE LAWS
ON
BANKING
S.K. SHARMA
SUSHILA NARANG
Department of Consumer Affairs, Government of India

in association with
Indian Institute of Public Administration, New Delhi
Case Laws on Banking
S.K. Sharma
Senior Advocate
Supreme Court of India
New Delhi
and
Sushila Narang
Advocate
New Delhi
logo
Indian Institute of Public Administration

New Delhi
ii
Consumer Case Laws Series-4
Series Editors :
S.S. Singh
Rakesh Gupta
Sapna Chadah
© Indian Institute of Public Administration, New Delhi

2008
Price Rs. 100
Published under aegis of consultancy assignment. Promoting Involvement of

Research Institutions/Universities/Colleges, etc., in Consumer Protection and
Consumer Welfare
Sponsored by : The Department of Consumer Affairs, Ministry of Consumer Affairs,

Food and Public Distribution, Government of India.
Published by Indian Institute of Public Administration, New Delhi and Printed at

New United Process, A-26, Naraina Industrial Area, Ph-II, New Delhi, Ph. 25709125
PRE
PREFFACE
Banking is the backbone of economy—trade, commerce and business cannot
survive without extensive banking facilities. In a world driven by the market forces
and governed by the vicissitudes of trade and commerce, banking as an institution,
has assured unprecedented importance. In the era of liberalisation, privatisation
and globalisation, the banking sector has started gearing up to face new challenges.
Several measures have been taken and new and latest services have been started in
the Indian Banking industry to meet the new challenges which include e-banking,
phone banking, plastic money, entry of banks into mutual funds and insurance
sector and many new kind of services. Banking is no longer confined to the
metropolitan cities and larger towns but has spread into the remotest corners of
the country. The switchover from the class banking to the mass banking has on the
other side created several problems—there is a steady increase in the frauds and
deterioration in banking services and efficiency.
Consumer Protection Act is one of the beneficial legislations enacted by the
Parliament with a view to provide better protection to the consumers. Section 2
(1)(g) of the Act defines deficiency in the service and the concept of service is defined
under Section 2(1 )(o) of the Act. Banking Service is one of the services covered under
the Consumer Protection Act. It may include receiving deposits in various accounts
and schemes, lending money, providing agency services e.g. payment of premium
against insurance policy, locker services, debit and credit cards, bank guarantees,
bank drafts etc. Deficiency in respect of any service provided by the Bank may be
brought before the Consumer Forums / Commissions.
Grievances of consumers from banking services are piling up in District
Consumer Forums, State Consumer Disputes Redressal Commissions and National
Consumer Disputes Redressal Commission. Redressal of these grievances has also
brought to fore several original and innovative perspectives on benchmarks and
standards for banking services.
The cases included in this compilation are those adjudicated by the Supreme
Court of India and National Consumer Disputes Redressal Commission between
2000-2007. This brings a summary of almost all the leading consumer cases of this
important banking service and reflects the expectations of courts as well as
consumers from the banking sector and is meant for the benefit of the consumer
and information of others concerned, including service providers, consumer activists
and legal practitioners.
iv
We are indeed grateful to the Department of Consumer Affairs (Government

of India) particularly Shri Yashwant Bhave, Secretary for his abiding trust and
confidence in IIPA. We are also thankful to Shri Rakesh Kacker, Additional Secretary
and Shri Sanjay Singh, Joint Secretary for their valuable suggestions and
encouragement. We are indeed grateful to Shri G.N. Sreekumaran, Director (CWF)
for his active support, help and advice. We also express our sincere thanks to other
officers of the Department and other members of the Evaluation Committee and
Monitoring Committee under the project respectively.
We express heartfelt thanks to the management of IIPA especially Shri T.N.
Chaturvedi, former Governor of Karnataka and Chairman, Executive Council, Dr.
Yogendra Narain, Chairman Standing Committee for their keen interest,
encouragement and constructive suggestions. Shri B.S. Baswan, Director IIPA has
always been supportive and helping. We are indeed thankful to him. We are also
thankful to Shri Sunil Dutt, Publication Officer for his keen interest in the publication
of the series.
Before concluding, a word of sincere gratitude towards the Project Director
Prof. S.S. Singh whose profound passion for the consumer movement is a source of
inspiration for the whole team. Shri Rakesh Gupta, Associate Project Director and
Ms Sapna Chadah, Assistant Professor were actively associated and involved with
this compilation and rendered valuable suggestions for making the work
comprehensive.
S. K. Sharma
Sushila Narang
LIST OF CASES
Pages
Preface iii
S.No. Name of Cases Case Volume Number
1. Canara Bank v. K.S. Seetharama III (2007) CPJ 68 (NC) 1
2. State Bank of India v. Anand Prakash III (2007) CPJ 95 (NC) 3
3. Kamlesh Kumar (NRI) v. Allahabad Bank II (2007) CPJ 45 (NC) 4
4. Union Bank of India & Anr. v. State Bank of II (2007) CPJ 60 (NC) 5
India & Ors.
5. Jhunjhunu Primary Land Development II (2007) CPJ 261(NC) 6
Bank & Anr. v. Ganpat Ram & Ors.
6. Allahabad Bank v. Ravindra Flour Mills Pvt. Ltd. I (2007) CPJ 60 (NC) 8
7. Bihar State Sugar Corp. Ltd. v. State Bank of I (2007) CPJ 91 (NC) 9
India & Ors.
8. Neelkantha Jute Dealers v. Central Bank of I (2007) CPJ 117 (NC) 11
India & Anr.
9. Central Bank of India v. Om Sons Wires Pvt. Ltd. I (2007) CPJ 151 (NC) 13
10. Allahabad Bank v. Shiv Swarup Srivastav I (2007) CPJ 221(NC) 15
11. Allahabad Bank v. JDS Electric Company I (2007) CPJ 270 (NC) 17
12. Canara Bank v. New India Assurance Co. Ltd. & Anr. IV (2006) CPJ 56 (NC) 18
13. Shanti Devi v. Bhojpur Rohtas Gramin Bank IV (2006) CPJ 83 (NC) 20
14. American Express Bank Ltd. v. Narender Kumar Rai IV (2006) CPJ 161 (NC) 21
15. Punjab National Bank v. Lt. Col. D.R. Aggarwal IV (2006) CPJ 165 (NC) 23
16. Mahender Singh Siwaeh & Anr. v. Punjab & IV (2006) CPJ 231 (NC) 24
Sind Bank & Anr.
17. P.S. Sawhney v. Canara Bank & Anr. IV (2006) CPJ 278 (NC) 26
18. Jason Links (India) Ltd. v. State Bank of India & Anr. IV (2006) CPJ 328 (NC) 28
19. Standard Chartered Bank v. Dr. B.N. Raman III (2006) CPJ 1 (SC) 30
20. Bank of India & Ors. v. Chinmay Barik & Ors. III (2006) CPJ 29 (NC) 32
21. Ashok Kumar Kalra v. Allahabad Bank III (2006) CPJ 34 (NC) 33
22. Tirupati Agencies v. HSBC Bank & Ors. III (2006) CPJ 37 (NC) 34
23. HDFC Bank Ltd. v. Kishore R. Worah III (2006) CPJ 40 (NC) 36
24. Om Prakash v. Allahabad Bank, Daliganj Branch, III (2006) CPJ 418 (NC) 38
Lucknow
25. Debabrata Mukherjee v. Allahabad Bank & Ors. III (2006) CPJ 423 (NC) 39
vi
26. Canara Bank v. Agnes D’mello I (2006) CPJ 8 (NC) 41

27. Mahad Co-operative Urban Bank v. United India I (2006) CPJ 44 (NC) 43
Insurance
28. Allahabad Bank, Bhopal v. Ranbir Sing Shadoriya I (2006) CPJ 94 (NC) 44
29. ING Voyage Bank Ltd. v. V. Y.G. SreeRam Setty I (2006) CPJ 182 (NC) 45
30. Allahabad Bank v. Chandigarh Construction IV (2005) CPJ 126(NC) 47
Co. Pvt. Ltd.
31. C.L. Khanna v. Dena Bank IV (2005) CPJ 139(NC) 48
32. Central Bank of India & Anr. v. Heera Soni & Ors. III (2005) CPJ 25(NC) 50
33. Deep Chand Jain v. Bank of Baroda & Ors. III (2005) CPJ 51(NC) 52
34. Col. D.S. Sachar (Retd.) v. Punjab & Sind Bank II (2005) CPJ 130(NC) 53
35. Zila Sahkari Bank Ltd. v. U.P. Police Avas Nigam Ltd. I (2005) CPJ 89(NC) 54
36. Anumati v. Punjab National Bank IV (2004) CPJ 21(SC) 56
37. Punjab & Sind Bank v. SukhRaj Bajwa & Anr. III (2004) CPJ 1(NC) 59
38. Prem Baboo v. Branch Manager, Farakhabad III (2004) CPJ 18(NC) 60
Gramin Bank & Ors.
39. Swadeshi Polytex Ltd. v. Central Bank of III (2004) CPJ 47(NC) 62
India & Ors.
40. Ratnachand Morakar v. Bank of Maharashtra, II (2004) CPJ 25(NC) 64
Bombay
41. Thiruchirapalli Multipurpose Social Service II (2004) CPJ 62(NC) 66
Society v. Canara Bank
42. ABN Amro Bank v. Sangeet Srivastava II (2004) CPJ 289(NC) 68
43. Standard Chartered Grindlays Bank Ltd. v. I (2004) CPJ 13(NC) 70
H.B. Impex Pvt. Ltd.
44. Smt. Manorama v. Chairman, Punjab National Bank I (2004) CPJ 56(NC) 72
45. India Export Corporation & Ors. v. Chairman-cum IV (2003) CPJ 45(NC) 73
Managing Director, Syndicate Bank & Ors.
46. State Bank of Patiala v. Rajender Lal & Anr. IV (2003) CPJ 53(NC) 75
47. CCI Chambers Co-op. Housing Society Ltd. v. III (2003) CPJ 9 (SC) 77
Development Credit Bank
48. Abdul Razak & Anr. v. South Indian Bank III (2003) CPJ 20(NC) 79
49. Poppeys Valley Hotel Pvt. Ltd. v. Citi Bank III (2003) CPJ 133(NC) 81
50. Archana M. Kamath v. Canara Bank & Anr. II (2003) CPJ 7(NC) 83
51. Om Prakash Sahni v. State Bank of India & Ors. II (2003) CPJ 100(NC) 85
52. K. RamaIyer & Ors. v. Indian Overseas Bank II (2003) CPJ 143(NC) 86
vii
53. Principal, Guru Nanak Girls College I (2003) CPJ 171(NC) 88

v. Punjab & Sindh Bank
54. DOSON Chemical Pvt. Ltd. I (2003) CPJ 214(NC) 89
v. United Bank of India & Ors
55. Memon Co-op. Bank Ltd. v. Anwar D. Ahmedabadi I (2003) CPJ 285(NC) 91
56. Canara Bank v. Naresh Kumar Jain & Anr. III (2002) CPJ 13(NC) 93
57. Andhra Bank v. Vishwapriya Financial Service & III (2002) CPJ 21(NC) 94
Securities Ltd.
58. M.P. Minerals Ltd. v. Bank of India & Ors. III (2002) CPJ 25(NC) 96
59. Aryan Agro Spice (P) Ltd. v. III (2002) CPJ 41(NC) 97
Saraswat Co-op. Bank. Ltd. & Anr.
60. Indian Overseas Bank v. Klebert Pierre III (2002) CPJ 77(NC) 98
61. Indo Steels v. Central Bank of India III (2002) CPJ 152(NC) 99
62. Commander Rakesh Sharma III (2002) CPJ 165(NC) 100
v. Punjab National Bank
63. Hanuman Hosiery v. Canara Bank III (2002) CPJ 253(NC) 101
64. State Bank of India v. Ugam Singh III (2002) CPJ 267(NC) 102
65. State Bank of India v. Mohinder Sing & Ors. III (2002) CPJ 275(NC) 104
66. Virender Narang v. M/s Syndicate Banks Ors III (2002) CPJ 279(NC) 105
67. Mrs. Anumati v. Punjab National Bank III (2002) CPJ 280(NC) 106
68. United Commercial Bank v. Smt. Anita Airan III (2002) CPJ 371(NC) 107
69. Topline Shoes Ltd. v. Corporation Bank II (2002) CPJ 7 (SC) 109
70. Canara Bank v. C.D. Patel II (2001) CPJ 19 (NC) 111
71. D.K. Lalwani v. The President, Indian Bank II (2002) CPJ 20 (NC) 113
Mutual Fund & Another
72. Mihir Kumar Mukherjee II (2002) CPJ 38 (NC) 114
v. Branch Manager, United Bank of India
73. Patna Co-operative Bank Ltd. v III (2002) CPJ 23(NC) 116
Hasmukh B. Shah
74. Arvind Sahni v. Punjab & Sind Bank III (2000) CPJ 8(SC) 118
75. Vimal Chandra Grover v. Bank of India II (2000) CPJ 11 (SC) 119
76. Bade Krishnaveni v. Canara Bank III (2000) CPJ 35(NC) 121
77. American Express Bank Ltd. T.R.S. I (2000) CPJ 1 (NC) 122
v. Rajesh Gupta & Ors.
78. Corporation Bank v. Navin J. Shah 1(2000) CPJ 13(SC) 124
Annexure 126
Case Laws on Banking 1
CanaraB
Canara ank vs. K
Bank .S
.S.. SSeee t har
K.S am
haram
amaa
III (200 7) CP
(2007) CPJJ 668
8 (NC)
(NC)
Fac
actts
Complainant, owner of Coffee estate, secured a loan from the Petitioner Bank,
Suntikoppa Branch under Kisan Credit Card Scheme. The complainant also
borrowed Plantation Development Loan from the Petitioner Bank. The total
amount due with interest in the account of complainant was Rs.1,79,698/- on
28.10.2002 in KCCS and Rs.4,96,113/- in PDL account. Petitioner Bank deposited
Rs.6,75,811/- to the loan account of the complainant with an intention to avail the
benefit of the special coffee Term Loan Scheme announced by the Government
notification. As per this notification the parties who would pay interest on or
before June 2005 are entitled to rebate of 2/3 portion of the interest. The
complainant paid Rs.2,65,642/- towards interest which accrued for the period from
1.4.2000 to 31.3.2005 in order to avail the package of relief. The Petitioner Bank
denied rebate to the complainant and stated that complainant is not entitled to
such a rebate. Therefore, complainant filed complaint before the District forum
claiming Rs.88,547/- from the bank and the Coffee Board. Before the District forum
petitioner bank contended that the scheme by the government is applicable to
special Coffee Term Loan account and since the complainant repaid his entire loan
on 3.4.2005 prior to the announcement of the scheme he is not entitled for the
same. The District forum allowed the complaint. On appeal, the State Commission
dismissed the appeal, confirming the order passed by the District forum. Against
the order of the State Commission, Petitioner bank filed Revision Petition before
the National Commission.
Issues
Whether Bank is liable to refund the excess amount of interest paid by the
complainant in view of the scheme announced by the Government of India for the
benefit of coffee growers?
Held
The National Commission rejected the submission advanced by the Counsel
for the Revision Petitioner that as per the scheme the borrowers were to pay 1/3rd of
the interest due to the creditor bank, remaining 2/3rd interest burden was to be
shared equally by the revision petitioner bank and the Government of India. Further,
that the government scheme was with prospective effect from the date of
2 Case Laws on Banking
announcement and is applicable only to loanee farmers/planters whereas

respondent had already repaid his full loan and hence he was not the loanee farmer.
The National Commission held that scheme announced by the Government of India
is a welfare scheme for the benefit of the Coffee growers wherein the grower, the
bank and the Coffee Board have to share equally the total interest burden and
therefore, liable to refund the sum of Rs. 86,547/-.
Revision Petition dismissed.
State Bank of India vs. Anand Prakash

III (2007) CP
(2007) CPJJ 95 (NC)
(NC)
Fac
actts
Complainant was maintaining an account with Petitioner Bank. Complainant
deposited one payee account cheque in his account bearing No. 807777 for
Rs. 1,47,500/- drawn on Matunga Bazar Branch at Mumbai for collection. As the said
cheque was not credited in his account complainant made various applications to
the Petitioner Bank. Complainant when got no response he filed a complaint before
District forum. The matter was contested by the Petitioner Bank taking defence that
the cheque in question was sent on 10.4.1999 it self by the Petitioner to its service
Branch at Mumbai through Madhur Courier Service. Service Branch of Petitioner
sent the cheque to the Branch for collection and the credit of the amount of cheque
could be given only after receipt of credit issued. Petitioner further submitted that
they had been taking matter constantly with service branch, respondent No.2 and
since the cheque was lost by Respondent No.2, the Petitioner cannot be held liable for
payment thereof. The District forum rejecting the submission of the Petitioner Bank
allowed the complaint. Against the order of District forum Petitioner Bank approached
the State Commission, which disposed the appeal by reducing the rate of interest
from 18 per cent to 12 per cent. Against this order of the State Commission Petitioner
Bank filed Revision Petition before the National Commission.
Issue
Whether the drawee Bank can shift its liability for loss of cheque and payment
of amount thereof on the Bank on which it was drawn?
Held
Petitioner has not adduced any evidence to show that the cheque in question
was forwarded by its Service Branch at Mumbai to Respondent No.2. In absence of
any such evidence and the stand taken by the Respondent No.2 in letter dated 20.2.98,
Petitioner cannot shift liability for loss of cheque and payment of the amount thereof
on Respondent No.2. Since the cheque was handed over for collection by Respondent
No.1, complainant to the Petitioner Bank it cannot evade liability for payment
thereof with interest. Respondent No.1, complainant was never informed in writing
of the loss of cheque by the Petitioner Bank.
Revision Petition dismissed with cost.
Kamlesh Kumar (NRI) vs. Allahabad Bank

II (2007) CP
(2007) CPJJ 45 (NC)
(NC)
Fac
actts
Complainant, a NRI deposited $3124.05 on 21.11.92 with the respondent Bank
@10% p.a. interest for two years and maturity value of deposit was $3797.28.
Complainant further deposited $10,000/- on 19.4.93 on an interest of 8% p.a. for 3
years. He further deposited $10,000/- with the respondent Bank @8% p.a. interest for
2 years. Maturity value of these two deposits was $11,716.59 each. Complainant was
made short payment of $118.53 in respect of earlier deposit maturing on 21.11.94 and
short payment of $371.18 was made by respondent bank on remaining two deposits.
Complaint was filed by complainant alleging deficiency in service against the
respondent Bank. The District forum allowed the complaint. The State Commission
disposed of appeal with a direction to the respondent Bank to calculate rate of
interest at the rate prescribed by RBI from the date when the branch office received
the circular and not at the prior point of time. Against this order complainant filed
Revision Petition before the National Commission.
Issues
Whether Bank is liable to pay interest rate expressed in receipts though the
same are in contravention to RBI instructions issued from time to time?
Held
Before the National Commission it was submitted by Petitioner that respondent
bank is liable to pay contractual rate of interest as mentioned in 3 FDRs for all the
time whereas respondent bank submitted that Petitioner is not entitled to interest
over and above the rate(s) fixed by RBI. The National Commission after hearing
both the parties held that in all the three FDRs towards right hand side it is printed
that interest rate expressed in receipts is subject to RBI instructions that may be
issued from time to time. This condition is binding on Petitioner. Therefore, despite
higher rate of interest and maturity value of deposits having been indicated in 3
FDRs, the petitioner is entitled to interest on the deposit maturing on 21.11.1992
@8.75% as against 10 per cent and @7.25 per cent instead of eight per cent p.a. in
respect of remaining two deposits. There was no deficiency in service on the part of
the respondent Bank.
Union B
nio ank of In
Bank Inddia & Anr
Anr.. vs. SStt ate B ank of In
Bank Inddia & Ors
Ors..
II (2007) CP
(2007) CPJJ 60 (NC)
(NC)
Fac
actts
Late Mr. Rajnish Awasthi with a view to help Respondent No.3 made a draft of
Rs.25,000/- from SBI, Dharamshala payable at SBI, New Delhi. This draft was sent by
registered post by Late Mr. Rajnish Awasthi to Mr. Naresh Sharma but it was never
delivered. On approaching Postal authorities Late Mr. Ranjnish was asked to make
an application for grant of compensation. Late Mr. Rajnish made on application
but of no avail. Thus, a complaint was filed before the District forum. The District
forum passed the order of compensation against both the respondents namely,
bank and postal department. Both Postal department and Bank filed appeals. The
State Commission dismissed both the appeals. Against dismissal order postal
department filed present Revision Petition before the National Commission.
Issue
Whether Postal department, in view of Sec.6 of Indian Post Office Act, 1898, can
be held liable for deficiency in service?
Held
The National Commission accepted argument of petitioner that under Section
6 of the Indian Post Office Act, 1898, they cannot be held liable unless a willful
negligence is alleged by the complainants. Since there was no allegation of willful
negligence in the complaint therefore Petitioner cannot be held liable for any loss/
non-delivery.
Revision Petition allowed.
Jhunjhunu Primary Land Development Bank &

Anr
Anr.. vs. G anp
anpa
Ganp at R am & Ors
Ram Ors..
II (2007) CP
(2007) CPJJ 261(N
261(N C)
1(NC)
Fac
actts
Complainants belonging to scheduled castes, with a view to buy a tractor,
obtained a loan from the Petitioner bank to the extent of Rs.1,60,000/-. The Petitioner
Bank made payment of loan amount to the dealer of the Swaraj Tractor and rest of
the payment of the tractor was made by the complainants. Despite making of
payment the dealer did not make the delivery of the tractor to the complainants.
Complainants brought the matter to the knowledge of the Petitioner bank but
when the same was not resolved, complainant filed complaint before the District
forum alleging deficiency in service against the Petitioner Bank and others on the
ground that despite making payment, the delivery of tractor was not given to them,
instead possession of the tractor was delivered to some other person belonging to
Jat Caste by making a forged bill in the name of the complainants. The District
forum after hearing parties allowed the complaint, directing the petitioner bank
not to recover any amount of loan from the complainants as they did not receive
the possession of the tractor and further to pay Rs.61655/- to the complainant which
was deposited by the complainants with Petitioner Bank. Aggrieved by this order,
two separate appeals were filed before the State Commission by Petitioner Bank
and Respondent No.4 which were dismissed by the State Commission. Against this
dismissal order Petitioner Bank filed Revision Petition before the National
Commission.
Issues
Whether the bank is liable for deficiency in service for not ensuring the delivery
of the funded goods to the beneficiary?
Whether the Bank is liable to reimburse the complainants to the extent of
Rs.61,655/-?
Held
The National Commission disposed of Revision Petition filed by the Petitioner
bank by modifying order passed by lower fora holding that since the complainants
who belong to scheduled castes community, have very little knowledge/literacy
levels. In such circumstances, the onus lies on the bank to ensure that the goods
being funded by them are delivered to the beneficiary. When the complainants
belong to a special community and not known to be knowledgeable in this regard.
In view of above, there is no merit in the revision Petition.
However, the National Commission reduced the liability of the Petitioner Bank.
The National Commission held that the liability of the Petitioner bank would be
limited to an amount of Rs.49,005/- only and not Rs.61,655/- as Rs.12,650/- was the
share money given by the complainants to become members of the bank which
they continue to be till today and are getting the return as a share holder.
Order of tthe
Ord he SStt ate Commi
Co mmisssion mo
sio mod ifiied, R
dif Reev isi
sioon PPeet it
itiion d
diisp
spoosed of
of..
Al
Alllahab ad B
ahabad ank vs. R
Bank Raav in
indd ra FFllour M il
Mil ls PPvv t . Ltd.
ills
I (2007) CP
(2007) CPJJ 60 (NC)
(NC)
Fac
actts
Complainant obtained cash credit limit of Rs.60 lacs in 1999 from Petitioner
Bank. Complainant repaid due amount in the account on 9.3.2000 and asked the
Petitioner to issue ‘No Dues Certificate’. The Petitioner Bank charged Rs.19,713/-
towards Penal interest @ two per cent from the complainant. Complainant filed
complaint seeking refund of penal interest charged. The District forum allowed
the complaint. Appeal of the Petitioner Bank was dismissed by the State
Commission. Against this dismissal order Petitioner Bank filed Revision Petition
before the National Commission.
Issues
Whether Bank is liable for deficiency in service for charging penal interest @2
per cent on the basis of instructions contained in circular No.3229 dated 9.12.1999?
Held
The National Commission rejected the contention of the petitioner bank
whereby it contended that the penal interest was charged on the basis of instruction
contained in circular No.3229 dated 9.12.1999 and hold that no copy of said circular
was supplied to the respondent neither any notice was sent to the respondents
drawing their attention to the circular. In absence of supplying copy of said circular
or drawing attention of respondents through notice/letter thereto the Petitioner
Bank was not legally entitled to charge Penal interest at the said rate from the
respondent.
Bihar SStt ate Sugar C

Sugar Coor p. Ltd. vs. SSttate B ank of In
Bank d ia & Ors
Ind Ors..
I (200 7) CP
(2007) CPJJ 91 (NC)
(NC)
Fac
actts
Complainant corporation wholly owned by the State of Bihar, decided to take
an insurance policy for the assets of Lauriya Sugar Factory vide its letter dated
10.12.1996 from the Oriental Insurance Co Ltd. who were earlier also insuring the
assets of the complainant corporation for over a decade on year to year basis. The
Oriental Insurance Co. issued insurance policies dated 28.03.1997 w.e.f. 23.3.1997. On
17.4.1997 at about 8.00 am molasses tank No.2 of Lauriya unit got burst accidentally
resulting into loss of molasses and also affected the Sugar products stored adjacent
and nearby places. Complainant Corporation lodged its claim with insurance
company on 11.4.1997. On 6.5.1997 complainant got telephonic information that the
cheque issued for premium was returned by Bettiah branch of respondent Bank on
the ground that there was no balance at Lauriya account. The cheque was
dishonoured despite sufficient fund in the account due to blunder of officer of
respondent Bank. Since there was no payment of premium insurance company
repudiated the claim of complainant on the ground that there was no subsisting
policy. Complainant corporation filed the present complaint before the National
Commission alleging that cheque was wrongly and negligently dishonoured by the
respondent bank and the complainant is entitled to the loss with interest.
Issues
Whether complainant is allowed to recover damages from the Bank for not
honouring the cheque despite having sufficient amount?
Held
Respondent bank, before the National Commission, admitted that the cheque
was dishonoured despite there being sufficient funds in the account of complainant
enabling bank to honour the cheque and for payment to be made. However, it is
submitted that the policy for which the cheque was issued was not covering the
damage with regard to explosion of molasses tanks. The National Commission on
question that whether the complainant is entitled to the reimbursement as claimed
held that since for the loss suffered by the complainant, there was no insurance
coverage. So dishonour of cheque by the bank has not resulted on loss of
reimbursement from the Insurance Company. Therefore, it would be difficult to
arrive at the conclusion that complainant is entitled to recover the damages suffered
by it from the Bank which has negligently dishonoured the cheque despite sufficient
funds in the account of the complainant. Even if the Insurance policy covers the
damage to molasses and if the cheque for premium is dishonoured the Insurance
Company would not be liable to reimburse the complainant. That means a wrongful
dishonour of the cheque would result in loss to Petitioners for more than Rs.25 lacs.
It is, therefore, just and reasonable to award punitive damages for a sum of Rs. five
lacs, so that the banks in general would keep in mind the statutory norms of verifying
properly, before dishonouring the cheque particularly cheque of reputed bodies,
including the Government and semi-government bodies. In present case, it was
known to the officers of the State bank the cheque was issued by the corporation
owned by the State Government. Before dishonouring the same, minimum care
ought to have been taken not only by the concerned clerk but also by higher officers.
Compensation granted.
mpllaint d
Comp diisp
spo acccording
osed of ac ingly
ly..
ly
Neel kant ha Jute De

antha al
Deal ers vs. C
alers ent
entrral B
Cent ank of In
Bank Inddia & Anr
Anr..
I (200 7) CP
(2007) CPJJ 11
1177 (NC)
(NC)
Fac
actts
Respondent Bank issued a letter of credit on 1.1.1992 for a sum of Rs.6,50,000/- to
make payment of invoices of jute to be supplied to Respondent No.2. The last date
of presentation of documents was fixed for 24.3.1992 and thereafter extended to
24.6.1992. The complainant invoked the letter of credit and the bills were submitted
on 22.9.1992. Out of eight bills, only one bill was paid and seven bills were returned by
letter dated 21.10.1992 which was received on 29.10.1992. These seven bills were
returned on the ground of cuttings and overwritings within 24 hrs of receipt of the
letter, complainant submitted fresh bill receipts and requested for payment but the
respondent bank refused to honour the same on the ground that letter of credit
had already been expired on 24.9.1992. Complainant filed complaint before the State
Commission. By majority of two members, the State Commission held that there
was no deficiency as undisputed documents were honoured but alteration in the
bill created doubt and thus, dismissed the complaint, whereas the President of the
State Commission took the view that on the basis of documents filed, it was not
possible to decide the point of deficiency in an effective manner and rejected the
complaint taking view that the matter could be dealt by civil court. Feeling aggrieved
by the dismissal of the complaint, complainant filed present appeal before the
National Commission.
Issued
Whether a Bank can be held liable for deficiency for not following the terms of
UCPDC?
Held
The National Commission held that if the respondent Bank suspected the
genuineness of the invoices only on the basis of suspicion, it could not have rejected
in terms of the judgment of Supreme Court. If the documents sent on 17.9.1992 &
22.9.1992 were received by the Central Bank of India, the documents were presented
in stipulated time i.e. before 24.9.1992 and if all the parties were at Calcutta, they
could have been easily contacted on phone or on fax etc. instead of waiting for
nearly a month before sending the letter of credit and rejecting the documents on
21.10.1992. The State Bank of Bikaner and Jaipur had its office at 14 NS Road, Calcutta
to which the letter dated 21.10.1992 was addressed. There was definitely deficiency
in the aforesaid circumstances. The bank could not be allowed to take advantage
of its own wrong that had not followed the terms of UCPDC particularly clause (d)
Regulation 16 as per which a Bank is supposed to act on the documents which
appear on their face to be in accordance with the terms and conditions of a credit.
The Central Bank of India was surely deficient in rendering service for not following
Section 16(d) of UCPDC and delaying the matter unnecessarily by rejecting the claim,
not on account of fraud, but on unreasonable and irrelevant grounds, not germane
to Section 16(d) of UCPDC. Further, seeing the nature of the transaction coupled
with extensions of time twice and clearance of one of the eight bills, it becomes
evident that for all practical purposes the time was not taken to be essence of the
contract. Supposing, the Central Bank Manager had any doubt, it is not its case that
the Bank contacted the Ganges Mfg. Co. Ltd. or the complainant on phone or by
sending fax, etc., as was expected from the Bank. Thus, there was deficiency in
rendering banking service by showing utter lack of promptness in this regard, leading
to subsequent problems.
Appeal allowed.
Cent
entrral B ank of In
Bank Inddia vs. Om SSo
ons W ir
iree s PPvv t . Ltd.
I (200 7) CP
(2007) CPJJ 11551 (NC)
(NC)
Fac
actts
Respondent No.2, Modi Bandhu purchased ferrous and non-ferrous metal and
opened inland letter of credit with Central Bank of India in favour of complainant
M/s Om Sons Wire Industries Pvt. Ltd. to supply the said metal. Complainant supplied
the aforesaid goods which were received by Modi Bandhu and an endorsement to
that effect was made by it on the Challan as well as on the Invoice. Complainant
handed over the documents alongwith letter of credit to its banker, namely Oriental
Bank of Commerce for negotiation and encashment of the letter of credit on
20.10.1993. On 23.10.1993, the appellant Bank refused to honour letter of credit on the
ground that complainant did not have complied with any of the instruction of the
said inland letter of credit. In order to avoid unnecessary litigation, the complainant-
respondent instructed its Bank to represent the document again. Accordingly,
negotiating bank again presented the documents alongwith its letter dated 1.12.1993
but the appellant Bank again refused to honour the letter of credit and returned
the documents with letter dated 21.12.1993 on the ground that the documents
contain many discrepancies and informed the complainant that they can handle
bill of the complainant on collection basis. Complainant filed complaint before the
State Commission. The State Commission directed the appellant Bank to pay
Rs.4,92,208/- with interest 18 per cent p.a. Against this order, appellant bank filed
appeal before the National Commission.
Issues
Whether complainant is a ‘consumer’ within the meaning of Sec.2 (i) (d) of
Consumer Protection Act, 1986;
Whether the Act of Bank in not honouring L/C without any justified reason
amounts to deficiency in service?
Held
Appellant Bank assailed the order of the State Commission on the ground that
the documents were not submitted as per terms of credit and also that complainant
was neither a ‘Consumer’ nor there was any privity of contract between the parties.
The National Commission rejecting the contention of the appellant Bank held
that insofar as exclusion on the ground of availing banking services for commercial
purpose is concerned, since the consumer would include beneficiary of such services
other than the person, who hired or availed of the services for a consideration paid
or promised and thus he was consumer and was entitled to file the complaint.
Further, explanation to sub-clause (ii) of Clause (d) of Sec.2 (i) of the Act clarified
that exclusion on the ground of commercial purpose, would be applicable only to
goods and not to Services. After amendment-dated 15.03.2003 the position is changed
whereby it does not include a person who availed to such services for any commercial
purpose, but the same could not be applied with retrospective effect. Present matter
was filed before amendment and therefore could not be rejected by the Consumer
Fora on this ground.
It was held further that in cases of Letter of credit, Bank could not refuse
payment by taking vague pleas. The payment could be refused only if it would be
established case of fraud. Contentions raised in response to letter are insufficient to
refuse to make payment in terms of letter of credit.
Documents, plea taken by the bank and letter exchanged between the parties
indicate that official of Central Bank of India declined to honour the L/C unless
payment was received from Modi Bandhu and this would amount to deficiency in
service. Since the bank failed to pay amount and retained the amount of
Rs.4,92,428/- the Central Bank was liable to pay interest @12 per cent p.a.
Appeeal al
App alllowed ppar
arttly
ar ly..
Allahabad Bank vs. Shiv Swarup Srivastav

I (200 7) CP
(2007) CPJJ 2221(N
21(NC)
21(NC)
Fac
actts
Complainant invested Rs.35,000/- in a fixed deposit for a period of one year on
11.11.1992 with the Petitioner bank. After maturity period the Petitioner Bank refused
to pay the maturity amount. Complainant filed complaint before the District forum
praying for refund of maturity amount alongwith interest. Before the District
forum petitioner Bank submitted that complainant was also holding a saving
account with petitioner bank. Amount of Rs.20,000/- on 16.5.1991 and Rs.10,000/- on
10.2.1992 were not actually deposited in that account and the enteries made in pass
book and ledger book in regard to deposit of these two amounts were fabricated
with the help of one of its employee Sh. Ram Gopal Srivastava. Though he was not
authorized to receive or deposit money in cash but complainant in collusion with
said employee got the enteries of deposit of Rs.20,000/- & Rs.10,000/- made in the pass
book and ledger book and issued FDR of Rs.35,000/-. The said employee found to be
guilty and sentenced to undergo imprisonment in a criminal case. As on 11.11.1992
an amount of Rs.35,614.10 was lying in credit in the said account including the said
amounts and FDR of Rs.35,000/- was issued after transferring money from the saving
account. Thus, the liability to pay the amount denied as the transfer of money
from saving account was without consideration and the enteries of the said two
accounts made in the pass book and ledger book were fictious and the bank cannot
be held liable for the fraud committed by the employee and made to pay the awarded
amount. The District forum rejected the contention of Petitioner bank and held
liable for deficiency in service. On appeal, the State Commission dismissed the appeal.
Against dismissal order Petitioner bank filed the present Revision Petition before
Issues
Whether Bank is liable to pay the amount of the fixed deposit with interest
despite the fact that the fraud was committed by complainant in collusion with its
own employee?
Held
The National Commission held that in absence of evidence to the effect that
complainant got the fictious enteries of two amounts of Rs.20, 000/- and Rs.10,000/
- made in the pass book and ledger book and issued FDR of Rs.35,000/- in collusion
with said Ram Gopal Srivastava and the respondent not being a co-accused in the
criminal case 4609/94, the Petitioner Bank must be held to have failed to prove the
said assertion of collusion. Admission by Petitioner bank that Ram Gopal Srivastava
was working as a clerk on 16.5.1991 and 10.2.1992 and the period during which enteries
were made in the Pass book and ledger book maintained by the bank. He was also
working on the date when the FDR of Rs.35,000/- was issued. Receipt of amount of
Rs.30,000/- from respondent was admitted by Ram Gopal Srivastava as may be seen
from the judgment dated 12.7.1995. Thus, loss of Rs.30,000/- to the bank was caused
by Ram Gopal Srivastava by misappropriating that amount within the scope of
course of employment. After applying the ratio of Shyama Devi’s case which rather
supports the respondent, the Petitioner Bank is vicariously liable to pay the amount
of the fixed deposit in question together with interest.
Allahabad Bank vs. JDS Electric Company

I (200 7) CP
(2007) CPJJ 22770 (NC)
(NC)
Fac
actts
Complainant was sanctioned with cash credit facility of Rs.2,00,000/- on
14.2.1997 which was increased to Rs.3,50,000/- on 25.11.1998 by the petitioner bank.
To secure that facility complainant hypothecated the stocks of finished goods, semi-
finished goods, raw material, goods in process, plant and machinery/equipment,
etc. with Petitioner Bank. The Petitioner Bank from the very inception getting the
stocks and equipment, etc. insured and debiting the premium amount in the
account of respondent. Due to fire in the premises of the complainant, he suffered
loss of more than four lacs. Complainant filed complaint against the Petitioner
bank alleging deficiency in service as the Petitioner bank failed to insure the stock
and equipments of the complainant. Petitioner Bank contested the matter on the
ground that under hypothecation agreement it was the responsibility of the
complainant to take insurance of the hypothecated goods and after taking
insurance supply copy of policy to the bank. District forum allowed the complaint.
On appeal the State Commission dismissed the appeal. Against dismissal order
Allahabad Bank filed Revision Petition before the National Commission.
Issues
Whether the Bank is liable for deficiency in service in the circumstances when
under the hypothecation agreement loanee himself is required to take insurance
on hypothecated goods and supply the copy of policy to Bank?
Held
The National Commission after hearing both the parties came to the
conclusion that for preceding two years the stock and equipment, etc. were got
insured by the Petitioner Bank and premium amount debited in the account of
respondent. No notice was given calling upon the respondent to get the
hypothecated stocks and equipment, etc. insured directly for the subsequent year
in which occurrence took place. No illegality or jurisdictional error in the orders
passed by fora below holding petitioner bank to be deficient in service on ground of
its not having got insured the hypothecated stocks and equipments, etc.
CanaraB
Canara ank vs. N
Bank Neew In
Inddia A ssuran
ancce C
suran o. Ltd. & Anr
Co Anr..
IV (2006) CP
CPJJ 556
6 (NC)
(NC)
Fac
actts
Complainant was having a saving account with cheque facility with Sindri
Branch of the Petitioner Bank. Complainant issued a cheque of Rs.4916/- in favour
of Insurance Company towards premium for renewal of the policy for car on
29.4.2002. On 1.5.2002 Car of the complainant met with an accident. Complainant
lodged his claim with Insurance Company which was repudiated on the ground of
non-payment of premium. Complainant filed complaint before the District forum
alleging Deficiency in service against bank. Before District forum Petitioner Bank
contested the matter. The Bank submitted that on 29.4.2002 only a balance of Rs.
2/- was lying in the account of the complainant. Complainant deposited an amount
of Rs.4,916/- with the said branch of Bank on 2.5.2002. Cheque was presented to the
branch for payment/through clearance on 7.5.2002. After debiting an amount of
Rs.10/- towards service charges for violation of non-maintenance of minimum
balance, the balance in the saving account of the complainant was Rs.4,908/- and
therefore the said cheque was returned unpaid for insufficient fund. The District
forum while allowing the complaint directed the Petitioner Bank to pay
Rs.1,08,896/- to meet the repair cost of the damaged car and Rs. 60,000/- to meet the
medical treatment. On appeal, the State Commission Partly allowed the appeal.
Against that order Petitioner bank filed Revision Petition before the National
Commission.
Issues
Whether the act of bank in dishonouring the cheque issued by the customer
for not having maintaining minimum balance in his account amounts to deficiency
in service?
Held
The National Commission held that since the minimum balance was not
maintained in the account, amounts of Rs.10/- were debited on 31.01.2002, and again
Rs.10/- on 28.2.2002 and again Rs.10/- on 30.2.2002 thereby leaving the credit balance
of Rs.2/-. Further, an amount of Rs.4,916/- was deposited in cash on 2.5.2002 and after
debiting Rs.10/- towards service charges for not maintaining the minimum balance
on 2.5.2002 the balance lying in account was Rs. 4908/- obviously debiting the said
amounts as service charges by the bank was in conformity with instruction at
Sl.No.12.5.5 of the Manual. Thus, the stand taken by the bank that the balance on
7.5.2002 was Rs.4908/- has to be accepted. Therefore, bank cannot be held deficient
in service in not honouring the cheque dated 29.4.2002.
Shanti Devi vs. Bhojpur Rohtas Gramin Bank

IV (2006) CP
CPJJ 83 (NC)
(NC)
Fac
actts
The husband of the complainant opened one Bank account on 12.11.1997 in his
own name with the Respondent Bank. After few days, complainant was also joined
as an account holder with the mandate ‘either or survivor’. After some time due to
family dispute, both of them withdrew the mandate of ‘either or survivor’. After the
death of the husband of the complainant Bank asked for succession certificate in
order to allow operation of the account. Complainant filed complaint before the
District forum on the ground that the complainant could operate the account
alone being a survivor or being a joint account holder and the respondent bank
should not ask for succession certificate. The District forum directed the respondent
Bank to allow complainant to operate the account. Against the order of the District
forum respondent Bank filed appeal before the State Commission. The State
Commission allowed the appeal. Aggrieved by the order of the State Commission,
complainant filed Revision Petition before the National Commission.
Issues
Whether a Bank can be hold liable for deficiency in service in safeguarding its
own interest and asking the complainant for succession certificate?
Held
The National Commission upheld the view of the State Commission and held
that the State Commission was justified in holding that the Bank could not allow
operation of the account by one of the account holders alone without there being
succession certificate and in case the Bank would do so, it may face litigation later
on which may be initiated by the other legal heirs of the deceased. However, a
solution-cum-justice oriented approach is need of the hour. If other heirs of the
deceased give consent on an affidavit on due identification and have no objection,
then the Bank should release the amount in favour of the complainant along with
other heirs or should allow the complainant Petitioner to withdraw 50 per cent
amount from the Bank account after taking an indemnity Bond from her to
safeguard the interest of the Bank, as well as other legal heirs.
Revision Petition disposed of.
American Express Bank Ltd. vs. Narender Kumar Rai

IV (2006) CP
CPJJ 116
61 (NC)
(NC)
Fac
actts
Complainant purchased traveller cheques amounting to 10,000 USD on 9.6.2001
and again of 2,000 USD on 9.7.2001 at Novosibrisk City of Russia, while he was
returning from Russia to his home country India. After reaching India, while the
complainant was coming to Patna from Delhi through Rajdhani Express, he lost his
hand bag containing traveller cheques alongwith other valuable documents
including passport, etc. Complainant lodged complaint at Patna on very next day
and also immediately informed the Traveller Cheque Related Service about the loss
of the Travellers cheques and filed claim in the office of appellant Bank. Despite
completing the claim format, sent by appellant Bank, appellant Bank disapproved
the claim of the complainant without assigning any reason. Complainant filed
complaint before the State Commission. The State Commission directed the
appellant Bank to issue duplicate traveller cheques of 12,000 USD in lieu of lost
cheque with interest. Feeling dissatisfied by the order of the State Commission,
appellant Bank filed appeal before the National Commission.
Issues
Whether the State Commission, Patna has jurisdiction to entertain the
complaint?
Whether the bank is liable for deficiency in service for repudiating the claim of
its customer in respect of loss of traveller cheques?
Held
The National Commission held that if bag was lost at Patna station, the cause
of action had arisen at Patna and within the jurisdiction of the State Commission,
Patna. It cannot be said that the State Consumer Disputes Redressal Commission,
Patna has no jurisdiction.
In order to deny the claim, the opposite parties are trying to find unnecessary
faults. It is not a case of isolated loss of traveller cheques alone, the complainant
had also lost his passport and valuable articles kept in the bag. It is not a case that
all reasonable information was not included in the FIR and in the report sent. There
is no dispute in the fact that the complaint was immediately lodged with the Railway
Police and in the claim form with affidavit, he mentioned that no amount of traveller
cheques has been encashed by him. The bag was lost at Patna. No investigation
report has been filed to doubt that there was some clout about the version of the
complainant.
It is not the case of the appellant that these cheques were presented for
encashment and they have paid after comparing the signatures of the complainant
on those cheques. When the cheques were not utlised and were lost consumer/
complainant/purchaser is entitled to get back the money. Otherwise, the person
who issued these traveller cheques would make an unjust enrichment and the
purchaser would be unnecessarily made to suffer the loss. The appellant could
have verified these facts with the help of all the facilities of computerization and
modern techniques.
Appeal dismissed.
P un jab N
unjab Naat ional B ank vs. Lt
Bank Lt.. C
Cool. D.R
.R.. Ag gar
D.R arwwal
IV (2006) CP
CPJJ 116
65 (NC)
(NC)
Fac
actts
Complainant raised two loans from the New Bank of India which was later
merged into Petitioner Bank. One loan was for Rs.24,300/- for one acre on 10.11.1986
and another for Rs.18,225/- for 3/4th acre on 15.5.1987. The complainant intended to
set up a holiday tourist resort on his farm land. A tripartite agreement was executed
between the Petitioner Bank and Respondent No.2 M/s D.R. Sondhi Farms who owned
about 200-300 acres of farm land. As per this agreement the bank undertook an
obligation of not only granting loan for purchasing land for the purpose of plantation
but also the maintenance of Eucalyptus tree per acre in 6 years and as per this
agreement the entire plantation of trees was hypothecated with the New Bank of
India. The plants were got insured by the Complainant at its own cost. Complainant
filed complaint before the District forum against the Petitioner Bank alleging
deficiency in service for breaching the terms/obligations created under the
agreement. Dissatisfied with the order of the District forum, complainant filed
appeal before the State Commission. The State Commission allowed appeal directing
the Petitioner Bank to pay compensation for the non-observance of the terms of
the agreement. Aggrieved by the order of State Commission, complainant filed
Revision Petition before the National Commission.
Issues
Whether the Bank is liable for deficiency in service for not observing the
obligations created under the agreement and is also liable to pay compensation?
Held
The National Commission upheld the order of the State Commission and held
that in view of the tripartite agreement it could not be said that the Bank was under
no obligation to inspect and to ensure that the sale proceeds are recovered to clear
the loan for in terms of the tripartite agreement that amount was to be adjusted
towards the account of the complainant. Since on account of failure of the Bank to
ensure the sale of the Eucalyptus trees in term of Clauses 11 & 12 and failure to discharge
other obligations under other Clauses of the agreement about the adjustment of the
amount in accounts books, loss suffered by the complainant/respondent due to breach
of obligation arising out of the agreement, are required to be compensated.
Mahender Sing
Mahend Singhh Siwaeh & Anr
Siwa Anr.. vs. PPun
un jab & Sin
unjab Sinddh B ank & Anr
Bank Anr..
IV (2006) CP
CPJJ 2231
31 (NC)
(NC)
Fac
actts
Complainant were allotted locker no.131 and allocated key no. 143 in the
Respondent Bank, Begumpul Branch, Meerut. Complainants were paying rental
charges regularly since 1979. The complainants last operated their locker, wherein
all valuables of the complainant were kept, in April, 1997. On 10th March 1998,
Complainants visited the Bank and tried to open the locker with their key but it did
not open. The manager of the Bank called a locksmith to open the locker and on
the revelation of the locksmith, it came to light that the said locker had already
been opened earlier by breaking its lock at the instance of previous allottee of the
locker. The bank officials confirmed that the previous allottee had removed all the
contents of the locker. Complainant immediately made a complaint to the police
on coming to know about removal of the jewellery from the locker and disclosed all
the items of jewellery. Complainants issued a legal notice to the Manager of the
Respondent Bank alleging fraud, default and misconduct on the part of branch
manager. In reply to the legal notice it was stated that it was a case of mistake/
negligence on the part of their staff and further stated in the notice that as no list
of inventory is being made by the Bank when a customer of locker placed his articles
in it, so when claim of your client will be vetted by any legal authority/competent
court of law, my client will compensate your client. Police arrested the previous
allottee of the locker who admitted fraud/theft and also surrendered to the bank a
sum of Rs.1,01,800/- in cash and melted gold and coins weighing 289.980 gms. The
bank, in turn, handed over the said amount and the gold to the complainants.
Complainants filed complaint against respondent Bank before the National
Commission.
Issue
Whether Bank is liable for deficiency in service for allowing previous allottee
to operate the locker who had already surrendered the locker 18 yrs before and
permitting him to take away gold jewellery as if he has kept the articles in the
locker.
Held
The National Commission held that the procedure laid down by RBI guidelines
has been completely flouted by the opposite party by not maintaining the locker
register, locker key register, non-payment of rent dues and lastly, the procedure that
should be adopted for breaking open a locker, etc. and also in view of the statements
by the complainants, admission of theft by previous allottee, admission of the bank
officials that it was an inadvertent mistake, there is clear deficiency in service and
gross negligence on the part of the bank. When the complainants are paying rent
for the locker and entrusting their valuable articles in the safe locker and show
their trust in the bank, it is the duty of the bank to protect the valuables of the
clients and maintain proper records of opening/closing of lockers, entry ledgers, etc.
Bank should have taken necessary action on their own against its employees instead
of accusing and disregarding the report and affidavits of the complainants as to
the value of the contents kept in the locker. The assurance of the Bank that they
will provide complete security becomes a myth when the Bank takes a consistent
stand of finding fault with the consumer.
Complaint allowed.
P.S
.S.. SSa
awhne
whneyy vs. CanaraB
Canara ank & Anr
Bank Anr..
IV (2006) CP
CPJJ 22774 (NC)
(NC)
Fac
actts
Complainant being an artist of Chandigarh visited Delhi with his arte-facts for
display in IITF. Complainant issued cheque of Rs.1,000/- to M/s Ram Kumar Glass
Suppliers for supplying the glass plate and the etching of art work on it. As the
complainant had to present his art work to some VVIP he contacted to the engaged
glass supplier, the complainant came personally to Delhi for collecting the same.
On reaching there he found the job to be incomplete. The Glass supplier returned
the cheque of Rs.1,000/- issued by complainant informing him that the cheque was
dishonoured by the respondent Bank and hence, refused to carry out the work. On
enquiry, it come out on surface that the respondent Bank sent the cheque for
collection to Punjab National Bank, New Delhi, instead of Punjab National Bank,
Chandigarh. Aggrieved by the action of Canara Bank/respondent Bank, complainant
filed a complaint before the District forum. The District forum dismissed the
complaint on ground that complainant is not a consumer as the complainant had
not hired the services of the respondent Bank. However, of the District forum
granted compensation to the supplier. Dissatisfied with the order of the District
forum complainant filed appeal before the State Commission which confirmed
the order of the District forum and therefore, complainant filed Revision Petition
Issues
Whether complainant can institute proceedings against the bank for
deficiency in service despite the fact that it did not hire the services of the bank?
Held
Before the National Commission, Petitioner submitted that the cheque in
question was presented by respondent Bank to a wrong branch of the Punjab
National Bank, and this per se is deficiency in service whereas the respondent Bank
submitted that as the concerned cheque was inadvertently sent to the New Delhi
Branch of the Punjab National Bank and thus there is no deficiency in service and
further submitted that the Glass supplier should have sent it to the Punjab National
Bank, Chandigarh and got the money. Further, it was submitted that since the
Petitioner was not having any account with the respondent Bank and therefore, he
cannot be said to be a consumer.
The National Commission held that the Petitioner would be the beneficiary of
the services, which were required to be rendered by the Canara Bank. Because of
wrong handling of cheque by the opposite party No.1 by presenting the cheque for
encashment at Punjab National Bank, Delhi, Petitioner suffered a loss. Petitioner
was the beneficiary of the services, which were required to be rendered by the Canara
Bank to the opposite party No.2. Hence, the complaint, in our view, was maintainable.
Further, the order passed by the State Commission directing the O.P. No.2 to pay
Rs.10,000/- as compensation cannot be justified. Because, there was no fault on his
part in presenting the cheque to the Canara Bank. However, Canara Bank was
directed to pay compensation to the Petitioner.
Revision Petition partly allowed.
Jason Link
Linkss (In
(Inddia) Ltd. vs. SSttate Bank of In
Bank Inddia & Anr
Anr..
IV (2006) CP
CPJJ 32
3288
Fac
actts
Complainant a NRI, started his projects in India and baggaged a number of
good contracts. For executing the contracts, the appellant/complainant availed of
credit facilities in terms of mutual agreement with the respondent Bank. In the
year 1986 respondent Bank sanctioned small credit facility of Rs.3 lacs which was
later in 1993 enhanced to the sum of Rs.38 lacs. The appellant/complainant, on
5.12.1992 requested the respondent Bank for issuance of earnest money Bank
gurantee in favour of MTNL which was refused by the Bank and on 7.1.1993 the
respondent Bank confirmed continuation of the credit facilities for a further period
of 6 months. On 17.2.1993 the complainant requested for extension of bank gurantee
for Rs.22,53,255/- in favour of silver oak co-operative Group Housing Society Ltd. for a
further period of 6 months w.e.f. 23.3.1993 to 22.9.1993. The existing Bank gurantee
in favour of M/s Silver oak co-operative Group Housing Society Ltd. was to expire on
23.3.1993. Despite request for renewal of the Bank gurantee respondent Bank failed
to do so which inflicted serious blow to the financial health of appellant company
as the silver oak society withheld the payments due and also the payments which
would have become due to the appellant company. Complainant filed complaint
before the State Commission. Dissatisfied with the order of the State Commission,
complainant filed appeal before the National Commission.
Issues
Whether deduction in credit limit and the act of not renewing the existing
Bank gurantee despite request amounts to deficiency in service?
Held
The National Commission held that Respondent Bank vide its letter dated
30.3.1993 renewed the credit facilities subject to certain conditions and requested
the complainant to make arrangements to file fresh charge as whenever any term
and condition of loan, etc. is modified fresh documentation is necessary but the
appellant till 20.11.1993 did not comply with the condition. Thus, whenever any
Bank or financial institution does not feel it safe on account of the questionable
conduct of a borrower, it could, rather should, reduce the credit limit. Credit limit
depends on flow of money in the Bank account. It depends also on the conduct of
the borrower not to take money surreptitiously. If in these circumstances specific
charge is asked to be created by executing a mortgage and it is delayed for nearly six
months then the Bank cannot be said to be deficient in rendering service, in case of
reduction of the credit limit and non-issuance of the Bank gurantees sought for.
Nor it could be said that the respondent was deficient in rendering appropriate
banking services.
Appeal dismissed.
St an
andd ardC
ard har
Char ter
tereed B
harter ank vs. Dr
Bank Dr.. B.N
.N.. R
B.N am
Ram an
aman
III (2006) CP
CPJJ 1 (S C)
(SC)
Fac
actts
Complainant, a NRI employed as a Prof. of Medical Physiology in the University
of Libya, placed with the appellant bank US$5000/- in the FCNR account for 63 months
@9% per annum. The deposit was made by the draft drawn on New York Bank. The
deposit was to be matured on 17.11.1984. In 1984, RBI allowed the banks to keep FCNR
for six years and interest was increased from nine per cent to 13 per cent.
Complainant in June 1984, intimated the appellant bank to re-invest the entire
amount in FCNR account on maturity for a further period of six years @13 per cent
per annum. While visiting India, the branch office of bank assured the complainant
that US$ 7939.56 were lying in the FCNR account which has been re-invested at 13
per cent p.a. for six years maturing on 7.11.1990. In September 1990, complainant
requested the appellant bank to re-invest the entire amount in his FCNR account
for a further period of three years after maturity. In January 1992, after coming
back to India, complainant enquired about the status of his deposit for which he did
not get any response. He made a complaint in writing on 5.1.1992, 14.1.1992.
Complainant received a letter from the appellant bank dated 15.10.1992 stating that
the said deposit was pre-maturely drawn on 22.11.1979. Complainant made
complaint to the RBI and also before the State Commission. The complaint before
the State Commission was resisted by appellant bank on the ground of limitation.
The State Commission allowed the complaint. Against the order of the State
Commission, appellant bank filed an appeal before the National Commission. The
National Commission confirmed the order of the State Commission and dismissed
the appeal. The appellant bank filed Civil Appeal before the Supreme Court.
Issues
Whether the activities relating to non-sovereign powers of statutory bodies
are within the purview of the Act?
Held
The Supreme Court held that National Commission, State Commission and
District forum are remedial agencies. Their functions are quasi-judicial. The purpose
of these agencies is to decide Consumer disputes. Activities relating to non-sovereign
powers of statutory bodies are within the purview of the Act. The functions of such
statutory bodies come under the term ‘service’ under section 2(1) (o) of the Act.
In the case of Forasol v. Oil & Natural Gas Commission, AIR 1984 SC 241, Supreme
court observed that in an action to recover an amount payable in a foreign currency
the court has to select a date which puts the plaintiff in the same position in which
he would have been, had the defendant discharged his obligation when he ought to
have done, bearing in mind that the rate of exchange is a fluctuating factor. To
select the date when the amount became due, the court has to act in a just, fair and
equitable manner because in a case where the rate of exchange has gone the
opponent escapes by paying a lesser sum than what he was bound to and thus he
gains by default while in the converse case where the rate of exchange has gone
against the opponent, the opponent would be subjected to a greater burden than
what it should be. The agencies under the Consumer Protection Act, 1986 should
also keep in mind the economic situation of the country. Encashment of dollar
denominated deposits have certain economic implications. In cases of this type, the
burden is on the complainant to show the rate of exchange prevalent on the
aforesaid dates in order to assist the court to arrive at the indicative prices. This has
not been done in the present case. Neither the State Commission nor the National
Commission has examined this question regarding selection of the appropriate
date, the appropriate rate of exchange on that particular date as also the rate of
interest, which the appellant was required to pay. The claim of the respondent for
money decree with interest at the rate of 18 per cent p.a. till realization appears to
be on the higher side and inflative. The rate of exchange, which is indicative of price
and which constantly varies from time to time, has not been examined.
Result: Appeal partly allowed; matter remanded to the State Commission for
fresh consideration.
Appeal partly allowed.
Bank of India & Ors. vs. Chinmay Barik & Ors.

III (2006) CP
CPJJ 2299 (NC)
(NC)
Fac
actts
Complainant with a view to start an oil processing unit, obtained a term loan
from Orissa State Financial Corporation and also got sanctioned ‘working-capital’
limit of Rs.1,00,000/- from the appellant Bank. The bank released Rs.10,000/- as loan
to the complainant on 13.6.1988 and the same was repaid on 3.2.1989 & 12.4.1990 but
the bank failed to release ‘working-capital-limit’ of Rs.1,00,000/- to the complainant
due to which his unit became sick and the complainant filed complaint before the
State Commission. The State Commission hold the appellant bank deficient in
service and allowed the complaint with compensation of Rs.10,000/-. Feeling
aggrieved by this order appellant bank filed appeal before the National Commission.
Issues
Whether the act of Bank in not honouring its commitment of releasing balance
loan amount to the complainant amounts to deficiency in service?
Held
The appellant bank submitted that no deficiency in rendering service could be
fastened on them as they were not expected to advance loan to a unit which was
closed. The complainant repaid his earlier loans and since the unit was closed and
therefore, they did not release any further instalment of loan to the complainant.
The National Commission held that in the meeting held on 16.11.1998 the Dy.
GM of the appellant Bank committed to release Rs.10,000/- to the unit and the
subsequent instalments were to be released after verification of stock. Not
honouring this commitment would amount to deficiency in service on the part of
the appellant. Further, if they had any reservation that the unit was closed or
electricity was not there, then all these points should have been raised in the meeting
where all concerned parties were present including the District Industrial Centre,
Orissa State Financial Corporation Bank and Ors. The assurance in this meeting
was categorical on the part of the appellant that the instalment would be released
and not honouring this would be a case of deficiency in service.
Appeal dismissed.
Ashok Kumar Kalra vs. Allahabad Bank

III (2006) CP
CPJJ 334
4 (NC)
(NC)
Fac
actts
Complainant took loan of Rs.1,50,000/- for purchasing a tractor and mortgaged
one land measuring 74 kanals for the purpose of securing loan. As per Hypothecation
agreement dated 7.1.1996 the Insurance premium of the tractor was to be paid by
the respondent bank and debited into the account of the complainant. The
complainant’s tractor on 5.9.1997 met with an accident wherein one person died
and the complainant had to pay Rs.69,000/- by way of compensation to the father
of the deceased before MACT. On lodging claim before Insurance company, it was
repudiated by Insurance Company on the ground of non-payment of premium.
Complainant filed complaint before the District forum alleging deficiency in service
against respondent Bank. Before the District forum, Respondent bank took plea
that under Para IX of hypothecation agreement it was the duty of the Petitioner to
pay the premium and not the duty of the respondent bank to get the tractor insured
and pay premium. The District forum accepted the complaint with a direction to
the respondent bank to pay Rs.69,000/- with interest @10 per cent p.a. Respondent
Bank filed appeal before the State Commission which allowed the appeal. Against
the order of the State Commission, complainant filed Revision Petition before the
Issues
Whether Bank can be held liable for negligence for not getting the tractor
insured?
Held
The complainant/petitioner before the National Commission submitted that
on the asking of petitioner the respondent bank had earlier paid premium to the
Insurance Company. The National Commission rejected the submission of the
Petitioner and held that bare reading of Hypothecation agreement it was primarily
the obligation of the Petitioner to have got the tractor insured and premium paid.
The Petitioner did not issue any instruction to the bank to obtain insurance of the
tractor for the relevant period and debit the premium amount in his account.
Tirupati Agencies vs. HSBC Bank & Ors.

III (2006) CP
CPJJ 37 (NC)
(NC)
Fac
actts
Complainant was awarded with an overseas contract for consignment of 2300
dozen of goods of children garments in Jeddah, Saudi Arabia. Foreign buyer obtained
a documentary credit no. DCBJD 100149 dated 22.1.2001 for USD 37,300.00 issued by
Saudi British Bank, Saudi Arabia in favour of the complainant. The documentary
credit in their favour was in accordance with the terms of Article 7(A) of UCP 500
which was received by Respondent Bank on 23.1.2001. Respondent Bank entrusted
the job of delivery of the said letter of credit to their agent, an authorized courier M/
s First Flight Courier Ltd. for onward delivery of letter of credit to the complainant
on 24.1.2001. Inspite of all the correct details given regarding the particulars of the
office address, Courier Company returned the said envelope containing the L/C to
the Respondent Bank with the remark that party shifted to unknown place. Based
on report of the courier company, Respondent Bank informed the foreign buyer
that the complainant is unreachable. The respondent bank did so without
ascertaining from the complainant. On receiving such report foreign buyer become
suspicious about the very existence of the firm and cancelled the L/C immediately.
Complainant filed complaint before the National Commission claiming payment
of an amount of Rs.17,35,000/- for loss arising out of loosing foreign consignment
transaction.
Issues
Whether Bank can be held liable for deficiency in service when the conduct of
the complainant itself dubious in not sending consignment within scheduled time
despite having knowledge that L/C cannot be cancelled unilaterally by the Bank.
Held
Respondent bank before National Commission submitted that the letter of
credit was received on 23.1.2001 and they delivered the same to the complainant at
the address mentioned in the letter of credit but courier company was unable to
deliver the said letter of credit to the complainant as complainant was not present
at the said address. Courier company made various efforts to deliver the said L/C to
the complainant and finally returned the same to the respondent bank on 5.2.2001
and thus, constrained to inform the issuing Bank i.e. Saudi British Bank on 6.2.2001
about the non-delivery of the L/C under the bona-fide belief that the complainant
must have moved away from that address to an unknown address.

Further, L/C was duly received by the complainant on 26.2.2001. The issuing
bank of the L/C gave a message on 28.2.2001 asking for cancellation of the said L/C.
Complainant was informed on 19.3.01 that Saudi British Bank (SBB) had asked them
to return the L/C for cancellation with the consent of beneficiary i.e., the
complainant but the same remained unreplied.
National Commission agreeing with the submissions of the Respondent Bank
held that respondent Bank on 4.5.2001 sent a letter to the complainant explaining
that once L/C is issued and received by the beneficiary, it cannot be cancelled by the
issuing bank, without the consent of the beneficiary but the same remained
unreplied. The said L/C was received by the complainant on 26.2.2001. He had ample
time to supply the garments before the expiry of the last date and shipment i.e.
21.4.2001 and then SBB was legally bound to honour the L/C. Hence, for reasons best
known to the complainant he preferred not to supply garments and hence, he is
responsible and liable for the loss, if any.
It is an admitted position that as per law once the L/C reached the beneficiary
the issuer cannot unilaterally cancel the same. Respondent bank rightly informed
the same by a reminder to the complainant and the complainant did not bother to
send the consignment within the time frame of L/C nor did he reply to the letters
written by O.P.No.1 complainant at a later stage cannot take a view that O.P.No.1 had
hurriedly sent a message to the issuing bank. In the light of the complainant’s own
conduct, the so-called intention to export seems questionable. The consequential
damages he has claimed cannot be awarded as there is no deficiency in service by
O.P.No.1.
Complaint dismissed.
HD
HDFFC B ank Ltd. vs. K
Bank Kiisho
horre R
R.. Worah
III (2006) CP
CPJJ 440
0 (NC)
(NC)
Fac
actts
Complainant obtained loan of Rs.5,00,000/- against shares from Petitioner Bank,
Chembur Branch. The drawing power granted to the extent of 65 per cent of the
value of shares. On 21.9.2001 complainant was asked to pay Rs.38,325.17 within two
days and in case of failure to make payment complainant was threatened to sell
the pledged shares. The complainant paid Rs.5,000/- on the very next day, leaving
the balance of Rs.3,315.17 and inspite of payment of said amount the Petitioner
bank sold the shares worth Rs.1,40,481/- on 26.9.2001 which were deposited with the
Bank as security. The complainant filed complaint before the District forum alleging
deficiency in service on account that Petitioner bank arbitrarily reduced the drawing
power from 65 per cent to 60 per cent without obtaining approval from the
complainant and the said sale of shares is in excess of their demand made by the
Petitioner bank on 23.9.2001 and is in breach of agreement/contract entered into
between the parties. The District forum allowed the complaint directing the
Petitioner bank to purchase 300 shares of Colgate Ltd. and 562 shares of ACC in the
name of the complainant at their own cost within a period of one month and
retain the same as security for the over drawing facilities granted to the complainant
if he is availing the facility and in case not availing the facilities then to hand over
the said shares to the complainant. On appeal, the State Commission dismissed the
appeal filed by Petitioner bank holding that the bank without waiting for expiry of
7 days from the date of intimation sold the shares and thus, acted in contravention
of the terms and conditions of the agreement which amounts to deficiency in
service. Aggrieved by the order of the State Commission Petitioner bank filed Revision
Petition before the National Commission.
Issues
Whether the action of the Bank in selling a part of the pledged shares to make
good the deficit in borrowing power and the margin when the borrower had
overdrawn in excess of the eligible limits, amounts to deficiency in service?
Held
Before the National Commission, Revision Petitioner submitted that the
Complainant / respondent had to maintain 40 per cent margin at all times for
having taken over draft facility against the shares and the amount required to
make good the deficit 21/2 times the overdrawn amount. Repeated letters by bank
asking complainant to make good the deficit did not yield any positive response
from the complainant despite having more than seven days notice. On the other
hand complainant submitted that telegram issued by Petitioner bank was dated
21.9.01 calling upon the complainant to make good the deficit in overdraft account
and they sold the shares on 26.9.2001 without waiting for the expiration of seven
days notice which amounts to deficiency in service.
The National Commission rejected submission of the complainant and held
that the telegram dated 21.9.2001 was the last reminder. Letters were sent earlier to
him by giving more than seven days time to make good the loss in deficit. The first
notice dated 28.4.2001 mentions about the details of excess overdrawal and the
statement of value of shares pledged. Vide another letter dated 14.5.2001 complainant
was requested to regularize the account by funding or pledging additional shares
within 10 days. The next notice dated 26.5.2000 also mentions the same thing. In
response to the deficit to the tune of Rs.27,252/-, Rs.2,252/-, Rs.19,252/-, Rs.20,252/-,
Rs.31,290/- and Rs.18,290/- the respondent had deposited only Rs.10,000/-, Rs.5,000/-,
Rs.5,000/-, Rs.5,000/-, Rs.5000/- and Rs.5,000/-, on 9.5.2001, 4.6.2001, 11.6.2001, 13.7.2001
and 26.7.2001, respectively as per the bank statement submitted by the respondent
which is clearly indicative of the fact that the respondent did not make good the
deficit and hence, the notices were issued to him in the form of letters. Through
these letters the bank had given more than seven days notice. As a final reminder
the telegram was sent. This generous act cannot be termed as deficiency of service.
The bank had given him adequate notice before they sold his shares.
The bank has exercised with due caution and circumspection and has acted
within the ambit of powers occurring to bank as a result of the contract i.e. loan
agreement-cum-guarantee signed by the borrower.
Om Prakash vs. Allahabad Bank, Daliganj Branch, Lucknow

III (2006) CP
CPJJ 41
4188 (NC)
(NC)
Fac
actts
Complainant approached the respondent Bank on 8.8.2004 for the renewal of
FDRs though the date of maturity was in the year 1995 and 1997. Complainant filed
complaint before the District forum with a prayer to direct the respondent Bank to
pay interest prevailing in the year 1995 and 1997. The District forum vide its order
dated 30.6.2004 directed the respondent Bank to pay the amounts of 3 FDRs with
interest prevailing at the relevant period for saving bank accounts. Complainant
and the Respondent Bank preferred appeals before the State Commission. The
State Commission dismissed the appeal of the complainant relying on the circular
dated 7.6.2001 issued by RBI binding on all banks in India as per which renewal of
overdue term deposit at the rate of interest prevailing on the date of maturity be
allowed only for an overdue period of 14 days. In case, the overdue period exceeds 14
days if the depositor places entire amount of overdue deposit or a portion thereof as
a fresh term deposit, banks may prescribe their own interest rate for the overdue
period on the amount so placed as a fresh deposit. Banks, however, have to inform
the depositors in advance of their policy for renewal of overdue deposits. Against
this dismissal order complainant filed Revision Petition before the National
Commission.
Issues
Whether Bank can be held liable for deficiency in service for not granting rate
of interest on the renewal of overdue FDR prevailing on the date of maturity?
Held
The National Commission relying on circular dated 7.6.2001 held that renewal
of overdue term deposit at the rate of interest prevailing on date of maturity, can be
allowed only for overdue period of 14 days and thereafter interest rate is to be
calculated for 15 days on date of presentation of FDRs for renewal. Petitioner, thus
could not have been allowed interest prevailing in 1995-1997.
Debabrata Mukherjee vs. Allahabad Bank & Ors.

III (2006) CP
CPJJ 44223 (NC)
(NC)
Fac
actts
Complainant alongwith two others opened a joint current ‘over Draft’ A/c and
a FDR of Rs.22,000/- and 208 shares of ITC Ltd. in the name of one Ms. Pratima
Mukherjee was given as security to the United Industrial Bank Ltd. The United
Industrial Bank Ltd. was taken over by the respondent Bank. On 31.10.1989 the
complainant received a letter showing an outstanding amount of Rs.45,135/- after
adjusting amount of FDR for which no information was given to the complainant.
Complainant pointed out to the respondent bank that amount of interest calculated
on FDR was not taken into account on the other hand respondent bank threatened
to sell the pledged shares and actually sold on 12.7.1991 and this amount was not
shown as ‘credit’ in favour of the complainant. Complainant filed appeal before the
State Commission. The State Commission directed the appellant Bank to refund
Rs.302 shown as excess in favour of the complainant alongwith compensation of
Rs.10,000/-. Aggrieved by the order both complainant as well as Allahabad Bank
filed two separate appeals before the National Commission.
Issues
Whether the Bank can be held liable for deficiency in service for not informing
the complainant about adjustment of the amount of FDR in his account and raising
further demands?
Held
The National Commission held that the State Commission rightly held that
the shares were held in the name of Pratima Mukherjee (since expired) and the
complainant had no right to sell the shares even if they were to be released in his
favour. Since the complainant had no authority to sell the shares standing in the
name of the deceased, hence it cannot be held that the complainant under went
any loss in view of non-sale of the shares. Shares were kept as security on over draft
obtained by the complainant and they were returned after the outstanding dues
were liquidated, hence rightly held by the State Commission on this account no
deficiency can be fastened on the part of the bank.
Further, the very fact that the Bank did not inform the complainant about
adjustment of the amount of FDR in the name of the complainant, along with
interest and its adjustment against the over draft outstanding amount and without
doing so, went on to raise the demands which were later found to be not in orders
and finally, refund order of Rs.302 show that the Bank was partially deficient in
rendering service.
Appeals dismissed.
Canara Bank vs. Agnes D’mello

I (2006) CP
CPJJ 8 (NC)
(NC)
Fac
actts
Appellant Bank provided locker No.37 to the Complainant on 7.5.1987. On
12.5.1987, the complainant alongwith her sister-in-law went to the bank and
deposited jewellery in the said locker and locked the locker. After assuring themselves
that the locker was properly locked and further after verifying that the lock of the
locker was properly locked and then went home. On 11.6.1987 the complainant
went to Muscat. The Manager of the Bank vide letter dated 13.8.1987 informed her
sister-in-law that the locker was found opened and the jewellery kept in the locker
was found missing. She filed FIR with the Police. The complainant sent letters to
bank but the bank did not properly respond to it. Ultimately after coming from
Muscat on 9.5.1988, complainant surrendered locker’s key to the bank and also filed
complaint before the State Commission. The State Commission directed the
appellant bank to pay Rs.1,12,500/- for the loss of ornaments kept in the locker with
18 per cent p.a. interest. Against the order of the State Commission, Petitioner Bank
filed appeal before the National Bank.
Issues
Whether the Bank is liable to compensate the customer the loss of ornaments?
Held
The National Commission held that insofar as the question of deficiency in
service is concerned, a person who provides a locker just virtually undertakes to
ensure safety of the valuables kept in the locker. Without master key the locker
could not be opened. After it is locked the person who looks after the locker is
supposed to see before leaving the office that all the lockers are properly locked.
Room of the locker is also supposed to be properly locked to ensure safety. If the
locker Manager fails to discharge his duty to ensure safety of the locker room and
lockers containing articles and valuables kept therein then the locker Manager and
the concerned bank cannot be absolved until and unless a robbery or dacoity takes
place at gun point by breaking open the locker. In view of the statement of official
of the Godrej Co. the key of the consumer could not be taken out without locking
the locker. There is undisputed evidence that the locker was locked and it was
verified by the complainant and her sister-in-law, in view of the statement of the
complainants, for the sake of argument it is taken for granted that it might have
not been properly locked, then it had to be believed that the locker Manager either
did not check that all the lockers have been properly locked on that very day or he
was negligent and deficient in performing his duty to act in good faith by taking
due care and caution. The fact that information of the locker was allegedly found
open much later on 8.8.1987 could make it evident in such circumstances that
deficiency was writ large and the bank could not be absolved from its liability to
compensate the respondent.
Mahad Co-operative Urban Bank Ltd. vs.

United In
nited Inddia Insuran
ancce C
Insuran Coo. Ltd. & Anr
Anr..
I (2006) CP
CPJJ 444
4 (NC)
(NC)
Fac
actts
M/s Ibrahim Ahmed Taj & Co./Akil Ibrahim Taj was engaged in purchase and
sale of dry fishes at Mahad, Maharashtra. Storing their goods in three stores/godowns
and took three insurance policies from Respondent Insurance Co. covering risk
against flood of Rs.30 lacs, 10 lacs & 15 lacs w.e.f. 25.3.1987 to 25.3.1988. Due to heavy
flood & rain on early hours of 19.8.1987 dry fishes being sensitive to water started
striking. Under the direction and supervision of the officials of Mahad Municipal
Council, dry fishes stored in three godowns were removed and thrown into river.
The surveyor appointed by Insurance company assessed loss at Rs.52 lacs, however,
Insurance company repudiated the claim. On the other hand, Sangli Bank Ltd.
through its Mahad branch instituted various proceedings for recovery of loan
amount against the complainant. Under a Tripartite agreement dated 9.6.1992
between Sangli Bank Ltd. and complainant and the Akil Ibrahim Taj, complainant
paid an amount of Rs.48 lacs to the Sangli Bank Ltd and the O.P.No.2 M/s Akil Ibrahim
Taj transferred all its actionable claims in favour of complainant Bank. In complaint
by Ibrahim Taj against repudiation, the National Commission directed insurance
company to pay compensation of Rs.18 lacs in full and final settlement. The Supreme
Court dismissed the appeal on the ground that LRs of Ibrahim Taj not pursuing the
matter before the National Commission. Mahad Co-operative Urban Bank Ltd. filed
fresh complaint before the National Commission based on the same three policies.
Issues
Whether a fresh complaint filed by bank based on same three policies could be
maintainable despite the fact that the earlier complaint based on these same three
policies was disposed of by the National Commission?
Held
The National Commission held that earlier complaint based on three policies
of Rs.30 lacs, 10 lacs and 15 lacs disposed of by this commission by order dated 8.9.2000
awarding compensation of Rs.13 lacs in full and final settlement to O.P. No.2. Appeal
filed by O.P.No.2 against that order was dismissed by the Supreme Court. Again
based on same three policies, a fresh complaint would not be maintainable and
thus deserves to be dismissed.
Allahabad Bank, Bhopal vs. Ranbir Singh Bhadoriya

I (2006) CP
CPJJ 994
4 (NC)
(NC)
Fac
actts
Complainant was availing locker facility on hire with Petitioner Bank bearing
No.138. On 18.5.1998 when the complainant visited the Petitioner Bank to operate
the locker, Mohan Lal Verma, officer of the bank went inside the locker room
alongwith the complainant. While the complainant was trying to open the locker,
he noticed that it was broken and empty and all ornaments kept therein were
missing. Immediately an FIR was lodged with Habibganj Police Station. When the
Petitioner bank did not settle the claim of the complainant of total cost of
ornaments amounting to Rs.4,35,260/- complainant filed complaint alleging
deficiency in service against Petitioner Bank. The District forum allowed the
complaint, which was affirmed by State Commission on appeal. Against this order
of the State Commission Petitioner Bank filed Revision Petition before the National
Commission.
Issues
Whether Bank is deficient in service for not taking immediate steps as per
instructions No.6.3, 9.1 & 9.2 in chapter 16 of the Mannual of Instructions governing
operation lockers?
Held
The National Commission the contentions of Petitioner Bank which submitted
that complainant mischievously removed the four bolts of the locker from inside
remained, removed the contents thereof and went away closing the locker without
key on 18.1.1997 and held that if the locker was closed without key after removing
the contents thereof by the respondent/complainant, the Petitioner bank should
have detected that fact on inspection of the locker immediately after it was used by
the respondent as also on physical verification of locker at the end of day on 18.1.1997
as required by instructions dated 6.3, 9.1 & 9.2 in chapter 16 of the Mannual of
Instructions governing operation of lockers. Respondent operated the locker after
a gap of 16 months. In case the respondent wanted to falsely make out a case of
theft of jewellery from locker, he would not have waited for the said period after
operating locker on 18.1.1997.
ING Voyag
ING agee B ank Ltd. vs. V.Y
Bank .G. SSrreeR
.Y.G. am SSee t t y
eRam
I (2006) CP
CPJJ 118
82 (NC)
(NC)
Fac
actts
Complainant was a guarantor for an advance of Rs.80,000/- made by the
Respondent Bank of Jayanagar Branch to one M/s Gautam Enterprises, Bangalore,
during the year 1983-84. Complainant also deposited Rs.20,000/- on 3.12.1986 and
Rs.30,000/- on 6.12.1986 under the Akshaya Deposit Certificate Scheme of the same
Bank of Fraser Town Branch. Under the scheme, on maturity the Bank was liable to
pay a sum of Rs.40,490/- and Rs.60,735/- to the complainant. On maturity the
Petitioner bank returned both the receipts as there was no amount lying in the
deposits to the credit of the complainant. The Bank also did not reply to the legal
notice dated 2.11.1993 of the complainant. Therefore, the complainant approached
the District forum by filing complaint. The District forum relying upon Sec.171 of
the contract Act, dismissed the complaint with cost. Complainant preferred appeal
before the State Commission. The State Commission allowed appeal by holding
that the FDRs held by the Bank were not pledged with the Bank. The complainant
had fixed deposits in Fraser Town Branch, whereas M/s Gutam Enterprises had
obtained loan from the Jayanagar Branch of the Bank and further held that one
branch of the Bank has no jurisdiction to exercise its powers on the other branch of
the same bank under the provisions of Sec.171 of the contract Act to have general
lien. Against this order, Petitioner bank preferred present Revision Petition before
Issues
Whether a banker in exercise of its lien under Sec.171 of the contract Act, straight
away appropriate the money deposited by a guarantor in FDR, without any bailment
and without informing the guarantor?
Held
Counsel for Petitioner bank submitted before the National Commission that
‘general lien of the banker’ is to the effect that the Bank can retain as security for
general balance of accounts on any goods bailed to them. Section 171 specifically
provides in the absence of a contract to the contrary, the Bank can retain as a
security for general balance of accounts any goods bailed to them. The National
Commission held that the complainant has not bailed any goods’ to the Bank. The
FDRs were also not pledged with the Bank against the loan taken by M/s Gautam
Enterprises. The amount was deposited with the Bank after more than one year of
the loan given to M/s Gautam Enterprises. The wording of the section are to the
effect that the bankers would have general lien only on any goods bailed to them. If
goods are not bailed, Bank cannot go and take away any goods, wherever they are
lying into their custody and contend that they have lien over the same.
Al
Alllahab ad B
ahabad ank v. C
Bank han
Chan
handd igarh C
Coonst
nstrr uct ion C
Coo. PPvv t . Ltd.
IV (2005) CP
CPJJ 1126(N
26(NC)
26(NC)
Fac
actts
Complainant got a bank guarantee issued from the Petitioner Bank for a sum
of Rs.1,52,000/- against security in the shape of FDRs worth Rs.1,50,000/-. The validity
period of the bank guarantee was upto 28.09.1990. Since the Bank did not release
the FDRs to the complainant even after the expiry of the bank guarantee, the
complainant approached the District forum for a direction to Petitioner Bank to
release the FDRs. District forum allowed the complaint. On Appeal the State
Commission confirmed the order passed by the District forum whereby Bank was
directed to pay the value of FDRs with interest @18 per cent p.a. from 1.10.1990 till
payment. Against this order Petitioner Bank filed the Present Revision Petition
Issues
Whether the bank was justified in withholding the FDRs even though the
bank guarantee invocation letter was not received and also that the District forum
passed the order to release the same?
Held
The National Commission held that there was no justifiable reason for the
Bank to retain the FDR after the District forum passed order dated 16.11.1993 for
releasing the same. Even thereafter the FDRs were not returned but were returned
only when this Commission passed the order on 8.5.2003. Further apart from the
bank guarantee invocation letter dated 25.9.1990 which was received by the Petitioner
bank on 1.10.1990, after the expiry of bank guarantee, the relevant terms of the bank
guarantee leave no doubt that the bank guarantee was required to be invoked on
or before 28th September 1990 and that stood cancelled automatically. Despite all
these facts, the officers of the Bank remained adament and refused to release the
FDRs. There was no justifiable reason for the Bank to withhold the same after May,
1991. In this view of the matter, the order passed by the State Commission confirming
the order of the District forum cannot be said to be in any way illegal or erroneous.
The order holding that there is deficiency on the part of the officers of the Petitioner
stands confirmed.
Revision Petition partly allowed.
C.L. Khanna vs. Dena Bank

IV (2005) CP
CPJJ 139(N
139(N C)
9(NC)
Fac
actts
Complainant, proprietor of Apee Industries, started small scale unit for
manufacturing LPG stoves in February 1973. For financial assistance complainant
approached the respondent Bank to provide facility of(i) Term Loan and (ii) Loan on
hypothecation for day to day expenses. The limit sanctioned in the term loan A/C
was Rs.75,000/- out of which complainant availed of Rs.44,000/- against the collateral
security of the property bearing No.52-A Okhla Industrial Estate, New Delhi and for
this purpose complainant pledged registered gift deed as simple mortgage duly
acknowledged by the bank vide its letter dt. 19.01.1973. Complainant was also provided
with overdraft facility of Rs.25,000/- in the Hypothecation A/c against the machinery
and stock. The Bank was charging interest as per the term loan A/c. In 1978, the
bank on an audit objection asked the complainant to furnish additional security.
The complainant deposited title deed of his other residential property bearing No.11,
Abdul Fazal Road, New Delhi. The outstanding amount in both the accounts of
complainant in the year 1985 was approximately Rs.1,00,000/-. The complainant
was prepared to pay the said amount on release of aforesaid title deeds. Since the
title deeds were not returned, the loan continued and complainant continued to
make regular payments towards the liquidation of his liability. In spite of repeated
requests title documents pledged with the Bank were not returned. Complainant
could not clear the outstanding and was forced to maintain the loan account and
thus paid the interest and instalments. Despite this, complainant was asked to pay
Rs.1,48,534.90 on 9.5.1995 which included Rs.1,29,158/- towards the interest from
January 1985 to March 1993. Complainant on 23.11.1998 requested the bank to settle
the matter without any further delay. However, in the year 2001 under the RBI
guidelines the Bank offered one time settlement, the complainant insisted that his
original deeds should be returned but of no avail. Complainant approached Bank
ombudsman and also filed a complaint for deficiency in service before the National
Commission.
Issues
Whether the complaint filed is barred by limitation?
Whether the Bank is liable for deficiency in service?
Held
Before the National Commission complainant contended that non-availability
or loss of original title deed of the free hold property had resulted in reduced market
price of the property due to the deficiency in service by the Bank. Whereas the Bank
resisted the complaint on the ground that complaint is time barred and the
complainant, in collusion with advocate, Sh. R.M. Gupta took back the original title
deeds in fraudulent manner. Since the return of original title deed is beyond the
control of the Bank and therefore do not constitute deficiency in service.
The National Commission after hearing the parties arrived at conclusion that
at no point of time the bank had denied its liability to return the title deeds delivered
by the complainant. Therefore, it would be difficult to arrive at a conclusion that
the complaint is time barred. The Bank never informed the complainant that as
the title deed was lost, therefore, they would not deliver it to the complainant.
Further, it is clear that upto 1989 complainant was in financial crisis. He was
compelled to handover title deed property No.11, Abdul Fazal Rd, New Delhi, even
though he had handed over title deed of property No.52A, Okhla Industrial Area, New
Delhi. Because the title deed of property No.11 Abdul Fazal Rd, New Delhi was delivered
to the bank it would not mean that the complainant had waived off his right to get
back the title deed of his factory premises at 52-A, Okhla Industrial Area, New Delhi.
In this view of the matter, it is apparent that there is clear deficiency on the part of
the Bank in not returning the title deeds. The title deeds were given to the Bank in
good faith and considering the Bank would be the safest place for keeping such
deeds.
Complaint allowed.
Cent
entrral B ank of In
Bank Inddia & Anr
Anr.. vs. H
Heeera SSo
era oni & Ors
Ors..
III (2005) CP
CPJJ 225(N
5(NC)
5(NC)
Fac
actts
Central Bank of India introduced a Group Insurance Master Policy No.GSLI/
601073 for its employees on 20.11.1990. On the death of one of the employee of the
Petitioner Bank, his legal heirs pressed the claim for Rs.1,20,000/- from LIC. The
claim was not settled despite notice to the LIC as well as to the Central bank of India.
The legal heir of the deceased filed a complaint before the District forum. LIC before
the District forum contended that since the Central Bank of India did not pay the
premium, the policy lapsed and therefore LIC is not liable to pay the amount of
claim whereas the Petitioner Bank contended that since the bank did not charge
any fee from its employees and the claim regarding payment payable after the
death of an employee was not maintainable. District forum rejecting the
contentions allowed the complaint. On appeal by LIC, the State Commission held
that since the policy lapsed LIC was not liable to pay any amount and the bank is
liable for deficiency in service and thus, directed to pay Rs.1,20,000/- alongwith
interest. Against this order of the State Commission Petitioner Bank, filed Revision
Issues
Whether Policy could have been said to have been lapsed, to hold that the LIC is
not liable?
Held
The National Commission held that if contributions are paid by the employees
themselves in full and the employer just acts only as a co-ordinator and monthly
contributions from the salaries of the employees and are required to be remitted to
LIC every month, failure of the co-ordinator would not and ought not absolve the
Life Insurance Corporation of its responsibility. It is not policy of an individual and
affect hundreds of employees for none of their faults.
Accordingly, National Commission held that the Central Bank of India was
acting as an agent having implied authority of the LIC for collecting the Insurance
premium from employees. The moment the amount was deducted from the salary
of the employees by the Central Bank, it would be deemed to have been paid to the
Life Insurance Corporation. Failure on the part of the agent having an implied
authority to receive premium on receipt by deduction from the salary coupled with
failure to deposit the same with LIC could not lead to lapse of the policy by any
stretch of imagination.
Revision Petition disposed of accordingly.
Deep Chand Jain vs. Bank of Baroda & Ors.

III (2005) CP
CPJJ 551(N
1(NC)
1(NC)
Fac
actts
Complainant/Petitioner purchased certain shares and same were sent for
transfer in the name of the complainant which required the verification of the
signature of the third opposite party, for which the complainant approached the
respondent No.2, verification of the second respondent related to the ‘signature,
name, address and seal’ of attesting officer. While ‘signature and seal’ put in but the
name and address’ of attesting officer was not entered. Petitioner sent these
documents to the share broker at Bhopal for transfer but same were received back
in August 1997 with the observation that the signatures of the seller are not properly
attested. As the complainant/petitioner was keen to sell the shares but due to
deficiency on the part of Respondent Bank lot of time elapsed within which the
prices of share fell to Rs.50/- from Rs.160/- per share. Complainant filed complaint
before the District forum alleging deficiency in service after long protracted
correspondence. The District Forum dismissed the complaint. The State
Commission, on appeal, partly allowed the complaint. Not satisfied with the relief
granted, complainant filed Revision Petition before the National Commission.
Issues
Whether Bank can be held liable for deficiency in service for doing an act out of
goodwill?
Held
The National Commission, confirming the view of the State Commission held
that there indeed was deficiency on the part of the bank by not mentioning ‘name
and address’ in the attestation form of the transfer certificate, but it is not the Bank
alone who should be held responsible. Equal responsibility also rests on petitioner
who should have been vigilant and should have observed the deficiency when he
received the attestation form from the respondent Bank. This is not a statutory
duty cast upon the bank to attest the signature, they were doing it out of goodwill.
If all the claims in the attestation form were not complete then the petitioner
should have taken care at the time of receiving the form that it is complete in all
respects. The plea that complainant suffered loss on account of delay resulting
from the incomplete attestation, does not withstand scrutiny and the bank could
be faulted at was for being partly deficient in service.
Col. D.S
.S.. SSac
D.S ac har (R
achar (Reetd.) vs. PPun
un jab & Sin
unjab dB
Sind ank
Bank
II (2005) CP
CPJJ 130(NC)
130(NC)
Fac
actts
Complainant/Petitioner was having current account with respondent Bank
at Phase V, SAS Nagar, Mohali on 6.4.1999, Complainant along with his wife visited
the said branch to deposit Rs.45,000/- in the said current account. At about 1.45 p.m.
when the complainant was at the counter, someone snatched the money from his
hand and despite raising loud alarm and chasing, the snatcher fled away on a scooter
standing outside the premises of Bank with engine on. Complainant filed complaint
before the District forum alleging deficiency in service on the part of Respondent
Bank as at the time of incident, there was no security guard/gunman present at the
entry/exit gate of the Bank. Collapsible doors of the main gate were not chained
and the bank was under duty to sound the siren alarm. The District forum dismissed
the complaint. On appeal, the State Commission also dismissed the appeal. Against
dismissal order of the State Commission, Complainant filed Revision Petition before
Issues
Whether liability for payment of money can be legally fastened on respondent
Bank on ground of it being deficient in service under section 2(i) (o) of Consumer
Protection Act, 1986?
Held
The National Commission held that in our view, ensuring safety of the money
to be deposited and/or withdrawn inside the Bank premises is impliedly part of
service rendered by a Bank to its consumer. The respondent Bank being deficient in
service cannot escape liability for payment of said money by way of compensation
to the petitioner, a consumer with interest.
Revision allowed.
Zil
ilaa SSahk
ahk ar
arii B
ahkar ank Ltd. vs. U
Bank .P
.P.. PPo
U.P oli
licce Avas N
Niigam Ltd.
I (2005) CP
CPJJ 89(NC)
89(NC)
Fac
actts
Complainant, U.P. Police Awas Nigam Ltd. in response to an advertisement
deposited a sum of Rs.2,01,38,800/- in the year 1988 with the appellant Bank. On
maturity of the call deposits, the appellant Bank did not pay the maturity amount
on the ground that as per instructions of NABARD, the rate of interest of only 4.5 per
cent and 3.5 per cent p.a. was payable on the call deposits of 61 days and 16 days. With
a view to get the blocked money released from the appellant Bank, the complainant
accepted the offer made by the Bank for converting the balance call deposits into
fixed deposits. The Bank violated all contractual norms and did not pay even the
revised lower rate of interest. While on one deposit interest was paid @3.5 per cent
instead of 9.5 and in respect of another deposit the interest was paid @3.5 per cent.
When the appellant Bank did not respond to many of the letters of the complainant,
he filed complaint before the State Commission. Appellant Bank contested the
matter on the ground that inadvertently in advertisement the rate of interest on
call deposits with 61 and 16 days notice were shown at 12 per cent and 10.5 per cent
without incorporating clause “Applicable to Non-borrowing Co-operative
Institutions”. As per RBI’s directions on rate of interest dated 16.8.1974 and 3.4.1983,
these rates should have been at 4.5 per cent and 3.5 per cent respectively. NABARD
raised an objection on the rate of interest allowed by the appellant Bank @12 per
cent and 10.5 per cent on the all call deposits and the appellant Bank informed the
complainant vide their letter dated 22.7.1989. The matter was reconciled with the
complainant and on agreement all the outstanding call deposits were converted
into FDRs. On maturity two FDR Nos.3375 and 3377 were paid by the Bank alongwith
interest applicable. The appellant Bank prior to making the final payment of FDR
No.3376 withheld the same as the appellant Bank sought advice of NABARD and
payment of interest @3.5 per cent was made. Thus, mistake in respect of issuance of
call deposit at higher rates and also conversion thereof into FDR’s from retrospective
effect was done inadvertently and any contract made in contravention of Statute
Rules and directives cannot be enforced. The State Commission directed the
appellant Bank to make the payment of interest @9.5 per cent in view of concluded
contract in respect of call deposit of 16 days and 10.5 per cent in respect of call
deposit of 61 days and thereafter conversion into FDR @9.5 per cent. Against this
order of the State Commission appellant Bank filed present appeal before the
Issues
Whether Bank is liable for compensating the other party for deficiency in
service for violating the norms of the contract?
Held
The National Commission was in agreement with the contention of the
appellant Bank that the contract was prohibited by a Statute Rule, etc. and contract
of commission of illegal act would not be enforceable. Further it held that the
depositing amount in fixed deposit was not a gratuitous act on the part of the
opposite party/Bank. Bank has enjoyed the benefit of the deposit and in some cases
such deposits had been regularized subsequently. Even if the Branch Manager has
exceeded to his authority, then also, the Bank is supposed to adequately compensate
the opposite party for an obligation resembling those created by contract.
Consequently, the respondent Bank was under an obligation in terms of second
part of section 73 of the contract Act which has not been discharged. Any person
injured by the failure to discharge such an obligation is entitled to receive some
compensation from the party in default, as if such person had contracted.
Further, in view of the representation made by way of advertisement inviting
call deposits for 61 days and 16 days and thereafter converting it into FDR @9.5 per
cent without having any authority in terms of instructions of the RBI and NABARD,
etc. the officials of the Bank are certainly deficient in rendering service and led the
complainant on a garden path.
Appeal dismissed.
Anumati vs. Punjab National Bank

IV (200 4) CP
(2004) CPJJ 21 (SC)
(SC)
Fac
actts
Complainant and her husband made a joint fixed deposit of Rs.20,000/- with
respondent Bank on 31st May 1988 for a period of 84 months (7years) which was to be
matured on 31.5.1995 and the amount payable on maturity was Rs.39,930/-. On 24th
June 1988, a loan was taken by one Khem Chand for his sole proprietary business of
M/s Verma Agro Industries. In 1991 the respondent Bank filed a suit against M/s
Verma Agro Industries, Khem Chand and against Complainant’s husband. It was
pleaded in the suit that Khem Chand and complainant’s husband had secured the
loan amount by creating a mortgage in respect of immovable property consisting
of agricultural land. The respondent Bank in suit prayed for a decree for
Rs.2,57,625/- together with additional interest and for enforcement of the claim
against the hypothecated and the mortgaged properties with a further prayer that
if the aforesaid securities were found insufficient for realization of the amount
payable under the decree, it may be given liberty to recover the balance from the
properties of complainant’s husband and one other Nanak Chand who executed
guarantee agreement on 24th June 1988. While the suit was pending complainant
and her husband sent a legal notice to the respondent Bank asking for premature
encashment of the fixed deposit receipt. Respondent Bank did not respond to the
notice and thereafter second notice was issued through an advocate on 26.5.1995
again demanding the amount payable on maturity of the fixed deposit stating
that the original FDR receipt had been lost by the complainant and her husband.
Respondent Bank did not answer to this notice too. The respondent Bank on 3rd
July 1995 filed an application before the court where the suit was pending informing
the court that the fixed deposit receipt had been mortgaged “as security towards
the disputed loan, complainant’s husband filed an objection to the Bank’s application
stating that he had never given any such guarantee and that the FDR had never
been mortgaged to the Bank. The trial court allowed the application of the
Respondent Bank and held that the amount of fixed deposit account had rightly
been adjusted in the account of the disputed loan. Complainant’s husband challenged
this order of the Trial court by way of Revision application. Revisional court dismissed
the application holding that same is not maintainable under section 115 CPC as
amended by UP Act No.31/1978. It further held that complainant and her husband
can initiate legal actions/proceedings for the recovery of the amount deposited
against the Bank. The Revisional Court found as a fact that the fixed deposit receipt
did not bear the thumb impression of the complainant and the only thumb
impression appearing thereon was of complainant’s husband. It further held that
since the FDR was not mortgaged as guarantee for the loan taken by M/s Verma
Agro Industries or Khem Chand, the dispute regarding the FDR was not in issue in
the suit filed by the Bank therefore, the trial court did not pass any order regarding
the right of the Bank to adjust the amount of the fixed deposit towards the recovery
of the loan alleged to have taken by M/s Verma Agro Industries and Khem Chand.
Complainant then filed a complaint before the District forum contending deficiency
in service against the respondent Bank. Before District forum respondent Bank
contended that both trial court as well as Revisional court had held that the fixed
deposit receipt had been mortgaged by complainant’s husband as security for the
loan granted by the respondent Bank to M/s Verma Agro Industries and the
complainant’s husband was entitled to do so because the FDR had specified that it
was payable to “either or survivor”. The District forum held that complainant was
entitled to recover half of the amount of the FDR i.e. Rs.19,965/- together with interest
from 1.6.1995 because complainant never mortgaged her share of the FDR in favour
of any party. It further held that since the receipt was in joint name of complainant
and her husband, the respondent bank should not have accepted any pledge of the
account without ifnforming the complainant and getting her consent. Since the
Bank accepted the same without consent of the complainant, Bank is deficient in
rendering services. Against the order of the District forum respondent Bank filed
appeal before the State Commission. The State Commission held that since the FDR
was payable to “either or survivor” it showed that the Bank could have got discharge
by making payment to either of the account holders. The State Commission allowed
the appeal holding that when payment could have been made to a single individual
in terms of the directions of the depositors then the Bank was at Liberty to accept
mortgage of the FDR on behalf of one of the depositors and the consent of the other
depositor was not necessary. Complainant, against the order of the State
Commission, filed Revision Petition before the National Commission. The National
Commission confirmed the order of the State Commission and also held that
financial institutions had every right to protect their interest by taking “conscious
decision”. Since the Bank had taken “conscious decision” in this case, it could not be
faulted and there was no deficiency in service. Against the order of the National
Commission complainant approached Supreme Court by way of civil appeal.
Issues
Whether the Bank has any right to adjust the amount of the FDR when there
was no claim with regard thereto and when the liability of the defendants in the
suit was yet to be quantified?

Held
The Supreme Court held that the contract in respect of the joint account was
between the Respondent bank and the husband and wife. The FDR was not a debt
due by the bank to Complainant’s husband alone which could be set off by the bank
against any claim that the bank may have had against Mamchand (Complainant’s
husband). Besides the right of Mamchand was to receive the money deposited only
after it matured, if he survived and in case of death of complainant’s husband before
maturity of FDR, the only person entitled to get money would be the appellant
(complainant). This right of the appellant could not have taken away without her
consent. It further held that the State and National Commission both erred in
proceeding on the basis that the civil court’s decision was that the FDR had, in fact
been pledged by Mamchand to the Bank. In such circumstances, the Bank had no
right to refuse payment of the amount deposited to the appellant. The refusal as
disclosed to this court, was contrary to banking norms. The District forum was
correct in accepting and the State Commission and National Commission erred in
rejecting the appellant’s complaint.
Appeal allowed order of the State Commission and National Commission set
aside.
P un jab & Sin

unjab dB
Sind ank vs. Suk
Bank hR
SukhR
hRaaj B
Baajwa & Anr
jwa Anr..
III (200 4) CP
(2004) CPJJ 1(NC)
1(NC)
Fac
actts
Complainant obtained one FDR for Rs.2.40 lacs on 6.2.1987 which was due on
6.8.1992 for Rs.5,13,419.99. Rs.7,28,848/- was again put in fixed deposit on 18.6.1996. On
maturity after 3years the amount was to become Rs.12,71,995/-. The Petitioner Bank
on being pointed out by the Local Audit that the higher rates of interest was given
for the interregnum period, reduced the face value of fixed deposit to Rs.5,78,822/-
giving an interest @5 per cent and not 13 per cent p.a. on the mentioned amount of
Rs.5,13,419. 1990 resulting in short payment of Rs.2,61,828/- as on 18.6.1999.
Complainant filed complaint before the District forum alleging deficiency in service
on the part of Petitioner Bank. District forum after hearing both the parties directed
the Petitioner Bank to pay Rs.2,61,828/- along with 12 per cent interest from 18.6.1999.
Aggrieved by the order of the District forum both the parties filed two separate
appeals before the State Commission. State Commission by common order dismissed
both the appeals. Against this dismissal order of the State Commission both parties
filed Revision Petition before the National Commission.
Issue
Whether Petitioner Bank is liable to pay interest to the complainant at the
rate granted by bank inadvertently to the complainant beyond the permissible rate
prescribed by the RBI?
Held
Before the National Commission Bank admitted their mistake and stated that
it was on account of inadvertence on the part of the bank that the rate of interest
i.e. 13 per cent was given for the period.
The National Commission held that no Bank can go beyond the guidelines
issued by RBI especially in regard to NRI accounts. Whatever might have been the
terms of the contract, i.e. in FDR, RBI guidelines have to prevail. If the contract ab
initio is against the authority on the subject then the contract loses its value to
that extent and cannot be enforced.
The deficiency albeit on account of inadvertence in giving interest @13 per cent has
been admitted by the bank causing loss and agony to the complainant. Bank is directed
to pay Rs.50,000/- as compensation for the deficiency on the part of Petitioner Bank.
Revision Petition of complainant dismissed.
P rem B ab
Bab
abooo vs. Bran
ancch Manag
Bran er
er,,
Manager
Far ak
arak hab
akhab ad G
habad Grramin B ank & Ors
Bank Ors..
III (200 4) CP
(2004) CPJJ 118(N
8(NC)
8(NC)
Fac
actts
Complainant obtained a loan of Rs.2,000/- from the respondent Gramin bank
Farkhabad and when this amount was not getting repaid, the first respondent
initiated recovery of the amount with interest by way of revenue recovery. The
Revenue Authorities in pursuit of this case made efforts to recover amount from
the complainant. Complainant paid Rs.1100/- on two separate dates in the year 1987
and 1988 to the Ameen, Surender Singh, receipt of which was given to the
complainant. He also paid Rs.2000/- to the said Ameen for which no receipt was
available on record. Complainant filed complaint before the District forum alleging
deficiency in service on the part of respondent bank for not issuing a ‘No Dues
Certificate’ as he paid due amount to the Ameen. District forum after hearing
parties directed the respondent bank to recover the paid out amount from the
Revenue Authorities and only the remaining amount, if any, to be recovered from
the complainant. Respondent Bank filed appeal before the State Commission which
set aside the order passed by the District forum and allowed the appeal. Against this
order of the State Commission complainant filed Revision Petition before the
Issue
Whether Bank can recover an amount twice once under process of law and
other by initiating the authority?
Held
The National Commission held that once the recovery proceedings under the
Revenue code of the State had been initiated by the Bank and unrebutted averments
of the complainant that the money was paid to the Ameen who is the collecting/
Enforcement Agency of the Tehsildar, the complainant cannot be faulted for non-
payment. Ameen is the functionary in the functional hierarchy of the Revenue
Administration in State which was acting under law as provided in the Revenue
code. Hence, whatever payments were made and if they were not deposited by the
Ameen is favour of the bank, the Petitioner/complainant cannot be faulted for this.
Matter is now between the Bank and the Revenue Hierarchy and since in this case
the amounts are reported to have been paid and the contention to this effect remain
unrebutted, the conclusion is that these amounts were paid by the petitioner to the
Ameen under a process of law to be paid back to the Bank. Any agency cannot
expect to recover twice from the poor farmer – one under process of law and the
other by initiating authority in this case the Bank. It is for the Bank to get the
details from the Revenue Authorities as to what has been done as a follow up to the
recovery / proceedings initiated on behest of the Bank. Having failed to do so and
having been brought on record that amounts have been paid by the complainant
to the Bank through Ameen, the Bank is not entitled to double recovery of this
amount from the Petitioner/complainant.
Revision Petition allowed, order passed by the State Commission set aside.
Swadeshi Polytex Ltd. vs. Central Bank of India & Ors.

III (200 4) CP
(2004) CPJJ 447(N
7(NC)
7(NC)
Fac
actts
Complainant company was carrying on business of manufacturing and
marketing polyester staple fiber and same was sold under the trademark ‘Jailene’.
Complainant received an order by telex on 30.12.1994 from opposite party No.4 – Shri
Minakshi Mills Ltd. for supply of Jailene PSP. On 21.1.1995 opposite Party No.4
confirmed the order after accepting the terms and conditions put forward by the
complainant where in it was written that the term of payment would be sight L.C.
and opened on 19.4.1995, an irrevocable without recource at sight letter of credit in
favour of the complainant through Central Bank of India, Madurai Branch, opposite
Party No.2 for Rs.66 lacs Subsequently, this L.C. was amended on 7.6.1995 as per which
complainant was required to submit certain documents to opposite Party No.2 i.e.
bank for claiming payment. The complainant submitted documents as per the
terms & conditions of the amended LC. through its Bank–Opposite Party No.3 which
were forwarded by them to the Central Bank between 17.6.1995 & 10.7.1995 before the
date of expiry of validity of LC which was up to 15.7.1995. When the complainant did
not receive payment despite submitting of documents complainant and its banker
took up the matter with Central Bank of India opposite Party No.2. Central Bank of
India intimated the complainant through telex message dated 27.6.1995 about some
discrepancies in the documents submitted by the complainant and a letter dated
18.7.1995 to the opposite Party No.4 (Shri Mirakshi Mills Ltd.) pointing out said
discrepancies in the documents which were waived out by them and requested vide
its letter dated 21.7.1995 to the bank to accept the documents and effect payments
of the bills. Despite various correspondence between the parties and re-submission
of documents as required Central Bank of India did not release the payments to the
complainant and again returned the documents along with covering letter dated
9.10.1995 advising the complainant to take up the matter directly with the ordering
company. Aggrieved by the actions of opposite party–Central Bank of India,
complainant filed complaint before the National Commission alleging deficiency
in service.
Issues
Whether the bank is liable for deficiency in service for refusing to honour the
letter of credit despite having received intimation regarding waiving off all the
discrepancies by the ordering party?
H eld
Before the National Commission it was contended by the counsel for the bank
that some cutting was required to be authenticated by the complainant and as
authentication was not done by the complainant during the currency of letter of
credit despite being pointed out, the bank was well within its right not to honour
the letter of credit. The National Commission rejecting the contention of the bank
held that the said cutting was not required to be authenticated and even if it was so,
it was not such a discrepancy on the basis whereof, bank could have refused to
honour the letter of credit thereby denying payment to the complainant who acting
on the LC had made delivery of Jailene PSF of the value of more then Rs.64,00,000/-
to the opposite Party No.4. There was gross deficiency in service on part of bank in
withholding payment of the value of the consignments for which said letter of
credit was issued by it.
Complaint party allowed.
Ratnachand Morakar vs. Bank of Maharashtra, Bombay

II (200 4) CP
(2004) CPJJ 225(N
5(NC)
5(NC)
Fac
actts
Complainant on 10.8.1990 deposited Rs.1,50,000/- & Rs.1,20,000/- with the
respondent Bank for the issuance of pay order and a demand draft to be issued in
favour of M/s Pratap Rajasthan Special Steel Ltd., Jaipur and M/s Indian Enterprises.
Subsequently, the pay order of Rs.1,20,000/- was cancelled by the respondent bank
and issued in favour of one M/s J.K. Industries for which complainant did not
authroise to any one i.e. neither for canceling the pay order and than for the issuance
of in favour of M/s J.K. Industries. Complainant was making regular enquiry with
regard to encashment of the said pay order. Respondent Bank vide its letter dated
4.11.1991 issued a certificate that pay order was issued in favour of M/s Keshri steel
Ltd., Bombay. On enquiry from M/s Keshri Steel Ltd., it was found that it had not
received the pay order. Complainant kept on making enquiries but bank gave no
response, then complainant vide its letter dated 7.4.1993 following with reminder
dated 26.4.1993 asked the respondent bank to resolve the matter by either issuing
fresh pay order or to credit Rs.1,20,000/- in his favour. Thereafter, Respondent bank
disclosed to the complainant that the said pay order was cancelled on 30.11.1990 and
a new pay order for the said amount was issued is favour of one M/s J.K. Industries.
Complainant filed complaint before the State Commission against respondent bank
for deficiency in service. The State Commission, dismissed the complaint and arrived
at conclusion that on the instructions of the manager of the bank, the payment in
favour of Keshri Steel Ltd. was withheld and fresh pay order was issued in favour of
M/s J.K. Industries. Complainant challenged the order of the State Commission
before the National Commission by way of present appeal.
Issue
Whether Bank is deficient in service for canceling the pay order and than
issuing it in favour of other party?
Held
Before the National Commission respondent Bank submitted that complainant
(a partnership firm) was having their current account with the Bank and he had
authorized their representative Ms. Lalit Seth to deal with same account. It is the
representative of the complainant who approached the respondent bank for
issuance of the pay order by filling in the request form on 10.8.90 in favour of M/s
Keshri Steel Ltd., Bombay. Thereafter, one authorized representative of the

complainant wrote a letter dated 20.10.1990 addressed to the Manager, Bank of
Maharashtra to cancel the pay order and issue a fresh pay order for the said amount
in favour of M/s J.K. Industries. Along with the said letter, he also produced the pay
order dated 10.8.1990. On the basis of said letter, Respondent Bank cancelled the pay
order dated 10.8.1990 and issued fresh pay order in favour of M/s J.K .Industries, as
requested, the National Commission considering the submission of the respondent
Bank held that the action of the Bank was in good faith on the basis of the instruction
of the authroised representative and in any case if authroised representative had
done something wrong complainant should take action against Authroised
Representative and not against the Bank.
Appeal dismissed.
T hir
hiruuchirap
hirap al
apal li M
alli ult
Mult ipur
ultipur
ipurppose SSo
o cial SSer
er
ervv ice SSo
oci
cieet y vs.
Canara Bank
II (200 4) CP
(2004) CPJJ 62(NC)
62(NC)
Fac
actts
Thiruchirapalli Multipurpose Social Service Society, registered under societies
Registration Act deposited various funds in FDR with the respondent Bank and in
all deposited Rs.62,08,745.05 for a term of 5 yeas which were due for maturity in the
year 2000. Complainant received a letter dated 5.2.1996 from the respondent bank
that the bank was marking a general lien on fixed deposits to cover the DIR loans
sanctioned by them from 1986 to individuals on the recommendations of the
complainant. Complainant filed complaint before the National Commission against
respondent bank alleging deficiency in service as bank acted arbitrarily in illegally
marking general lien on said deposits because the DIR scheme never provided for
any gurantee by the complainant.
Issue
Whether it is a fit case to be decided under the Consumer Protection Act, 1986
and to invoke the jurisdiction of this commission?
Held
The National Commission after hearing both the parties decided against the
complainant. It is submitted by the complainant that there was no gurantee given
by the complainant for repayment of the loan by the loaners to whom the benefit
was given under the Differential Interest Scheme framed by the Central Government
and therefore, bank was not entitled to have any lien on the fixed deposits of the
complainant, whereas it was submitted on behalf of respondent bank that the
amount deposited by the complainant was ‘seed money’ on the basis of which bank
gave loan to the persons recommended by the complainant. Furthermore,
transaction between the complainant and the respondent bank is commercial in
nature being a joint venture and the voluminous evidence is required to be
considered and therefore is not a fit case for exercise of jurisdiction under the
Consumer Protection Act, 1986.
It is further submitted that a project was started in collaboration with the
complainant in lending financial assistance for the upliftment of the down trodden
and the complainant provided seed money capital for the same. Respondent Bank
agreed to participate in lending programme to the beneficiaries sponsored by the

complainant, the programme continued and complainant kept on depositing the
seed capital money. The seed amount was not fixed deposit as understood in usual
sense and therefore, bank has rightly marked its general lien on the “seed capital”.
After hearing both the parties the National Commission held that prima facie,
it was a joint commercial venture between complainant and the bank to give loan
as per ‘Differential Interest Rate” Scheme and therefore, the complainant cannot be
said to be a consumer and would not be a fit case for deciding under the Consumer
Protection Act and requires to be dismissed.
ABN Amro Bank vs. Sangeeta Srivastava

II (200 4) CP
(2004) CPJJ 2289(N
89(NC)
89(NC)
Fac
actts
Complainant purchased a Tata Indica Car after taking loan from the Petitioner
Bank. Loan amount was to be repaid in equal monthly instalments of Rs. 7427/-.
Complainant due to financial difficulty could not make payment of instalments
for three consecutive months amounting to Rs.21,741/-. Due to default Petitioner
Bank forcibly took possession of the car despite the fact that the complainant was
ready to pay the amount due on her account. Complainant sent a notice on 25.11.2002
to the Petitioner bank which was replied back by letter dated 2.12.2002 by the
Petitioner bank with false averments. Complainant in such circumstances filed
complaint before the District forum against the Petitioner bank. Petitioner bank
was proceeded ex-parte as it failed to put in appearance despite service of notice.
District forum in its ex-parte order directed the Petitioner bank to refund
Rs.65,223/- (margin money) to the complainant. Petitioner bank filed an appeal
before the State Commission. The State Commission dismissed the appeal of the
Petitioner Bank. Against the dismissal order passed by the State Commission
Petitioner Bank filed Revision Petition before the National Commission on the ground
that complainant is not entitled to the refund of margin money amount.
Issue
Whether the District forum rightly proceeded ex-parte against the Petitioner
Bank?
Whether Bank is liable to refund the margin money to the complainant?
Held
The National Commission on the issue of non-service of notice held that court
file shows that notice was sent by post to the Petitioner on 1.5.2003 and an entry to
that effect was made at serial No.2447 in the Despatch Register for postal dak. Notice
was sent on the address of the Petitioner Bank shown in the cause title of the
complaint. It is not the case of the Petitioner that the said address is incorrect.
Thus, under Indian Evidence Act, 1872 it has to be presumed that the notice for
15.7.2003 was sent by the District forum and received by the Petitioner Bank. Though
issue of non-service of notice was not considered by State Commission still the
National Commission held that Petitioner bank was served with notice for 15.7.2003
and the District forum rightly proceeded the Petitioner Bank ex-parte as no body
put in appearance on its behalf.
On the issue of refund of margin money, the National Commission held that
amount of Rs.65,223/- was contributed by the complainant towards margin money
for purchase of the car which was re-possessed and sold by the Petitioner Bank.
Order for refund of margin money was passed by the District forum considering the
averments made in complaint and unrebutted affidavit filed in support there to by
the complainant and is therefore, devoid of merit.
St an
andd ardC
ard har
Char ter
tereed G
harter Grr in
indd l ays B ank Ltd. vs. H.B
Bank H.B.. Imp
Impee x PPvv t .Ltd.
I (200 4) CP
(2004) CPJJ 13(NC)
13(NC)
Fac
actts
Complainant, a merchant exporter, was having an account with the appellant
Bank. One company M/s B. Motiram placed two orders on the complainant on 4.5.1995
and 3.6.1995 valuing respectively US$17000.00 and US$1,27,160.00 which were to be
completed by the complainant by 15.9.1995 and the time for the shipment was the
essence of the contract. In order to execute the order complainant in turn placed
order with M/s Peetex/Phundipalle Textile Mills, Solapur for the manufacture of
those goods. It was settled between the complainant and the manufacturer that
the manufactured goods were to be dispatched to the complainant by 25.8.1995
and the complainant agreed to pay a sum of Rs.1,40,000/-. Accordingly, complainant
instructed its banker to issue a bank draft for Rs.1,40,000/- in favour of manufacturer
on charging usual commission. The appellant Bank charged its usual commission
for issuing the draft and also prepared the draft for Rs.1,40,000/- but it prepared
invalid draft in favour of the manufacturer with the result that when the
manufacturer deposited the bank draft with its bankers it was returned to the
manufacturer with the remarks ‘authorised signatory’s signatures’ required and
the Bank draft was not honoured by the Indian Bank, Solapur. The manufacturer
returned the invalid draft to the complainant blaming the complainant for such a
bogus/defective draft. Due to issue of defective Bank draft delay was caused in the
supply of the goods by the manufacturer to the complainant which resulted in the
shipment being delayed and cancellation of order for supply. Complainant claimed
compensation before the State Commission alleging deficiency in service against
the appellant Bank. State Commission allowed the complaint holding appellant
Bank liable for deficiency in service. Aggrieved by order passed by the State
Commission appellant Bank filed appeal before the National Commission.
Issue
Whether cancellation of order was the direct result of delayed shipment of
earlier orders and was on account of the negligence of the Bank who prepared the
invalid Bank draft which amounted to deficiency in service?
Held
The National Commission held that where a consumer sues for damages, the
loss he suffered as a result of breach of contract, must not be too remote.
Complainant is in the export business and is having account with the bank for the
last many years. It could be said that if there was any cancellation of the order of
4.5.1995 and 3.6.1995 this would be within the contemplation of the bank at the
time it prepared Bank draft. It is difficult to accept the proposition that cancellation
of the subsequent order of US$96000.00 was ever in the contemplation of the parties.
Any loss arising out of cancellation of the subsequent order would be too remote to
attract compensation. There is no circumstance to hold from where it could be
said that the alleged loss arising out of cancellation of subsequent order could be
considered to arise in the usual course of dealings between the parties and therefore
bank cannot be held liable for cancellation of the order of US$96000.00 placed by
M/s B. Motiram on the complainant because of defective Bank draft for Rs.1,40,000/
-.
Smt
mt.. Man
Manooram
amaa v s. C hair
Chair
hairmman, PPun
un jab N
unjab Naat ional B ank
Bank
I (200 4) CP
(2004) CPJJ 556(N
6(NC)
6(NC)
Fac
actts
Complainant made a term deposit of Rs.14,718.39 for the period of 4 months at
interest rate of 3.75 per cent p.a. After its maturity on 9.6.1959, next time complainant
approaches the Bank is only in the year 1987 and only on 25.11.1988 asked in writing
for payment of FDR amount with interest. Complainant did not receive any response
from the respondent Bank and therefore, filed complaint before the District forum.
The District forum held that the FDR could not be renewed on account of lapse on
the part of the complainant itself therefore, he is not entitled to get any interest till
25.11.1988. However, complainant is entitled for interest at the rate of savings interest
w.e.f.25.11.1988 till the filing of the complaint and thereafter of prevalent rate
regarding FDR 10 per cent p.a. Complainant, against the order of the District Forum,
filed appeal before the State Commission. The State Commission dismissed the
appeal. Therefore, complainant filed Revision Petition before the National
Commission.
Issue
Whether the complainant/consumer is entitled to get interest for the period
9.6.1959 to 25.11.1988 i.e. interest between date of maturity and date of application
for payment?
Held
The National Commission held that it is not in dispute that the money was
available with the Bank which he would have utilized for its purpose. After maturity,
at best it became a ‘deposit account’. Bank has enjoyed this money ever since its
maturity and complainant is thus, entitled to interest for the period that money
was with the Bank. The complainant is entitled to the interest at the prevailing
rates on a savings account from time to time worked on simple interest basis from
10.6.1959 till the date of payment.
Indian Export Corporation & Ors. vs. Chairman-cum Managing

Dir
Direecto
torr, SSyy nd icate B ank & Ors
Bank Ors..
IV (200 3) CP
(2003) CPJJ 45(NC)
45(NC)
Fac
actts
Complainant for starting the business of rice approached the respondent Bank
for grant of loan of Rs.9,50,000/- by way of overdraft facility. Sanction for ODMS
Limit in the said sum was conveyed to the complainants vide letter dated 18.8.2000
which was to be expire on 31.8.2001. Respondent Bank vide its letter dated 27.9.2000
informed the complainants about the extension of period of limit upto 31.10.2002.
Complainant on the basis of extended period limit of overdraft facility placed orders
for purchase of rice. Twenty five per cent of the ordered value of rice was paid to the
broker in advance and 75 per cent was to be paid at the time of lifting the stocks
which was to be lifted within 60 days and in case the stock was not lifted within 60
days, the money paid by way of advance was to be forfeited. The complainants paid
total sum of Rs.3.9 lacs to the broker out of which Rs.1.20 lacs were drawn from the
said account. Respondent Bank vide its letter dated 2.3.2001/14.3.2001 communicated
their decision to the complainants about unilateral withdrawal of sanctioned
overdraft facility without giving any prior notice. As a result of that action,
complainants suffered loss and thus, filed complaint before the State Commission
against the respondent bank alleging deficiency in service for unilateral withdrawal
of OD facility without any prior notice. The State Commission dismissed the
complaint with liberty reserved to the complainants to pursue remedy that may be
available to them under any other law. Against this dismissal order complainants
filed appeal before the National Commission.
Issue
Whether the State Commission was justified in dismissing the complaint on
the ground that the alleged deficiency in service on the part of bank was connected
with commercial purpose?
Held
The National Commission placing reliance on the decision of Supreme Court
in Cheema Engineering Services v. Rajan Singh held that engaging a technical person
for quality control, seven persons for loading and unloading gunny bags, peon and
receptionist for the office as alleged in the complaint would show that alleged
deficiency in service was connected with commercial activities which has been
excluded from the purview of the Act by amending the definition of ‘Consumer’
w.e.f. 15.3.2002. Ratio in ‘Cheema Engineering Services’ case supports the conclusion.
The complaint was rightly dismissed by the State Commission without calling upon
the respondent Bank to file their written version.
Appeal dismissed.
St ate B ank of PPa

Bank at iala vs. R
iala Raaj en
endder LLal
al & Anr
Anr..
IV (2003) CP
(2003) CPJJ 553(N
3(NC)
3(NC)
Fac
actts
Complainant deposited one cheque for collection on 12.5.1999 issued by Mr. V.K.
Arora of M/s V.K. Industrial Corporation, Ludhiana for Rs.75,000/- dated 1.5.1999, drawn
on Bank of Maharashtra Service Branch, Ludhiana, in his saving account maintained
with the Petitioner Bank. On some of the visits to the branch of the Petitioner Bank
complainant was informed that neither the cheque nor the amount thereof had
been received. Complainant made a complaint in writing to the Petitioner Bank to
know the fate of the said cheque on 13.7.1999 then the complainant was informed in
writing that Petitioner had not received any intimation about the cheque from the
Bank of Maharashtra. Complainant filed complaint before the District forum
alleging deficiency in service on the part of the Petitioner Bank. District forum
allowed the complaint ex-parte against the Bank of Maharashtra and the Petitioner
Bank, State Bank of Patiala. Petitioner Bank filed appeal before the State Commission.
The State Commission dismissed the appeal and affirm the order of the District
forum whereby Petitioner was directed to pay the amount of cheque with interest.
Against this order of the State Commission Petitioner Bank filed present Revision
Issue
Whether the Bank is liable for deficiency in service?
Held
The Petitioner Bank admitted the fact that the complainant deposited the
cheque for collection on 12.5.1999 which was sent by the Petitioner Bank at Ludhiana
Branch for the purpose of collection and Ludhiana Branch presented the cheque
for clearing on 19.5.1999 by Bank of Maharashtra, Bank of Maharashtra returned
the cheque same day with Memo insufficient fund, and the cheque alongwith that
memo was sent by the branch at Ludhiana to the Chandigarh branch by post but it
was lost in transit and therefore could not be returned to the complainant. The
National Commission on this submission of the Petitioner held petitioner Bank to
be liable for deficiency in service in not informing the complainant about dishonour
of cheque on 19.5.1999 and its having lost in transit because on coming to know
about the dishonour of cheque complainant could have initiated civil/criminal
action based on the said cheque against the drawer thereof. In this backdrop, the
Petitioner Bank could not have been made to pay Rs.75000/- being the entire amount
of the cheque with interest by the District forum and the State Commission. But
the Petitioner Bank cannot escape liability for payment of reasonable compensation
to the complainant which was assessed by the National Commission to be Rs.15,000/
-.
CCI C hamb
Chamb ers C
hambers o-o
Co-o p. H
o-op ousing SSo
Housing oci
cieet y Ltd. vs. De
Devve lopment
Credit Bank
III (2003) CP
(2003) CPJJ 9 (S C)
(SC)
Fac
actts
Complainant was maintaining a saving account with the respondent bank.
The respondent bank honoured 72 cheques amounting to Rs.75,70,352/- and debited
the same in the account of the complainant. Complainant filed complaint before
the National Commission alleging deficiency in service against the respondent Bank
in honouring 72 cheques amounting to Rs.75,70,352/- as all of them bore forged
signatures of the complainant and in some of the cheques the figures had been
altered. The National Commission held that numerous documents would be
required to be proved including about 150 cheques. Service of the expert will have to
be requisitioned for proof of the signatures and writings wherein the figures in
cheques have been altered. Under the Consumer Protection Act, 1986 this commission
is expected to decide the matter within a set frame of time. Relying on the decision
of Supreme Court is Bharthi Knitting Co. v. DHL Worldwide held that present case
involves an acute dispute of facts and therefore, the complaint is being returned to
the complainant for knocking the door of civil court. Against this order of the
National Commission, Complainant filed civil appeal before the Supreme Court.
Issue
Whether the approach of National Commission, shutting the case on the
ground that the question of fact and law arises which need to be investigated and
determined, is within its jurisdiction as conferred on it by Consumer Protection
Act?
Held
The Supreme Court held that it cannot be denied that Fora at the National
level, the State level and at the District level have been constituted under the Act
with the vowed object of providing summary and speedy remedy in conformity
with the principles of natural justice, taking care of such grievances as are amendable
to the jurisdiction of Fora established under the Act. The principal object sought to
be achieved by establishing such Fora is to relieve the conventional courts of their
burden which is ever increasing with the mounting arrears and whereas the disposal
is delayed because of the complicated and detailed procedure which at times is
accompanied by technicalities. Merely because recording of evidence is required, or

some questions of fact and law arise which would need to be investigated and
determined, cannot be a ground for shutting the doors of any forum under the Act
to the person aggrieved.
Further Supreme Court held that the decision arrived at by the National
Commission is premature. The Commission ought to have issued notice to the
respondent and taken its pleadings on record. Only when the pleadings for both
parties were available the commission should have formed an opinion as to the
nature and scope of inquiry, i.e., whether the questions arising for decision in the
light of the pleadings of the parties required a detailed and complicated investigation
into the facts which was incapable of being undertaken in a summary and speedy
manner. Then the commission could have justifiably formed an opinion on the
need of driving away the complainant to the civil court. Mere complicated nature
of the facts and law arising for decision would not be decisive.
Appeal allowed matter remanded back for fresh hearing.
Abdul R az
Raz ak & Anr
azak Anr.. vs. SSout
out
outhh In
Inddian B ank
Bank
III (2003) CP
(2003) CPJJ 20(NC)
20(NC)
Fac
actts
Some imposter requisitioned new cheque books for the accounts of the
complainants and obtained them from the respondent bank. This imposter
fraudulently withdrew the large amount from complainants account. Upon coming
to know of negligible balance on presentation of cheques by the complainants they
came to know of the fact of withdrawal(s) based on cheque books which they never
obtained nor did they sign the cheques withdrawing the amounts. Complainants
complained the matter to the respondent Bank and upon not getting any proper
response/relief they filed two separate complaints before the District forum. The
District forum allowed the complaints and directed the respondent Bank to pay
back fraudulently withdrawn amount with interest. Respondent Bank against the
order of the District forum filed appeal before the State Commission. The State
Commission allowed the appeal and set aside the order passed by the District forum
and dismissed the complaint. Aggrieved by the order of the State Commission
complainants filed Revision Petitions before the National Commission.
Issues
Whether there has been any deficiency on the part of the Bank in issuing
cheque books to imposters and honouring the cheque of large amounts without
verifying the signatures?
Held
The National Commission held the respondent Bank is liable for deficiency in
service for not verifying and comparing the signatures and encashing the cheques
of large amount twice. The National Commission rejected the contention of the
respondent Bank that they performed their duties in good faith when they issued
the cheque books and encashed the cheques. The National Commission held that
the State Commission did not go into the question that it is the duty of the Bank to
compare the signatures of the account holder before issuing of an instrument or
encashing the cheques. When the National Commission saw the signatures on the
Account opening form of both the complainants and compared them with the
signatures on the cheque requisition application and the cheques, then even without
aid from any handwriting expert it became clear that the respondent bank failed
not once but twice to correctly verify/compare the signatures on these instruments
and the specimen signatures with them on record. One at the time of issue of
cheque book and again at the time of encashing cheques. The National Commission
held it to be the case of double default on the part of respondent Bank. Bank’s
cashiers are professionals and trained to read the difference between the signatures.
Deficiency in service is writ large on the face of it by the respondent bank by not
comparing the signatures on the documents/instruments presented to them.
Revision Petition allowed and the orders passed by District forum are restored
and set aside the orders of the State Commission.
Popp
ppeeys Val
allley H
Hoote
tell PPvv t . Ltd. vs. C it
itii B
Cit ank
Bank
III (200 3) CP
(2003) CPJJ 133(NC)
133(NC)
Fac
actts
Complainant, a private limited company owning a hotel in Tirupur and became
a member of the respondent establishment Citibank card centre and was given
code No.44151960. In the usual course of business, complainant forwarded the charge
slip signed by one Mr. Sayed Doha, Visa Card No.4121741329556679 for Rs.39,690/- on
December 2, 1995 to Respondent Bank. The respondent Bank instead of giving credit
in the account of the complainant returned the charge slip on the ground that the
said card is in the warning bulletin which was issued on 29.11.1995 to all the
merchants and that the card holder’s account was closed as the customer was a
defaulter. The complainant intimated the respondent Bank that they were not
justified in returning the charge slip because the said warning bulletin dated
29.11.1995 was received only after 10-15 days from the date of issue, i.e. 10 to 15 days
after the charge slip of defaulter customer was collected by him. Complainant
issued legal notice dated 8.4.1996 calling upon respondent bank to pay a sum of
Rs.39,990/- with interest but of no avail. Thereafter, complainant filed complaint
before the District forum alleging deficiency in service on the part of respondent
bank. The District forum dismissed the complaint without giving notice to the
opposite party holding that the complainant cannot be construed as a consumer
and does not fall within the purview of the Consumer Protection Act, 1986. On
appeal the State Commission also expressed the similar view and dismissed appeal
after giving notice to the Respondent Bank. Against this dismissal order passed by
the State Commission complainant filed Revision Petition before the National
Commission.
Issue
Whether complainant can be construed as a consumer falling within the
purview of the Consumer Protection Act, 1986?
Whether there has been any deficiency in service on the part of Bank in not
giving credit to the complainant for the charge slip of a defaulter customer?
Held
The National Commission on the point that whether complainant is a
consumer held that since the relationship between the bank and the complainant
entail rendition of service and reimbursing the members establishment and the
bill, the bank is directing the charges which constitute the consideration of such
services and therefore, it cannot be said that the Member establishment is not a
consumer.
Further, the National Commission, on merits of the case, held that there has
not been any deficiency on the part of respondent bank as the complainant/Member
Establishment exceeded their limit without prior authorization by the bank.
Complainant was not very careful in accepting without obtaining prior
authorization of respondent bank when the amount exceeded lower limit. The
bank has a right to refuse the payment or grant or refuse authorization which
shall be binding and final on the merchant establishment and cannot be faulted
for their conduct. No case of deficiency in service is made out against the respondent
Bank.
Revision Petition dismissed, complaint dismissed.
Ar
Arcchana M
M.. K am
Kam
amaath vs. CanaraB
Canara ank & Anr
Bank Anr..
II (200 3) CP
(2003) CPJJ 7(NC)
7(NC)
Fac
actts
Complainant was having a current account with respondent Bank.
Respondent Bank charged Rs.50/- for issuance of 50 leaves of MICR cheques which
were not being charged from the complainant previously but this time charged
unilaterally without any information and consent of the complainant. Aggrieved
with this unilateral action of the respondent Bank complainant filed complaint
against respondent Bank on the ground that this amount had not been charged
earlier for issuance of cheque book and same has been introduced unilaterally
without any prior information and consent. The District Forum allowed the
complaint holding that Bank was not justified in recovering the charges for supply
of leaf of cheque as it could not be done unilaterally without the consent of the
customer. Further District Forum held that Respondent Bank also did not provide
any data indicating cost it incur in obtaining such cheque books. Respondent Bank
against the order of the District Forum approached the State Commission. The
State Commission upheld the order of the District Forum observing that there was
a direction of the Reserve Bank of India to the Banks providing that the Banks
would not be charging for clearing of the cheques. Being aggrieved by the order of
the State Commission, Respondent Bank approached the National Commission.
The National Commission held that the charges which the Bank chose to levy, for
providing their services by supply of MICR cheques, fell in the realm of pricing and it
is on account of consideration for providing banking services. Hence, it was not
within the jurisdiction of the forums to go into that question relating to pricing to
such services. Thereby the National Commission allowed the Revision Petition filed
by Respondent Bank. Against the order of the National Commission complainant
filed present civil appeal before the Supreme Court.
Issue
Whether the National Commission was right in holding that the amount
charged by the Bank relates to pricing of services rendered by the Bank?
Held
The Supreme Court rejecting the submissions of complainant that the charge
has been unilateral, without consent and against the directives of the Reserve Bank
of India held that introduction of MICR facilitates the clearance of the cheques and
avoids unduly long time consuming process in cheque clearance. Such small charges
necessitated due to general modernization of its functioning and services, the
question of it being unilateral, does not arise nor the question of consent of each
customer. Further Banks charging any amount for issuing MICR cheques to their
customers or for the better services rendered for clearance of cheques by introducing
any modern and new methods, are not against the directives of the RBI. The Supreme
Court held that the order passed by the National Commission setting aside the
orders passed by the District Forum and the State Commission calls for no
interference.
Appeal dismissed.
Om Prakash Sahni vs. State Bank of India & Ors.

II (2003) CP
(2003) CPJJ 1100(N
00(NC)
00(NC)
Fac
actts
Respondent Bank invited applications for allotment of equity shares of Rs.10/-
at a premium of Rs.90/- in response to the capital issue float. Complainant applied
for allotment of 100 shares each but failed to receive any allotment advice. Since
there was no response from the State Bank of India, Complainant approached the
District forum alleging deficiency in service on the part of respondent Bank. Before
the District forum respondent Bank did not appear and the District forum on the
basis of record available held that the complainants were prospective investors and
hence, could not be deemed to be consumers, dismissed the complaint. Against
dismissal order complainant approached the State Commission. The State
Commission placing reliance on the decision of the Supreme Court in the case of
Morgan Stanley Mutual Fund v. Kartik Das affirmed the order of the District forum
and held further that the complainants have no case before the fora constituted
under the Consumer Protection Act and can approach civil court and dismissed the
appeal. Complainants approached the National Commission invoking its revisional
jurisdiction.
Issue
Whether the complainants are Consumers under the Fora constituted under
Consumer Protection Act.
Held
The National Commission held that complainants are not consumers, but
they are only prospective investors, and remedy, if any, lies in civil court. The National
Commission dismissed the revision Petition without prejudice to their right to
approach civil court for appropriate remedy.
K. R am
Ram
amaa Iyer & Ors
Iyer Ors.. vs. In
Inddian O
Ovvers
erseeas B ank
Bank
II (2003) CP
(2003) CPJJ 114
43(NC)
3(NC)
Fac
actts
Complainants for the improvement of their hotel business approached and
availed a term loan of Rs.10 lacs in the month of March 1986 from the Bank of Tamil
Nadu, which later on merged with the respondent Bank, Indian Overseas Bank.
Again in August 1986 they further availed a loan of Rs.2,75,000/-. Complainants were
going to repay the loan amount. On ‘daily payment system’. For further improvement
of their business complainants again approached the Bank of Tamil Nadu for the
sanctioning of Rs.15 lacs under the IDBI Scheme which was sanctioned by the Bank
but before the disbursement of the loan, the Govt. of India imposed moratorium in
August 1989 and formulated the Scheme for the merger of the bank of Tamil Nadu
with the Indian Overseas Bank. After the moratorium lifted by Government of
India complainant contacted the Respondent Bank for the release of the sanctioned
loan amount of Rs.15 lacs. The complainants were asked to submit a fresh
application as a matter of formality which complainant did on 16.3.1990 but the
Respondent Bank even then did not release the loan amount which was already
sanctioned. Respondent Bank, in the meantime, called on the complainants on
23.3.1992 to repay the earlier sanctioned loan amount on the representation of the
complainants the respondent Bank granted a concession to write off Rs.52,381/-
and called upon the complainant to pay the balance amount of Rs.56,360/- with
interest. Complainant protested against the recovery of interest as claimed by the
Respondent Bank being over and above the guidelines issued by the Reserve Bank of
India as they have already paid Rs.6,68,904/- in full and final settlement.
Complainants filed complaint before the State Commission against the respondent
Bank alleging deficiency in service in failure to close the loan account and returning
the documents. Respondent Bank contested the complaint before the State
Commission on the ground that complaint is not maintainable matter being sub-
judice before civil court and that after the amalgamation of the erstwhile Bank of
Tamil Nadu with the Indian Overseas Bank the amount in this non-operative account
was credited towards the loan account and hence, there was no deficiency on the
part of the Bank. The State Commission rejecting the contentions of the Respondent
Bank held that in view of the provisions of section 3 of Consumer Protection Act,
matter being sub-judice in civil court, is no bar to remedy and hence complaint is
maintainable. Further, it held that after taking over all the assets and lialilites of
Bank of Tamil Nadu by the respondent Bank they cannot turn around and say that
they are not bound by the order of Bank of Tamil Nadu and are not liable to disburse
the loan amount and therefore, there has been gross deficiency in service on the
part of the respondent Bank in not releasing the sanctioned loan amount (sanctioned
by Bank of Tamil Nadu) and allowed the complaint partly. Against this order both
parties filed appeal before the National Commission.
Issues
Whether the Bank is liable for deficiency in service in not releasing already
sanctioned loan amount which was sanctioned by Bank of Tamil Nadu before its
merger with Respondent Bank?
Held
The National Commission during the course of argument specifically asked
the complainant to show any document sanctioning the loan amount of Rs.15 lacs
by the Bank of Tamil Nadu which he failed to do so. Neither the loan document nor
any correspondence emanating from the said Bank of Tamil Nadu have been
produced on record. In absence of any document or examination of the said loan/
additional loan, it cannot be accepted that any loan/additional loan had been
sanctioned. Oral information by the chairman of the Bank of Tamil Nadu is nothing
more than a hear say and cannot be accepted as evidence.
Principal, Guru Nanak Girls College vs. Punjab & Sind Bank
I (2003) CP
(2003) CPJJ 1177 1(NC)
1(NC)
Fac
actts
Complainant was the Principal of Guru Nanak Girls College, Ludhiana which
was being run by a trust and under different resolutions of the Trust there were
seven separate accounts opened in the Respondent Bank which were operated only
by the Principal. Respondent Bank stopped the operation of all the accounts on a
complaint received from some rival body of the Trust managing the college. This
caused great loss to the principal and therefore she filed complaint before the State
Commission and sought compensation. The State Commission dismissed the
complaint. Against dismissal order complainant filed appeal before the National
Commission.
Issues
Whether Bank is deficient in service for stopping the operation of accounts
opened in the name of the principal by just receiving a communication from rival
group?
Held
The National Commission while agreeing the reasoning of the State
Commission that the Bank acted on the advice of one group of the trustees held
that prima facie, Bank was wrong in stopping the operation of the accounts operated
by the principal. It was certainly a mistake on the part of the Bank and must have
caused a great deal of anguish and harassment to the principal but then Bank was
under a bona fide belief that it could stop the operation of the Bank accounts but
then every mistake cannot be necessary stated to be deficiency in service.
Appeal dismissed.
DOSONC
SON hemi
hemiccal PPvv t . Ltd. vs. U
Chemi nite
Unite dB
nited ank of In
Bank dia & Ors
Ind Ors..
I (2003) CP
(2003) CPJJ 214(N
214(N C)
4(NC)
Fac
actts
Complainants were having a cash credit facility to the tune of Rs.10 lacs from
the respondent Bank. Title documents relating to immovable property were
deposited with respondent Bank by way of security. In the course of time,
complainants approached the respondent Bank for release of the title deeds of the
immovable property and offered other securities in lieu of immovable property as
the Federal Bank offered to provide loan over Rs.20 lacs for completing the building
on that immovable property. Since the complainants were in urgent need to get
the loan from the Federal Bank, once again requested the Respondent Bank to close
its account and for this gave a cheque on 22.9.1998 for Rs.9,63,895/- towards the
balance in the account and also offered to make payment of balance amount of
interest in cash and requested the bank to return all the documents of title within
30 days but the bank did not return the title deeds etc. relating to immovable property
even after several reminders and therefore, complainant filed complaint before the
State Commission against the respondent bank for not handing over the documents
of title. After filing of the complaint Petitioner bank returned the documents of
title in March 1999 Bank did not file written version despite two adjournments and
the State Commission dismissed the complaint treating it as infructuous and
holding the bank to be liable for deficiency in service and did not grant any
compensation observing that since complainant had not suffered any loss on
account of delay in returning the document he is not entitled. Against this dismissal
order complainant filed appeal before the National Commission.
Issue
Whether the State Commission was proper in exercising its jurisdiction vested
by law when it held that Bank was deficient in service but did not grant any
compensation to the complainant?
Held
The National Commission held that the State Commission failed to exercise
jurisdiction vested in it by law. It further held that once having held that there was
deficiency in service on the part of respondent Bank, complainant should have been
compensated even though complainants did not suffer any loss. There being no
written version from the Bank it could not be assumed that the complainant did
not suffer any loss. The State Commission should have examined the matter in
more pragmatic manner after holding Bank to be deficient in service than rush to
dismiss the complaint. Complainants were trying hard the get their documents of
title back for availing loan from the Federal bank to Complete their building complex.
They even refunded whole of the amount to the Bank standing in their cash credit
account. Delay in construction escalated the cost.
On the face, there was gross deficiency in service on the part of the Bank after
having received the whole amount from the complainants there was no reason for
the Bank to hold on to the title deeds for such a long period. Bank failed in its duty
to return the documents within reasonable time.
Order of State Commission, set aside, complaint allowed
allowed. Compensation of Rs.
50,000/- alongwith 12 per cent from the order of State Commission granted.
Memo
MemonnC o-o
Co-o
o-opp. B ank Ltd. vs. An
Bank Anwwar D
D.. Ahme
Ahmedd ab adii
abad
ad
I (2003) CP
(2003) CPJJ 2285(N
85(NC)
85(NC)
Fac
actts
Consumer/Complainant was having a saving account with appellant No.2.
Complainant issued a cheque dated 28.3.1994 in favour of appellant No.2 for Rs.3 lacs
to be invested in a fixed deposit. Appellant No.2 received a notice from CBI on 29.3.1994
under section 102 Cr.P.C. requiring it to stop operation of accounts/lockers, etc. as
detailed therein standing in the names of Mohd. Dawood Ahmedabadi and his
relatives. Acting on said notice appellant No.2 returned the cheque dated 28.3.1994
to the complainant alongwith a covering letter dated 29.3.94 referring to said notice
from CBI as complainant was the brother of Mohd. Dawood Ahmedabadi.
Subsequently, on instructions from CBI, appellant No.2 sent a letter dated 22.7.1995
to the complainant informing him that he may operate his saving account.
Complainant sent a legal notice to the appellant No.2 to which appellant No.2 replied
back on 22.7.1997. Thereafter, complainant filed complaint against appellant No.2
and its head office alleging deficiency in service in not making fixed deposit before
the State Commission. The State Commission directed appellant No.2, Bank to pay
interest @12 per cent p.a. on the amount of Rs. three lacs from 1.4.94 to 14.5.1996.
Against this order appellant No.1 & 2, Banks filed appeal before the National
Commission. Another complaint was filed by Smt. Sufia M. Ahmedabadi on identical
allegations. She was intimated regarding operation of her account on receipt of
communication from CBI vide letter dated 15.5.1996. Whereas complaint was filed
on 13.10.1997. The State Commission in this matter also granted the same relief.
Appellant No.2 Bank filed appeal against this order also.
Issue
Whether Bank is deficient in not making the fixed deposit despite having
received the cheque for the same?
Whether complaint is barred by limitation?
Held
Before the National Commission appellants made twofold submissions i.e.
complaints barred by limitation and secondly that there is no deficiency in service
in view of notice u/s102, Cr.P.C. dated 29.3.1994 Sent By CBI. The National Commission
on the point of limitation held that cause of action to file complaints against the
appellants had accrued to the respondents on 29.3.1994 when appellant no.2. Bank
did not convert the amount of 2 cheques for Rs.3 lacs each in view of notice u/s 102,
Cr.P.C. received from CBI on 29.3.1994. Taking that date as starting point of limitation,
the complaints filed beyond the period of two years on 25.9.1997 and 13.10.1997 and
were barred by time. Even if date of 22.7.1995, the date of intimation regarding
permission to operate saving account, is taken for computation of limitation then
also the complaint filed by complainant Anwar D. Ahmedabadi was time barred
and in case of Smt. Sufia M. Ahmedabadi since the intimation was sent on 15.5.1996
same is within limitation. But date of 15.5.1996 cannot be taken as starting point
for limitation in both complaints. In complaint filed by Anwara Ahmedabadi
15.5.1996 could not have been taken for computation of limitation for filing
complaint as the cause of action had accrued on 29.3.1994.
Further, on the point of deficiency in service, the National Commission held
that Bank stamps appearing on both the cheques in question as also covering letters
conclusively point out that the cheques were delivered to appellant no.2 Bank on
29.3.1994 instead of 28.3.1994.
Further, National Commission held that in view of aforesaid notice under
section 102, Cr.P.C. dated 29.3.1994, the appellant No.2 was well within its rights not to
convert the amounts of 2 cheques into fixed deposits and return them to
respondents. Appellant Bank followed the decision of Supereme Court in State Bank
of Maharashtra v. Tapas D. Neogy, (1999) 7 SCC 685 wherein it was held by Supreme
Court that bank account of an accused or any of his relative is ‘property’ within the
meaning of section 102, Cr.P.C. and a police officer in the course of investigation can
seize or prohibit the operation of the bank account if such assets have direct links
with the commission of offence which the police officer is investigating into.
Appeals accepted; order passed by State Commission set aside.
CanaraB
Canara ank vs. N
Bank ar
areesh K
Nar um
Kum ar Jain & Anr
umar Anr..
III (2002) CP
(2002) CPJJ 13(NC)
13(NC)
Fac
actts
Complainant obtained cash credit limit of Rs.30,000/- against goods stored in
the shop and godown. Petitioner Bank took insurance policy in respect of shop of
the complainant at the cost of complainant. Complainant also took insurance policy
for his shop and godown but same was surrendered on 6.7.1994. Loss on account of
heavy rain was reported on 7.7.1994. Complainant filed claim with insurance
company which was rejected by the insurance company because the loss occurred
was not covered by insurance policy. Complainant filed complaint before the District
Forum alleging Deficiency in service on the part of Bank & Insurance Company. The
District Forum exonerated the insurance company and held Bank liable for
deficiency in service for not taking policy for goods in the godowns. Petitioner Bank
against the order of the District Forum filed Appeal which was dismissed by the
State Commission. Petitioner Bank filed Revision Petition before the National
Commission taking plea that it is the primary duty of the complainant to take
insurance policy for the hypothecated goods.
Issues
Whether the Bank is liable for deficiency in service for not taking insurance
policy in respect of hypothecated goods lying in godown?
Held
The National Commission considering the plea of the Petitioner Bank held
that the Petitioner Bank was under no obligation to take an insurance policy after
recall of loan by the petitioner and after having filed a suit against the complainant/
respondent. Onus lays clearly on the respondent to have a valid policy cover all the
time which he did obtain and surrendered only to claim loss the next day. It is the
duty of the complainant to ensure that his goods are covered by insurance policy all
the time and it is complainant who failed to do so, therefore Petitioner Bank cannot
be held liable for lapses on his part.
Revision Petition allowed, order of the State Commission and the District Forum
set aside.
Andhra Bank vs. Vishwapriya Financial Service & Securities Ltd.

III (200 2) CP
(2002) CPJJ 21(NC)
21(NC)
Fac
actts
One concern M/s Shree Ganesh approached the respondent for discounting
bills of exchange raised by it on M/s S.T.R. laboratories, Hyderabad and produced a
Bank Gurantee issued by appellant Bank, Juntapalli Branch, Andhra Pradesh for a
sum of Rs.5.5 lacs alongwith a letter from the appellant confirming the issuance of
Bank Gurantee. Respondent believing the said Bank Gurantee discounted the bills
of exchanged raised by M/s Shree Ganesh. When the respondent sent its
representative for presentation of bills, no one was found at the given address and
thus respondent invoked the Bank Gurantee given by appellant Bank vide its letter
dated 30.8.1993. In response appellant Bank asked about the particulars of the Bank
Gurantee which was furnished to the respondent as no such Bank gurantee was
noted in their record and referring the matter to higher authorities and ultimately
informed the respondent that the appellant Bank has not issued any such Bank
gurantee to M/s Shree Ganesh. Respondents referred the matter to RBI but without
any progress. Respondents filed complaint before the State Commission against
the appellant Bank for not honouring the Bank gurantee. The State Commission
rejected the plea of appellant Bank that Bank gurantee could be invoked only after
exhausting all other remedies and directed the appellant Bank to honour the Bank
gurantee holding that since the Bank gurantee was actually issued by the branch
of the appellant and if the Manager of the appellant did not act bonafide then it
cannot absolve the appellant Bank from its liability under the letter of gurantee.
Against this order appellant Bank filed appeal before the National Commission.
Issues
Whether the Bank is deficient in services for not honouring the Bank gurantee
issued by it?
Held
The National Commission after referring various judgments held that it is
well settled principle of law that if the act is done in course of employment which is
authorized, then the master is liable for the acts of its servant. The National
Commission further held that the evidence on record well establishes that the
Branch Manager acted within the normal course of his duties when he issued the
Bank gurantee and the plea raised by the appellant Bank that the customer should
have exhausted its remedies against the principal debtor before invoking Bank
gurantee is without any merit. The liability of the surety/guarantor arise
immediately on the contingency mentioned in the Bank gurantee occurring i.e. the
dishonour of bills of exchange. The failure of appellant Bank in not honouring the
letter of gurantee issued by its branch manager amounted to grave deficiency in
service.
Appeal dismissed and the order of the State Commission affirmed.
M.P
.P.. M iner
Miner als Ltd. vs. B
inerals ank of In
Bank Inddia & Ors
Ors..
III (2002) CP
(2002) CPJJ 225(N
5(NC)
5(NC)
Fac
actts
Present complaint is against the respondent bank alleging deficiency in service on
their part in not paying the amount of the Bank gurantee on demand being obligation
on the part of Bank requiring it to pay under the Bank guarantee. The respondent bank
executed a bank gurantee on behalf of its customer, M/s Searsole Chemical Ltd. in favour
of the complainant. In the bank gurantee dated 6.7.1993 the respondent bank undertook
to pay to the complainant an amount not exceeding Rs.20 lacs by reason of any breach
made by the said customer M/s Searsole Chemical Ltd. of any of the condition contained
in the agreement dated 7.6.1993 being executed between the complainant and M/s
Searsole Chemical Ltd.. The said bank gurantee was extended by the respondent bank
vide its letter dated 5th September 1999 for one year i.e. from 20.5.1994 to 19th May 1995.
The complainant called upon the respondent bank invoking the gurantee dated 6.7.1993.
When the respondent bank did not pay the said bank gurantee complainant filed the
present complaint before the National Commission.
Issues
Whether Bank is liable for deficiency in service for not paying the amount of
bank gurantee on demand especially, when the demand was not made in accordance
with the terms of the gurantee?
Held
The National Commission while accepting the plea of the respondent bank that
the demand in the manner it has been made is not in accordance with the terms of
the gurantee and as such it is not obliged to pay, held that it is a condition of the Bank
gurantee that demand certifying that breach of terms of agreement has occurred
supported by proof of supply of material and acceptance of the same by the company
and non-payment, therefore, no payment could be made. Complainant did not sent
requisite documents proving the delivery of the consignments in respect whereof the
money is being claimed. There are certain conditions that are provided in the gurantee
itself which have to be fulfilled before the Bank can make payment under the gurantee
and the complainant failed to fulfill those conditions. As the documents which were
required to accompany the demand were not sent. Therefore, the Bank was within
its right not to honour such demand under the gurantee.
Ar
Aryyan Agro SSpi
pi
picce (P) Ltd. vs. SSar
ara s wa t C
ara o-o
Co-o
o-opp. B ank
ank.. Ltd. & Anr
Bank Anr..
III (200 2) CP
(2002) CPJJ 41(NC)
41(NC)
Fac
actts
Complainant exported fruits, chilly, pickles and other items to Dubai and
instructed Respondent Bank to realize the export proceeds. Respondent Bank failed
to realize export proceeds and thus the complainant filed complaint before the
Issue
Whether the National Commission under its summary jurisdiction can
entertain a complaint wherein complicated questions/issues of facts and law is
involved?
Held
The National Commission considering the submission of the Bank that though
packing credit limit was sanctioned to the complainant it was not utilized by the
complainant for exporting goods to Dubai complainant exported goods to M/s Das
Foodstuffs Trading, Dubai though it took packing limit for M/s Mipco Ltd. And used
the letter of credit for exporting goods to M/s Das Foodstuff without any intimation
to the respondent Bank and ultimately held that the complaint cannot be decided
in the summary jurisdiction of a Consumer Forum. Such type of cases should not be
dealt with by the forum under the CP Act, in a summary fashion.
Indian Overseas Bank vs. Klebert Pierre

III (2002) CP
(2002) CPJJ 777(N
7(NC)
7(NC)
Fac
actts
Complainant deposited US$36, 701.33 on 16.7.1990 with Petitioner Bank for a
period of 18 months @9.5 per cent interest. Later same was renewed on 20.1.1992
@10.5 per cent rate of interest, on 19.7.1993 @10.5 per cent on 17.1.1994 @4.5 per cent and
on 18.1.1995 @6.5 per cent rate of interest. During audit inspection the Petitioner
Bank found that the rate of interest on FCNR Account in 1992 was 6.75 per cent and
not 10.5 per cent. This error was brought to the notice of the complainant and
requested the complainant to forward the deposit receipt for necessary correction
and re-transmission, which was refused by the complainant. The Petitioner Bank
paid US$52,786.36 to the complainant after deducting excess amount paid due to
clerical mistake. Aggrieved by such deduction complainant filed complaint before
the District forum. The District forum allowed the complaint and directed the
Petitioner Bank to pay deducted excess amount with interest. Petitioner Bank filed
appeal before the State Commission. The State Commission affirmed the order of
District forum. The Petitioner Bank filed Revision Petition before the National
Commission.
Issues
Whether excess amount deducted by the Petitioner Bank amounts to deficiency
in service?
Held
The National Commission relying on the decisions of Supreme Court and its
previous decisions held that the depositor could not be paid interest at the rate
higher than the maximum prescribed by the RBI which in the present case is 10.5
per cent plus one per cent i.e. 11.5 per cent and the Bank could not be faulted for
reducing the rate of interest to the extent of interest prescribed by the RBI and
applicable at the time of acceptance of FDRs.
Revision Petition allowed; orders of both the fora below are set aside.
Indo Steels vs. Central Bank of India

III (2002) CP
(2002) CPJJ 11552(NC)
2(NC)
Fac
actts
Complainant is carrying on business of iron and steal and enjoying an overdraft
facility with respondent Bank since 1986. While the facilities were being enjoyed by
the complainant respondent bank locked the premises of the firm. Complainant
filed complaint before the State Commission alleging deficiency in service on the
part of respondent Bank on account of locking the premises of the firm, the
reputation of the complainant suffered substantial damage. The State Commission
dismissed the complaint. Against the dismissal order of the State Commission,
Complainant filed Appeal before the National Commission.
Issues
Whether the Bank is liable for deficiency in service for protecting its own
interest by locking the premises of the Loanee?
Held
The National Commission rejected the contention of the complainant that it
suffered loss of reputation due to the action of the Respondent Bank which locked
the premises of the firm without any notice to the appellant and accepted the
submission of respondent Bank that the overdraft facility provided to the
complainant by the respondent bank was subject to the condition that he would
maintain adequate stocks to cover the dues and he was also required to submit its
periodic stock statement for the reason that the complainant was overdrawing his
account leading to a huge balance of Rs.40 lacs outstanding and therefore the
respondent Bank insisted for adequate security and asked the complainant to
regularize his accounts but when the surprise inspection conducted by the officers
of respondent, the stock in the premises were hardly worth of Rs.15 lacs. Therefore,
the respondent Bank, with a view to secure Bank’s interests the Bank converted the
hypothecation of all movable stocks into pledge as per the terms of hypothecation
agreement. After considering the terms & conditions of hypothecation agreement
and the contention of the respondent Bank, The National Commission held that in
view of huge outstanding which remained uncleared the action of the Bank in
taking possession of the securities to protect its interests cannot be assailed.
Appeal dismissed.
Commander Rakesh Sharma vs. Punjab National Bank

III (2002) CP
(2002) CPJJ 116
65(NC)
5(NC)
Fac
actts
Complainant, holder of a saving Account with Respondent Bank issued two
cheques one for Rs.60,350/- dated 10th May 1991 & other for Rs.20,000/- dated 13th May
1991. To ensure the availability of necessary balance in his account he deposited two
cheques in his account on 12th May 1991 drawn on Nankpura Branch of PNB for Rs.10,000/
- and another drawn on Bank of India, Parliament Street for Rs.6,000/-. The Respondent
Bank sent the cheque drawn on Bank of India on the very next working day i.e. 13th
May 1991. The cheque was cleared and credited to the account of complainant on 15th
May 1991 while the other cheque could not be sent for clearing even on 14th May 1991
being an off day for Nankpura Branch & also for Motibagh Branch. The said cheque
was sent for realization only on 15th May 1991 and till 16th May 1991 was not cleared.
Meanwhile, both the cheques issued by complainant in favour of Air Force Naval
Housing Board were presented in the account of complainant on 15th May 1991. The
Bank on its own decided to clear the cheque for smaller amount i.e. for Rs.10,000/- and
referred the other cheque to the drawer on account of ‘insufficient funds’. Aggrieved
by this complainant filed complaint before the District forum alleging deficiency in
service against the Respondent bank as the complainant was made to pay penalty of
Rs.1,508.85 and had to suffer humiliation as the Air Force Naval Housing Board refused
to accept cheques from the complainant in future. The District forum dismissed the
complaint. Complainant filed appeal before the State Commission. The State
Commission also rejected the argument of the complainant that the Bank should
have returned the cheque with the remarks ‘effects not cleared’ and not on with
remark ‘refers to drawer’ and dismissed the Appeal. Against this dismissal order
complainant filed Revision Petition before the National Commission.
Issues
Whether there is any illegality or jurisdictional error in the judgement passed
by fora below for not holding Bank deficient in service?
Held
The National Commission affirmed the order of Fora below and held that there
appears to be no element of neglect or deficiency in service nor is any ground which
could lead to the inference of any illegality or jurisdictional error in the judgment below.
Hanuman Hosiery vs. Canara Bank

III (2002) CP
(2002) CPJJ 22553(NC)
3(NC)
Fac
actts
Complainant, a partnership firm applied for a loan of Rs. two lacs from the
respondent Bank. Respondent Bank released Rs.75,000/- only out of Rs. two lacs to
the Complainant and gave assurance to sanction further amount but did not
sanction the same. Complainant filed complaint before the National Commission
alleging deficiency in service on the part of Respondent Bank for not releasing Loan
amount of Rs.12,5000/- out of Rs. two lacs which was promised to be given to the
Complainant.
Issues
Whether Bank is liable for deficiency in service for not releasing loan amount
of Rs.1,25,000/- out of Rs. two lacs which was promised by respondent Bank to be
released to the complainant.
Held
The National Commission dismissed the complaint holding that when the
complainant did not submit detail of estimates, requirement of working capital,
proof of present overdues with Bihar State Financial Corporation, sources of raw
material and arrangements for sale of finished goods, sources of margin, stock
statement, etc. Therefore, there was no question of sanctioning of any further loan.
An amount of over Rs.47.50 lacs claimed by the complainant towards compensation
is an abuse of the process of Consumer Forum under the Consumer Protection Act.
State Bank of India vs. Ugam Singh

III (2002) CP
(2002) CPJJ 267(N
267(NC)
7(NC)
Fac
actts
Complainants had a locker facility with the respondent Bank. Complainant
operated his locker last on 5.12.1990 and while he came next time to operate his
locker and was completing formalities for the same, he heard the Bank Manager
quarrying a staff member “if this was the very person Ugam Singh whose locker was
opened”. Thereafter when the complainant went into the strong room to operate
his locker, he found the locker already opened and no ornaments were there. The
complainant lodged an F.I.R. and also filed complaint before the State Commission
for compensation from the Petitioner Bank. The State Commission held the
appellant Bank liable for deficiency in service. According to the State Commission,
non-production of locker ‘register’ furthered the cause of the complainant and
directed the appellant Bank to pay the cost of the jewellery. Complainant filed
appeal for the enhancement of the compensation and the appellant Bank filed
appeal before the National Commission for setting aside the order of the State
Commission.
Issue
Whether Bank is liable for deficiency in service when the locker found to be
opened?
Held
The National Commission allowed the appeal filed by the bank. It is submitted
by the bank that it is well established fact that locker can be operated by two keys,
one of which is with the individual and the other is kept by the bank. Once the
complainant says that he had locked the locker, then who and how the locker could
be opened without the locker operator’s key? Whereas it is argued on behalf of the
complainant that the bank has been deficient in providing service. Bank take locker
charges for rendering services. As soon as locker was opened and finding the jewellery
missing, complainant reported to the Bank Manager, lodged FIR with the Police but
Bank did not initiate any departmental action which was must for the Bank.
The National Commission after hearing arguments advanced by both the
parties held that complainant is a literate and sensible person. It cannot be believed
that he lent his key to close his locker and then re-opened it. It is not disputed that
the customer’s key was always with the complainant, then how could a duplicate
key be made which is one of its kind and specific to that lock. It will be further
difficult to believe that duplicate key holders connived with Bank to open the locker
and left the locker open.
Further, there is no question of any probe especially when police went into the
matter and found nothing wrong and filed FIR. Enteries in a locker register are not
disputed. In such circumstances, complainant failed to prove his case that locker
was already open when he went to operate it on 5.01.1990 and the State Commission’s
deduction is not based on any evidence or proof.
Appeal of Petitioner Bank allowed and Appeal of Complainant dismissed.
State Bank of India vs. Mohinder Sing & Ors.

III (2002) CP
(2002) CPJJ 2275(N
75(NC)
75(NC)
Fac
actts
Complainant took a loan from the Petitioner Bank for the purchase of a truck
in 1981, repayment of which was to be made in 50 equal instalments. Due to
irregularity in repayment of instalments, the Petitioner Bank filed a civil suit to
recover the outstanding amount. Complainant requested for NOC from the
Petitioner Bank at the time of renewal of route permit for the truck i.e. in February,
1992, whereas the same was issued in the month of November 1992. Complainant
file complaint before the District forum alleging deficiency in service on the part of
petitioner bank and sought damages for non-issue of NOC for the period February
1992 to November 1992. The District forum held Petitioner Bank to be deficient in
rendering services and awarded damages. Petitioner Bank filed Appeal before the
Sate Commission which was dismissed. Petitioner Bank against this dismissal order
filed Revision Petition before the National Commission.
Issues
Whether the order passed by lower Fora holding Bank to be deficient in
rendering services is correct?
Held
The National Commission while allowing the Revision Petition held that the
conduct of the complainant speaks for itself. Outstanding stretched for six years.
Bank cannot be faulted for non-issue of NOC when such a huge amount was
outstanding. It is the complainant who was a defaulter and could not claim the
right to NOC. Complainant continue to make money by plying the truck and yet
not paying the instalments, takes away his right to any help, goodwill from the
Bank. Both the lower forums did not appreciate the importance of non-paying of
instalments and therefore, order passed by lower forums cannot be sustained and
donot find any deficiency in service rendered by the Bank.
Revision Petition allowed, order passed by lower forums set aside.
Virender Narang vs. M/s Syndicate Banks Ors

III (2002) CP
(2002) CPJJ 2279(N
79(NC)
79(NC)
Fac
actts
Complainant, being a businessman, was availing overdraft facilities from the
respondent Bank since 1995. He started availing the overdraft limit of Rs.50,000/-
which was later enhanced to Rs.3.25 lacs. The complainant applied for further
enhancement of the facilities from Rs.3.25 lacs to Rs.5.50 lacs. The complainant was
informally informed that the enhanced limit has been sanctioned and can operate
his account. On receiving such informal information complainant booked its sales of
proportionately increased quantum. Later on, it transpired that the enhanced limit
has not been sanctioned and received a letter from the respondent bank requiring
imposition of further pre-conditions for release of the enhanced overdraft facility.
Complainant filed complaint before the State Commission against the respondent
bank alleging deficiency in service on account of non-granting of additional overdraft
limit, he suffered serious prejudice and losses in business. The State Commission
dismissed the complaint exonerating the respondent bank. Complainant against the
dismissal order filed present appeal before the National Commission.
Issues
Whether the bank acted unreasonably in not sanctioning the overdraft facility
to the complainant, making itself liable to deficiency in service?
Held
The National Commission after perusing the material on record relying on its
precedents held that since the letter of sanction of additional facilities clearly sets out
that enhancement was subject to the appellant offering some collateral security.
Apart from that respondent Bank also asked the complainant to complete the
formalities and execute all necessary documents. The respondent Bank further
complained to the complainant that he had been diverting the sale proceeds to some
other account which was in breach of the agreement for overdraft. The Bank have to
exercise their discretion and act in accordance with their best judgment after taking
into account various relevant factors and hence, mere failure to provide financial
facility cannot be said to constitute “deficiency in service”. In the peculiar facts and
circumstances of the present case, it cannot be said that the respondent Bank had
acted unreasonably.
Appeal dismissed with costs.
Mrs. Anumati vs. Punjab National Bank

III (200 2) CP
(2002) CPJJ 2280(N
80(NC)
80(NC)
Fac
actts
Complainant jointly with her husband put Rs.20,000/- in Fixed Deposit for a
period of 84 months with Respondent Bank. Despite maturity of the FDR respondent
Bank did not credit the FDR and adjusted the same, same being mortgaged, against
the loan taken by M/s Verma Agro industries, by the husband of complainant.
Complainant filed complaint before the District forum contending that the
respondent has no right to adjust her half share in the fixed deposit as she is the
joint holder of the fixed deposit. The District forum accepting the contention of the
complainant allowed the complaint. Respondent Bank filed appeal against the
order of the District forum on the ground that the husband of the complainant
alone was competent to pledge the fixed deposit receipt against the loan taken
from the respondent Bank and no consent of the complainant was required for the
same. The State Commission referring to the form filled for fixed deposit receipt
reached to the conclusion that the mode of payment was “either or survivor” which
shows that on maturity payment could have been made by the respondent Bank
either to the complainant or to her husband and it was not necessary that the fixed
deposit should have been encashed by both the depositors and when the payment
could have been made to a single individual then the Bank was at Liberty to accept
the mortgage of the fixed deposit receipt on behalf of one of the depositors. Against
this order of the State Commission complainant filed Revision Petition before the
Issues
Whether Bank is deficient in service for adjusting the maturity amount of
FDR on joint name against loan, same being mortgaged by one of them without the
knowledge/consent of other?
Held
The National Commission affirming the order of the State Commission held
that the financial institutions have every right to protect their interests by taking
conscious decisions. When a respondent Bank took a conscious decision it cannot
be faulted for deficiency in service.
Revision Petition dismissed, order of the State Commission affirmed.
Unite
niteddC
Coommer cial B
mmercial ank vs. SSmt
Bank mt
mt.. Anit
Anitaa Airan
Airan
III (2002) CP
(2002) CPJJ 37 1(N
371(N C)
1(NC)
Fac
actts
Present case is about deficiency in service rendered by Bank and the Insurance
Company. The complaint is filed by the wife of the deceased insured. Deceased took
Janta Personal Accident Insurance Policy from the National Insurance Company for
Rs.50 lacs. Deceased gave a cheque of Rs.1800/- bearing No. 0882491 dated 25.3.1996
drawn on Bank of Baroda towards Premium at the time of Proposal. The Insurance
company issued the insurance policy on the following day. Insurance Company sent
the cheque to its Banker, UCO Bank for collection on 26.3.1996, which was sent by UCO
Bank vide its letter dated 4.4.1996 to the Bank of Rajasthan which was acting as a
clearing house and received the cheque only on 9.4.1996. Bank of Rajasthan sent the
cheque to the Bank of Baroda on same day which was returned by the bank despite
having money in his account on the ground that the account holder had since expired.
Since, the deceased insured died on 2.4.1996 in a car accident. His wife made a claim
before Insurance Company which was repudiated on the ground that the premium
on the policy of her deceased husband remained unpaid and thus there was no policy.
Wife of the deceased offered to pay the amount of premium in cash but it was declined.
Therefore, wife of deceased filed complaint before the District forum alleging
deficiency in service against the Insurance company and the UCO Bank. The District
forum allowed the complaint and held both insurance company and the UCO Bank
deficient in service and also liable to make payment of Insurance claim. Both Insurance
company and the UCO Bank filed separate appeals before the State Commission. The
State Commission dismissed, both the appeals with cost. Being aggrieved by dismissal
order passed by the State Commission both Insurance company and the UCO Bank
filed Revision Petitions before the National Commission. The National Commission
while considering whether Insurance company or the Bank is liable for deficiency in
service by interim order directed the Insurance company to pay 50 per cent of the
insurance amount. Insurance company against this interim order filed a special
leave Petition before the Supreme Court. The Supreme Court though stayed the interim
order of the National Commission, however, subsequently, directed both the Insurance
company and the bank to pay Rs.1.00 lac each to the wife of the deceased insured, but
did not deal with the controversy involved in the matter and dispose of the Petition
with a direction that the deposits so made would abide by the order of the commission.
Issues
Whether Insurance Company or the Bank is liable for the deficiency in service?
Held
Insurance company took a plea before the National Commission that Section
60VB of the Insurance Act provides that no risk be assumed unless premium is
received in advance whereas Bank took stand that it could not be accused of any
deficiency in service as at best it was the agent of the Insurance company. Neither
the insured nor his widow was consumer of the Bank. National Commission while
rejecting the pleas of both Insurance company and the bank held that the bank is
extremely negligent and could be accused of extreme deficiency in service in relation
to the Insurance company. The Bank sent the cheque for collection on 4.4.1996 but
appeared to have sent later than this date as it was received by the Bank of Rajasthan
on 9.4.1996. If the Bank had been prompt in sending the cheque for collecting
payment could have received prior to 4.4.1996 when the deceased insured met with
his unfortunate death in car accident on 2.4.1996 Bank was certainly deficient in
service in not sending the cheque for collection in reasonable time as has been so
rightly held by the Forums below.
Further, it is usual for the Insurance company to accept the amount of premium
by cheque. Payment by cheque is as good as payment in cash provided it is honoured.
Payment by cheque in fact relates back to the date of cheque or to the time when it
was given and it is not material when cheque was encashed. If the cheque had been
presented for payment in time, it could have been encashed. The cheque was received
on 25.3.1996 and sent for collection on 9.4.1996. It may be on account of the fault of
the UCO Bank and that Bank acted as an agent of the Insurance company and
deficiency in service by the agent, as far as complainant is concerned, is attributable
to the Insurance company itself. For the complainant it is the Insurance company
which sent the cheque for collection when it was presented on 9.4.1996 after receiving
the same on 25.3.1996. No explanation could be acceptable as to why the cheque
could not be presented immediately for collection at least within a reasonable period.
In these circumstances of the case, provisions of sec.64VB are not of any help to the
Insurance company. It is the Insurance company which has been deficient in service
and has to bear consequences. Both the District forum and the State Commission
have correctly arrived at the conclusion that there has been deficiency in service on
the part of the Insurance company but at the same time holding deficiency in
service on the part of UCO Bank as well. However, UCO Bank as an agent of the
Insurance Company cannot be held liable so far complainant is concerned.
Revision Petition filed by UCO Bank allowed, Revision Petition filed by Insurance
Company dismissed with cost.
Topline SSho
ho
hoee s Ltd. vs. C
Coo r p o ra t i o n B ank
Bank
II (2002) CP
(2002) CPJJ 7 (S C)
(SC)
Fac
actts
The controversy involved in the present case is whether or not the State
Commission could grant time to the respondent to file reply, beyond a total period
of 45 days in view of sec.13(2)(a) of the Consumer Protection Act. The complainant
filed complaint before the State Commission, Gujarat claiming compensation
against the respondent Bank as the respondent Bank failed to advance loan timely
despite furnishing of security for the same. Though the Respondent Bank received
the notice on 22.2.2000 for the date of hearing as 4.4.2000 failed to file reply on date
of hearing and sought adjournment on date fixed i.e. on 4.4.2000 and also sought
time to file reply. The State Commission, Gujarat granted time to the respondent
Bank for filing reply and adjourned the matter for 4.5.2000. The complainant on
24.7.2000 filed an application before the State Commission contending that the
reply filed by the respondent Bank should not be taken on record as the same has
been filed after the expiry of 30 days initially admissible for filing reply and also
beyond a further period of 15 days as could be extended for the purpose and thus
prayed that the reply of the respondent Bank may not be taken on record and
rejoinder filed by the appellant may be returned to it. The State Commission, Gujarat
dismissed the application of the complainant and also imposed a cost of Rs.500/-
upon the respondent Bank for late filing of the reply. The complainants preferred
Revision before the National Commission which was also dismissed on the ground
that no ground was made out to interfere in exercise of its Revisional Jurisdiction.
The complainants filed civil appeal before the Supreme Court.
Issue
Whether the State Commission, could grant time to the respondent to file his
reply, beyond a total period of 45 days, in view of section 13(2) of the Consumer
Protection Act, 1986.
Held
The Supreme Court held that the provisions as contained under clause (a) of
sub-sec (2) of section 13 is procedural in nature. It is also clear that with a view to
achieve the object of the enactment, that there may be speedy disposal of such
cases, that it has been provided that reply is to be filed within 30 days and the
extension of time may not exceed 15 days. No penal consequences have, however,
been provided in case extension of time exceeds 15 days. Therefore, it could not be
said that any substantive right accrued in favour of the appellant or there was any
kind of bar of limitation in filing of reply within extended time though beyond 45
days in all. The reply is not necessarily to be rejected. All facts and circumstances of
the case must be taken into account. The statement of objects and reasons of the
Act also provide that principles of natural justice have also to be kept in mind.
Further, the provision says that the extended time may not exceed 15 days is
directory in nature. It does not mean that orders extending the time to file reply
may be passed repeatedly unmindful of and totally ignoring the provision that the
extension may not exceed 15 days.
So far, the facts of the present case are concerned we find that at the first
instance the commission itself had fixed the date beyond 30 days and the respondent
Bank sought further time which prayer was accepted and 4.5.2000 was fixed. The
respondent Bank filed his reply on the date fixed. In such circumstances there was
no occasion to contend that the reply of the respondent should be rejected.
Appeal dismissed.
CanaraB
Canara ank vs. C
Bank .D
.D.. PPa
C.D ate
tell
II (2001) CP
CPJJ 1199 (NC)
(NC)
Fac
actts
Complainant who was a Non-Resident Indian deposited 15000 pounds as
security for the loan of Rs. two lacs for the period of two years. This amount was to
be kept in a FCNR Fixed Deposit Account for the same period. On the strength of
security of two lacs Bank provided overdraft facility to the company M/s Suncrush
Fruits Pvt. Ltd. While availing overdraft facility no relation of complainant and
M/s Suncrush Fruits Pvt. Ltd. was disclosed. On the maturity of the Fixed Deposit
Complainant further get it renewed alongwith the accrued interest. The Fixed
Deposit was allowed to continue beyond two years without the knowledge and
consent of the complainant. The complainant demanded the return of the entire
amount with accrued interest standing to his credit in the FCNR fixed deposit
account which was seized by the appellant Bank against the Loan/overdraft facility
availed by the company M/s Suncrush Fruits Pvt. Ltd.. Complainant filed complaint
against the Petitioner Bank alleging deficiency in service.
Issue
Whether a substantial shareholder is liable for the debts of the company?
Whether a Bank can exercise its power of general lien?
Held
The National Commission held that it is trite law that a shareholder is not
liable for the debts of the company. The company is clothed with a juristic
personality, which is quite different and separate from its shareholders. The
shareholders cannot be made liable for the debts of the company.
There are however situations where for the sake equity, corporate veil is pierced,
particularly, once winding up proceedings start, the company’s corporate veil can
be lifted to find out the reality. In the instant case, we are not aware of the status of
the company except that it is financial straits. Its assets have been seized by financial
institution. Patel who had opened a fixed deposit account and given its security for
two years but had allowed it to continue for nearly eight years for the benefit of the
company and has now come up with a complaint that the fixed deposit which was
due to mature on 28.10.1994 should not be extended any further and must be
returned with accrued interest.
The particulars of the nature and the degree of involvement of Patel in the
affairs of the company have not been disclosed and we shall not presume any
equitable consideration in favour of the complainant while deciding the case strictly
in accordance with law.
Further, we are of the view, having regard to facts and circumstances of this
case that a general lien in favour of the Bank was created. The security was available
against “the said overdraft/loan guarantee limit or other liability from time-to-
time…” There is another clause in the deed of pledge by which Patel made the
security available for all credit facilities given to the company.
“which & renewals whereof please hold as a continuing security for all loans,
advances, overdrafts and Bank guarantees issued/to be issued and all other credit
facilities of whatsoever kind made/to be made to the borrower on whatsoever
account from time to time.”
The Bank is entitled to adjust the disputed fixed deposit account against dues
from the various loans/oversrafts taken by M/s Suncrush Fruits Pvt. Ltd.
Appeal allowed, complaint alongwith cross appeal of the complainant
dismissed.
D.K
.K.. LLalw
alwani vs. T he PPrre si
alwani siddent
ent,,
Indian Bank Mutual Fund & Another
II (2002) CP
(2002) CPJJ 20 (NC)
(NC)
Fac
actts
Present case is against the Bank for its deficiency in not splitting the units for
sale in marketable lots timely. Complainant bought certain IND Ratna units (Shares)
in their joint names and were in the custody of the respondent Bank as the same
were pledged against the loan advanced to the complainants. Complainants filed
complaint before the District Forum as the Respondent Bank failed to split the
units timely for sale in marketable lots. The District forum dismissed the complaint.
The State Commission also dismissed the appeal of complainants. Against the
dismissal order complainants filed the Revision Petition before the National
Commission.
Issue
Whether there is any ground to interfere in the matter under revisional power
of this Commission when the subject matter did not fall within the provisions of
Consumer Protection Act?
Held
The National Commission in present case held that while the units were in the
custody of the Bank as the same were pledged against the loan advanced to the
complainants, no attempt was made by the complainants to repay the amount.
Assuming that there was delay in not splitting units in time for sale in marketable
lots, complainants were not entitled to the return of the units as these were pledged
as securities with the Respondent Bank and the Bank was not bound to return the
same to the Complainants. It is rightly held by the State Commission that there
was relationship of creditor and debtor between the complainant and the
respondent bank.
Mihir K um
Kum ar M
umar uk
Muk her
herjj e e vs. Br
ukher an
ancch Manag
Bran er
er,,
Manager
United Bank of India
II (2002) CP
(2002) CPJJ 338
8 (NC)
(NC)
Fac
actts
The Present case is complaint against the Respondent Bank alleging deficiency
in service which hiked the price of locker rent and were being deducted from the
saving account of the complainant without his information/consent. Complainant
rented a locker as a licensee from the Respondent Bank, New Alipore Branch, Calcutta
in the year 1995. It was agreed that the complainant would pay the rent of the
locker annually. Respondent Bank increased the rent of the locker gradually and
periodically and was communicated to all the branches vide their circular dated
30.4.1999. The Respondent Bank deducted hiked locker rent annually from the saving
account of the complainant. The complainant protested against the price hike
and asked for refund of excess amount and filed a complaint before the District
forum Bank alleging deficiencies in service. The District forum partly allowed the
complaint directing Respondent Bank to issue the receipt for the locker rental
amount of Rs.450/- deducted from the saving account of the complainant.
Complainant filed appeal before the State Commission, west Bengal against the
order of the District forum. The State Commission dismissed the appeal.
Complainant filed Revision Petition before the National Commission.
Issue
Whether the Respondent Bank is deficient in service and is liable for unfair
Trade Practices for not explaining cause of increase in locker rent without increasing
any of its services?
Held
The National Commission held that Bank has not entered into any such
agreement with hirer of lockers that they can enjoy the locker indefinitely without
any increase in rent. Admittedly, the Petitioner accepted earlier rent hike in the
years 1985, 1993 and 1996 without any protest. The Petitioner is at liberty to continue
the locker facility or to withdraw the same when there was an increase in the
locker rent on 7.1.1995. Under the Rule 18 attached to the memorandum “It is hereby
agreed that the relation of the hirer (s) and the Bank in this connection is that of
licensor or Licensee and not that of Banker and customer and/or of Bailor and
Bailee” clearly indicates it is on hire basis the locker was granted to the Petitioner.
We do not see any deficiency in service or unfair Trade Practice in the conduct
of the Respondent in increasing rent as it is necessitated due to increase in cost of
maintenance, salary of the staff and other incidental expenses like rent of the
accommodation etc and it is not increased only for the Petitioner but to one and all.
Further more, the petitioner also authorized vide letter dated 15.101998 to the
Bank to deduct Rs.300/- from his saving account No.1244 on 20th day of November of
every year as locker rent so long he occupy the locker till further notice from the
petitioner. This letter by petitioner enables the Bank to adjust and do not attribute
any negligence by the Bank.
Revision Petition dismissed, affirming the order of the State Commission.
Patna Co-operative Bank Ltd. vs. Hasmukh B. Shah

III (2002) CP
(2002) CPJJ 223(N
3(NC)
3(NC)
Fac
actts
Navinchandra B. Shah placed five fixed deposits with the Petitioner Bank which
were to be matured on 13.10.1989. These Fixed Deposit receipts were having printed
terms at the back of each Fixed Deposit Receipt providing that: “Receipt not
transferable by a endorsement. Payment to third party must be sanctioned by a
letter of authority accompanied by the Receipts duly discharged.”
The State Bank of India presented said five receipts on 25.6.1987 for payment
before their maturity dates. At the back of these receipts, depositor had discharged
by an endorsement which read as under: “I hereby authorize you to prematurely pay
these Fixed Deposit Receipts to Echbee Corporation.”
On receiving the same Petitioner Bank asked the original depositor for his
confirmation about the said endorsement. The original depositor vide its letter
dated 29.6.1987 instructed the Petitioner Bank not to pay the same as the deposits
were not matured. In view of the same Petitioner Bank returned the said receipts
expressing its inability to encash the same. On the very next day Petitioner Bank
was served with a notice of attachment under section 132(3) of Income Tax Act
attaching the amounts covered by the said Fixed Deposit Receipts. The Bank was
again served with another notice from the Income Tax Officer, K-IV ward, Bombay,
requiring the Petitioner Bank to pay to the Reserve Bank of India, the proceeds of
the said Fixed Deposit Receipts towards income tax payable by the original depositor.
It was in pursuant to the order from the Income Tax Office, the Petitioner Bank
deposited the amount in the Reserve Bank of India. The complainant in October,
1993 presented the FDRs for encashment but Bank failed to encash the same. The
complainant lodged a police report which was failed. It is after a lapse of almost
seven years from the date of first presentation on the return of the Fixed Deposit
Receipts and a lapse of little less then five years from the date of maturity of Fixed
Deposit Receipts, a complaint was filed before the District forum which dismissed
the complaint. The State Commission, in appeal, reversed the order of the District
forum on point of limitation and condone the delay and allowed the appeal directing
Petitioner Bank to pay amount of Fixed Deposit Receipts together with 15 per cent
interest till the date of payment. Against this order Petitioner Bank filed Revision
Issue
Whether the order passed by the State Commission condoning the delay is
sustainable, if not, whether the Bank is deficient in not honouring the original FDRs
presented for enchashment?
Held
The National Commission set aside the order passed by the State Commission
and held that when no grievance was made by the respondent for a period of over
six years of such payment and in 1993 when the FDRs were presented for encashment
there was no question of those being encashed because the Bank had already paid
the proceeds of the FDRs to the Reserve Bank of India in compliance with the orders
of the Income Tax Authorities and in law such a payment afforded the Bank a valid
discharge. No grievance of such payment is made by the original depositor, nor was
any grievance made by the respondent in whose favour the endorsement at the
back of the FDRs existed for more than six years and now the complaint before the
District forum was filed after a lapse of over seven years. With the lapse of such time
both the fora below should have considered the question of condonation of delay
more seriously.
Further, the National Commission held that even if the complaint had been
entertained or appeal had been entertained the question which fells for
determination is whether there was any deficiency in not honouring the original
FDRs which were presented for encashment in October, 1993. The answer to this
cannot be but in the negative, because, there was no money lying with the Bank
which was covered by the said FDRs as the Bank had already paid it into the account
of income tax authorities. An FDR is not a negotiable instrument, particularly when
its being not transferable, is printed on the face of it and a special mode of transfer
is printed on the reverse of it which is not followed. No challenge has been made to
the validity of the payment by the Bank to the Income Tax Authorities. Claim covered
by the complaint in the present case was stale and barred by limitation and there is
no explanation forthcoming for condonation of delay.
The National Commission set aside the order passed by the State Commission
and upheld the order passed by the District forum.
Arvind Sahni vs. Punjab & Sind Bank

III (2000) CP
CPJJ 8(S C)
8(SC)
Fac
actts
Complainant/Appellant filed complaint before the State Commission,
Chandigarh against the Respondent Bank for deficiency in service as the Respondent
Bank wrongly honoured the cheque of Rs.30,000/- from the account of the
complainant without verifying the sigunatures on the cheque. Since the cheque
for Rs.30,000/- did not bear signature of complainant/appellant the State
Commission, Chandigarh held the Bank to be deficient in service and passed a decree
for Rs.34,000/-. Respondent Bank challenged the order of State Commission,
Chandigarh before the National Commission. The National Commission affirmed
the fact that the signatures on the cheque were not that of the appellant.
Respondent Bank submitted that the amount involved has already been paid to the
appellant/complainant, The National Commission directed the appellant to furnish
indemnity Bond. Appellant/Complainant challenged the order before the Supreme
Court.
Issue
Whether the National Commission is right in requiring the appellant/
complainant furnishing of an indemnity bond?
Held
The Supreme Court held that admittedly the cheque was not signed by the
appellant/complainant and the amount involved has already been reimbursed, the
National Commission erred in requiring the furnishing of an indemnity bond
especially when it does not appear to be a categorical case of the respondent that
there was any sort of connivance between the appellant and the forgery.
Appeal allowed, part of the order of the National Commission which has
required the appellant to furnish the indemnity bond set aside.
Vimal Chandra Grover vs. Bank of India

II (2000) CP
CPJJ 11 (SC)
(SC)
Fac
actts
Complainant applied for an overdraft limit of Rs.5,00,000/- against pledge of
shares of Rs.10,60,900/- to the respondent Bank. As per the terms of sanction of the
overdraft limit shares were got to be transferred in the name of the Bank. In due
course of time appellant/complainant paid an installment of Rs.1,45,600/- to the
Bank against the overdraft limit. Overdraft amount was to be adjusted in three
equal installments. Appellant vide its letter dated 23.04.1992 requested the
respondent Bank to sell 500 shares of Castrol Ltd. apart from shares of other
companies. After 12 days of the receipt of the letter of complainant, the Nagpur
branch of respondent Bank sent a letter dated 5.5.1992 to its Head office, Bombay
agreeing to the terms of the appellant set out in his letter dated 23.4.1992, Nagpur
Branch vide its letter dated 29.07.1992, after receiving letter from Head office found
that the shares were not in the Head office and informed the appellant/complainant
that Head office was not holding shares and found lying with the Nagpur branch
only and therefore could not sell the shares. In the meantime, the prices of the
shares fell and thus could not be sold at the price indicated by the Complainant.
Therefore, complainant filed claim for Rs.5,09,037.53 from the Bank before the
National Commission.*
Issues
Whether the transaction between customer and bank, being a commercial
activity, comes under the purview of definition ‘services’ of the Consumer Protection
Act, 1986?
Whether the Bank is bound to dispose of the shares on the instruction of its
customer and is not liable for deficiency in service for not doing the same?
Held
Before the Supreme Court Respondent Bank submitted that appellant/
complainant is not Consumer within meaning of sub clause (2) of clause (d) of Sec.2
of the Act and overdraft unit provided by the bank is not, ‘service’ within the meaning
----------------------
*The National commission held that there was no significance on the part of the bank against this
order. An appeal was preffered before the Supreme court.
of the Act being without any ‘consideration’ of the complainant. Supreme Court
allowed the appeal holding that overdraft limit prescribed by the Bank was not
without consideration. Bank is rendering service by providing overdraft facilities to
a consumer, which is not without consideration. Bank is charging interest and
other charges as well in providing the service. Provision for overdraft facility is
certainly a part of the Banking and its service within the meaning of Clause (o) of
section 2 of the Act. Request for sale of part of the pledged shares for getting overdraft
facilities and which is agreed to by the Bank is certainly part of the service connected
with the grant of overdraft facilities. Appellant as a consumer was hiring services
of the Bank for consideration by way of payment of interest for the overdraft
facilities received by him by pledging the shares of different companies.
Further, Supreme Court held that the Bank has a right under the law to retain
the pledged goods is not in dispute. But once the Bank having agreed to sell part of
the pledged goods, it could not fall back on those very provisions to raise a plea of its
right under the law to retain the pledged goods.
Further, in these days of revolution in information technology Bank is merrily
going on corresponding with its customer, the appellant, and also with its own
Head office. It was not difficult for the Bank to find out on receipt of the letter
dated 23.4.1992 of the appellant where the pledged shares were lying. It took 12 days
to transmit the request of the appellant to its Head office. When the Nagpur Branch
received letter dated June 19, 1992 from the Head office that the shares were not
lying, it took another 40 days to inform the appellant of this fact by its letter of July
29, 1992. Then the Nagpur Branch find, that the shares are lying with it and then it
is too late. Once the Bank agreed to sell the part of the shares on request by the
appellant and without any pre-conditions, it cannot fall back on other alleged
defaults of the appellant in his dealing with the Bank. The plea of the Bank that it
would dispose of the shares only through its own broker is without substance as it
never apprised the appellant of this fact.
The Supreme Court rejected the view taken by the National Commission that
there was no negligence on the part of the Bank or that the Bank was not bound to
dispose of the shares.
Appeal allowed
Bade Krishnaveni vs. Canara Bank

III (2000) CP
CPJJ 335(N
5(NC)
5(NC)
Fac
actts
Complainant and her mother jointly deposited Rs.22,000/- and Rs.10,000/- in
fixed deposit with Respondent Bank. After the death of her mother, complainant
claimed the amount of FDR standing in the name of her deceased mother which
was rejected by the respondent Bank on the ground that the amount of FDR has
been adjusted against loan taken by the husband of the complainant and a suit has
been filed for the balance amount. Complainant filed complaint before the District
Forum which dismissed the complaint with an observation that the complainant
had given authorization to the Bank to adjust the FDR amounts towards the lorry
loan of her husband in writing but the District Forum did not go into the question
whether the complainant’s signatures on the blank paper was forged or not or
whether the complainant’s husband had signed blank papers and therefore, the
District Forum directed the complainant to seek redress in the civil court. The State
Commission, Andhra Pradesh affirmed the order of the District Forum. Complainant
challenged the order and filed Revision Petition before the National Commission.
Issue
Whether fora has jurisdiction to give direction to seek redress in civil courts in
respect of disputed questions?
Held
The National Commission held that the District Forum has come to a right
decision on the facts of this case. The fixed deposit made by the complainant and
her mother were adjusted against the loan taken by the husband of the complainant
on the authorization of the complainant and her mother. A suit for recovery of the
balance amount of loan has already been filed by the Bank. The authorization was
in writing which was produced before the District Forum. Whether the documents
were forged as alleged by the complainant will have to be decided by some other
forum. Direction given to complainant that he will have the liberty to go to the civil
court to prove its case remain in force and therefore, can seek remedy in civil court
in accordance with law.
Amer
Ameriican EExxpr
pree ss B ank Ltd. T.R
Bank .S
.S.. vs. R
.R.S Raa j e sh G up
uptt a & Ors
Gup Ors..
I (2000) CP
CPJJ 1 (NC)
(NC)
Fac
actts
Present case is about the claim of complainant in respect of loss of travellers
cheques which was repudiated by the Petitioner Bank. It is only after such
repudiation of claim petitioner filed complaint against the Petitioner Bank alleging
deficiency in service. Complainant who had a very urgent business trip for 35 days
at a stretch to Germany and to that effect, he was in need of foreign exchange. He
contacted his Bankers where he was advised to contact the American Express Bank,
Netaji Subhah Road, Calcutta for the arrangement of foreign currency by way of
travelers cheques, which in turn advised the Complainant to collect the travelers
cheques as per his requirement from their New Delhi Branch. Complainant went to
New Delhi Branch of the Petitioner Bank and collected travelers cheques
amounting to Us$12,500/- equivalent to Rs.4,00,000/- from there. After reaching
Airport, the complainant found that travelers cheques as well as the passport and
other relevant documents were missing and after long search reported the matter
to the Police Station, Cannaught Circus and also to the Petitioner Bank, New Delhi
Branch. Thereafter, on several occasions complainant approached the New Delhi
Branch for refund of the travelers cheques but with no results. Complainant also
approached the head office, USA of the Petitioner Bank but of no avail and ultimately
the Petitioner Bank repudiated the claim of the complainant. After repudiation
complainant filed complaint before the District Forum, Calcutta against the
Petitioner Bank for deficiency in service. The District forum Calcutta allowed the
complaint rejecting the contention of the Petitioner Bank that the District forum,
Calcutta has no jurisdiction to entertain the present complaint. Petitioner Bank
filed an appeal before the State Commission, West Bengal. The State Commission,
West Bengal by majority judgment, differing from the view of President, dismissed
the appeal. The Petitioner Bank against the dismissal order filed the Revision Petition
Issue
Whether the District forum, Calcutta had territorial jurisdiction to entertain
a complaint when no part of cause of action arisen at Calcutta?
Whether Petitioner Bank can held to be deficient in service when the claim of
the complainant was repudiated only after detailed enquiry?
Held
The National Commission held that in the light of statement of law enunciated
by the Supreme Court in Union Bank of India’s case the District forum, Calcutta had
no territorial jurisdiction to entertain and try the complaint as no part of cause of
action had arisen at Calcutta. The travellers cheques were purchased at Delhi,
those were lost in Delhi; matter was reported to the Police at Delhi; claim for refund
of the amount was lodged with the Delhi Branch of Bank; the matter was
investigated by the Delhi Branch of Bank and the claim was rejected by the Delhi
Branch and communicated to the complainant at his business address at A-94,
Sec.-5, Noida, U.P. The President of the State Commission, Calcutta rightly held that
the District forum, Calcutta had no territorial jurisdiction to entertain the
complaint.
Further, regarding deficiency in service, the National Commission held that
the refund of claim was rejected by the Bank after holding detailed enquiry and
proper investigation. Repudiation of claim by the Bank was in good faith after due
application of mind to relevant facts and circumstances and not in arbitrary or in
unreasonable manner. Such being the position Petitioner Bank cannot be made
liable for any deficiency on the part of the Bank so as to give rise to a cause of action
for a complaint under the provisions of the Consumer Protection Act, 1986.
Revision Petition accepted; set aside the majority view of State Commission as
well as the order of the District forum, Calcutta and dismissed the complaint.
C o r p o ra t i o n B ank vs. N
Bank Naav in J. SShah
hah
I 2000 CP
CPJJ 13(SC)
13(SC)
Fac
actts
Present case is about the compensation claimed by the complainant from its
Bank on account of deficiency in service as the Bank delayed the matter of
repatriation of export proceed. Complainant who was a tea exporter, had the credit
facilities with the appellant Bank, entrusted documents relating to the export of
tea for the propose of realizing the proceeds from the consignee. The appellant
Bank issued advice of purchase of Bills to the complainant in respect of goods covered
by several invoices. Complainant while entrusting documents relating to the export
of tea instructed the appellant Bank to handover the documents only after ensuring
that the export proceeds could be repatriated to India in U.S. Dollars. The appellant
Bank negotiated the documents relating to the exports through foreign Bank of
Sudan. The appellant Bank without informing complainant of any difficulties
experienced by them in the matter of negotiations, realized the export proceeds in
local currency i.e. other than in U.S. Dollars. It is only later, after realization of export
proceeds, appellant Bank informed the complainant that repatriation of export
proceeds in terms of U.S. Dollors could not be made due to certain restrictions
imposed by the government of Sudan and requested the complainant to approach
the Export Credit Guarantee Corporation of India Limited to cover the risks involved
in the export Business and to settle the claim using the insurance policy taken by
the complainant in respect of the goods covered by the entrusted documents.
Complainant immediately got his claim settled before the corporation but also
filed the complaint before the National Commission for deficiency in service against
the appellant Bank after a decade.*
Issue
Whether there is any deficiency in service on the part of appellant Bank which
could not realize the export proceeds timely as instructed?
Whether the National Commission can entertain a claim after lapse of a decade
though Consumer Protection Act, 1986 does not prescribe any time limitation for
filing claim?
-----------------
*The National Commission allowed the complaint holding the bank deficiency in rendering the
service. Hence appeal was filed by the bank before the Supreme Court.
Held
The Supreme court held that the appellant Bank negotiated the documents
as provided under the agreement, so did the foreign Bank of Sudan but the
conversion of the Local currency in U.S. Dollors became difficult on account of policy
of government of Sudan when the realization of money in US Dollors was frustrated
by reason of the governmental action, no responsibility for deficiency in service
could be fastened on appellant Bank. Both Banks did whatever was required to be
done under the contract and therefore, commission was not justified in holding
appellant Bank to be deficient in service so as to attract the provisions of the
Consumer Protection Act.
Further, the transaction in question took place in the years 1979 & 1981. The
difficulties in realization of the amount due from the consignee became clear to
the complainant at the time when the claim was made before the corporation
against Insurance and the claim had been made as early as on December 19, 1982
but petitions alleging deficiency in service against the appellant Bank was filed on
September 25, 1992 that is clearly a decade after a claim had been made before the
corporation. Indeed at the relevant time there was no period of limitation under
the Consumer Protection Act to prefer a claim before the commission but that does
not mean that the claim could be made even after unreasonably long delay. In the
legislative wisdom three years period had been prescribed as the reasonable time
under the limitation Act to lay a claim for money. We think that period should be
the appropriate Standard adopted for computing reasonable time to raise a claim
in a matter of this nature.
Appeal allowed, set aside the order of the National Commission and dismissed
the complaint.
(Annexure)
MODEL FORM OF NOTICE, COMPLAINT, AFFIDAVIT AND REPLY

MODEL FORM-1 NOTICE BEFORE FILING THE COMPLAINT
Name and address

.................................................................................................................
(of the trader, dealer, firm, company, etc.)
.................................................... ............................................................
(Complete address)
IN RE: (Mention the goods/services complained of giving details)
.................................................................................................................
Dear Sir,
This is to bring to your kind notice that 1 had purchased………….............from your

............................... for a consideration of Rs……………………………...... paid in cash vide your cash
memo/Receipt/Invoice No....................................................... (or through cheque No ........................... dated ...................
drawn on ........................................bank for a sum of Rs ....................
The said goods are suffering from the following defects:

(i) ............................................
(ii) ............................................ etc
I have reported the above matter to you several times (give reference of earlier
letters, if any) but despite all my pleadings you have not made good the defect in
the goods (ordeficiency in services) which is indeed regrettable and highly
unbusiness like. On account of your aforesaid dereliction of duty and failure and
neglect to rectify the same I have suffered losses/incurred expenses
...........................................................................................................................................................................................................
............................................................................................................................................................................................................
...........................................................................................................................................................................................................
...........................................................................................................................................................................................................
...........................................................................................................................................................................................................
(give details)
which you are liable to compensate to me.

You are hereby finally called upon to
(i) remove the said defects in the goods
and/or
(ii) replace the goods with new goods
and/or
(iii) return the price/ charges paid
(iv) pay compensation for financial loss/injury/interest suffered due to your

negligence .................................................................
(give details)
in the sum of Rs ............................................ with interest @.............................. % per annum
within……………………days of the receipt of this notice failing which 1 shall be
constrained to initiate against you for redressal of my aforesaid grievances and
recovery of the aforesaid amount such proceedings, both civil and criminal as
are warranted by law, besides filing a complaint under the statutory provisions
of The Consumer Protection Act, 1986 exclusively at your own risk, cost,
responsibility and consequences which please note.
Place……………………..
Dated............................... Sd/-
.………. . .
Model Form –2 -The complaint
BEFORE THE HON’BLE DISTRICT CONSUMER DISPUTES

REDRESSAL FORUM AT ........................................................
OR
BEFORE THE HON’BLE STATE CONSUMER DISPUTES
REDRESSAL COMMISSION AT .....................................................
OR
BEFORE THE HON’BLE NATIONAL CONSUMER DISPUTES REDRESSAL
COMMISSION AT NEW DELHI
IN RE: COMPLAINT NO ........................ OF 20 ......... IN THE MATTER OF:
(FULL NAME) (DESCRIPTION) (COMPLETE ADDRESS)
............... Complainant
VERSUS
(FULL NAME) (DESCRIPTION) (COMPLETE ADDRESS)
................................. Opposite Party/ Parties
COMPL AIN
MPLAIN
AINT T UNDER SSE
UNDE ECTION I2/ SSE
ECTION 1177/
SECTION 21 O
OFF THE CONSUME
CO UMER R PR
PROOTECTION ACT, 11986986
986..
RES PE
RESPE C T FUL
PEC ULLLY SSH
HO W E T H
INTRODUCTION
(In this opening paragraph the complainant should give his introduction as
well as that of the opposite party/parties.
T R AN
ANSSAC T ION
(In this paragraph complainant should describe the transaction complained of,
i.e., particulars and details of goods/ services availed; items of goods/kind and nature
of service; date of purchase of goods/availing of service; amount paid as price/
consideration, full or in part towards the goods/service; Photocopies of the bill/cash
memo/voucher or receipt should be attached and properly marked as
Annexure – A,B,C and so forth or 1,2,3 and so forth.)
DEFECT DEFICIENCY
(In this paragraph complainant should explain the grievance, i.e., whether the loss
or damage has been caused by some unfair trade practice or restrictive trade practice
adopted by any trader or there is some defect in the goods or there has been deficiency
in service or the trader has charged excessive price for the goods. One should elucidate
the nature of unfair trade practice adopted by the trader, i.e., relating to the quality of
goods/services; sponsorship; warranty or guarantee for such period promised. The
nature and extent of defects in goods should be explained and so should the deficiency
in service. In case of excessive price one should specify the details of actual price fixed
by or under any law for the time being in force or as set out on goods and their packing
vis-a-vis the price charged by the trader. Complaint can also be filed against offer for
sale of goods hazardous to life and safety when used. You should narrate your grievance
and rest assured it is being read /heard by compassionate and pragmatic judges.
Photocopies of relevant documents must be attached.)
RE
RECC T IF
IFIIC AT ION
(In this paragraph complainant should highlight what attempts were made by him to
set things right, i.e., personal visits or negotiations; communication in writing if any;
whether any legal notice was got served and / or whether he has approached any other
agency for redressal like, Civil or Criminal Court of competent jurisdiction; the stage of
its proceedings, its outcome, if any, alongwith copies (certified preferably) of such
proceedings. The nature of response got from the trader when irregularities were
brought to his notice, should also be disclosed here).
OTHER PROVISIONS
(In this paragraph reference may be made to any other law or rules or regulations of
particular procedure which is applicable to the case and/or which has been violated by
the trader and consumer’s rights under the same. There are incidental statutory
obligations, which traders must fulfil and in case of their failure to do so the case in
prima facie made out and Forum would take cognizance).
EVIDENCE
(In this paragraph complainant should give details of documents and/or witnesses he
will rely upon to substantiate his case. The documents attached as Annexures as stated
above may be incorporated in a proper list and a list of witnesses (if any) may be filed
similarly).The annexures should be attested as “True Copy”.
JURISDICTION
(In this paragraph complainant should liquidate the claim in the complaint, i.e., upto 20
lakh; 20 lakh to one crore; or above and set out the pecuniary jurisdiction of the Forum/
State Commission/National Commission, as the case may be. The territorial Jurisdiction
should be highlighted to obviate any formal objection).
LIMITAT ION
IMITA
That the present complaint is being filed within the period prescribed under section
24A of the Act.
RELIEF CLAIMED
(In this paragraph complainant should describe the nature of relief he wants to claim.
i.e., for removal of defects in goods or deficiency in service; replacement with new
goods; return of the price or charges, etc., paid and/or compensation on account of
financial loss or injury or detriment to his interest occasioned by negligence of the
opposite party and elucidate how you have calculated the amount of compensation
claimed).
PR
PRAAYER CL
CLAAUS
USEE
It is, therefore, most respectfully prayed that this Hon’ble Forum/Commission may
kindly be pleased to ....................................................................... (Details of reliefs which complainant wants
the Court to grant)
Place: ................................... Dated: ...................................
Complainant Through ...................................

(Advocate or Consumer Association, etc.)
Ver if
ifiicat ion.
erif
I, ............................. the complainant above named, do hereby solemnly verify that the contents
of my above complaint are true and correct to my knowledge, no part of it is false and
nothing material has been concealed therein. Verified this .............................. day of
............................ 20 ...... at .......... Complainant.
Note: Although it is not compulsory, complainant may file an affidavit in support of

the complaint which adds to the truth and veracity of allegations and gives
credibility to the cause. It need not be on a Stamp paper but one should get it
attested from an Oath Commissioner appointed by a High Court. The format
is just as simple.
Mo
Moddel FFo
or m –3- Af
Afff idav it in supp
suppoor t of tthe
he cco
omp
mpllaint
BEFORE THE HON’BLE…………………..IN RE: COMPLAINT NO………….OF 20……………..IN

THE MATTER OF:
…………………………………………………………
................................................................................................................................................... Complainant
......................................................................................................................................................................................
.............................................................................................................................................. Opposite party
AF
AFFFID IDA AVIT
Affidavit of
Shri…………………………………………….S/o. Shri .......................................................
aged………………………………years, resident of .........................................................
......................................................................................................................................................................................
(1) That I am complainant in the above case, thoroughly conversant with the
facts and circumstances of the present case and am competent to swear this
affidavit.
(2) That the facts contained in my accompanying complaint, the contents of which
have not been repeated herein for the sake of brevity may be read as an integral
part of this affidavit and are true and correct to my knowledge.
Deponent
Ver if
ifiic a t ion:
erif
I, the above named deponent do hereby solemnly verify that the contents of my
above affidavit are true and correct to my knowledge, no part of it is false and nothing
material has been concealed therein.
Verified this…………………………day of………………….. 20…………. at……….
Deponent
Model Form –4- Reply by the trader to the complaint
BEFORE THE HON’BLE …………………………………….. THE CONSUMER DISPUTES

REDRESSAL FORUM/ COMMISSION AT………………………
IN RE: COMPLAINT NO…………………….OF 20……………………..
IN THE MATTER OF:
...........................................................................................................................................................................Complainant
VERSUS
........................................................................................................................................................................Opposite Party
DATE OF HEARING……………………
WRIT
RITTTEN SST
TATEME
MENNT ONB
ON EHAL
BEHALFF O
OFF RESPOND
RESP ENTS TO THE
NDE
COMPLAINT OF THE COMPLAINANT
RESPECTFULLY SHOWETH:
Preliminary Objections
1. That the present complaint is wholly misconceived, groundless and unsustainable

in law and is liable to be dismissed as such. The transaction question was without
any consideration and free of charge.
2. That this Hon’ble Forum/ Commission has no jurisdiction to entertain and adjudicate
upon the dispute involved in the complaint in as much as it is not a consumer
dispute and does not fall within the ambit of the provisions of the Consumer
Protection Act,1986, hereinafter called the said Act and is exclusively triable by a
Civil Court and as such the complaint is liable to be dismissed summarily on this
score alone.
3. That the dispute raised by the complainant in the present complaint is manifestly
outside the purview of the said Act and in any event, the Act is in addition to and not
in derogation of the provisions of the.............. Act. The proceedings initiated by the
complainant under the Act are honest, null and void and without jurisdiction.
4. That the definitions of ‘Complainant’, ‘Complaint’ ‘Consumer Dispute’ and ‘Service’,
as defined in Section 2(1) of the said Act do not cover the claims arising under the
present dispute and that from the aforesaid definitions, the complainant is not’
consumer’ and the controversy involved in the complaint is not a ‘consumer
dispute’.
5. That the present complaint is baseless and flagrant abuse of process of law to
harass and blackmail the answering respondent.
6. That the complainant has no locus standi to initiate the present proceedings.
7. That the complaint is bad for non-joinder of necessary and proper party and is
liable to be dismissed on this score alone.
8. That the complainant has already filed a Civil Suit for ................. in a court of competent
jurisdiction which is pending disposal in the Court of ............. and the present complaint
has become infructuous.
9. That the present complaint is hopelessly barred by limitation.
10. That this Hon’ble Forum/Commission has no territorial or pecuniary jurisdiction in
as much as the amount involved in the subject-matter exceeds/is less than the limit
prescribed by Section 11(1) Section 17(1)(a)(i)/Section 21(a)(i) of the Act.
11. That the present complaint is frivolous and vexatious and liable to be dismissed
under Section 26 of the Act.
12. That the present complaint has not been verified in accordance with law.
On Merits:
In these paragraphs respondent must reply each and every allegation made and
contention raised by the complainant, factual and legal as well. In case one has already
made good the defect or deficiency, elucidate steps taken. One may have, inter alia,
following goods defences as well.
1. That the transaction entered between the parties to the above dispute is a
commercial one and the complainant cannot claim any relief from this authority in
as much as .........................................................................................................
(give details)
2. That the complainant had purchased the goods as a seller/retailer/distributor, etc.,
for consideration of resale and as such is barred from moving this Hon’ble Forum/
Commission for the alleged defect/deficiency etc. in as much as
...........................................................................................
(give details)
3. That the complainant has already availed the warranty period during which the
answering respondent has repaired/replaced the goods in question. The complainant
is thus legally stopped from enforcing this complaint or to take benefit of his own
wrong.
4. That the present complaint is an exaggeration beyond proportion despite the fact
that the complainant is himself responsible for delay and laches in as much as he
has on several occasions changed his option for class of goods/type of allotment
scheme of flats/model of vehicle, etc ........................................................................................................................................
(give details)
5. That the answering respondent is well within his rights to charge extra price for
the subject-matter of the above dispute in as much as time was not the essence of
delivery thereof. The complainant is liable to pay the increased price w.e.f ............ on
account of escalation due to excise duty/budgetary provisions etc. in as much as…..
(give details)
6. That the complainant has accepted the goods and/or service towards repair/
replacement etc. without protest and the present complaint is merely an after
thought.
7. That without prejudice the answering respondent as a gesture of goodwill is
prepared to.............................................................................................................................................. (give details of
rectification, if any, which can be done in case of minor or tolerable problems to
avoid harassment to consumer and litigation problems)
The allegations of defect/default/negligence and/or deficiency in service are wholly

misconceived, groundless, false, untenable in law besides being extraneous and
irrelevant having regard to the facts and circumstances of the matter under
reference.
Prayer clause with all the submissions made therein is absolutely wrong and is
emphatically denied. Complainant is not entitled to any relief whatsoever and is
not entitled Model Form costs.
Sd/-
(Opposite Party)
Place: ......................
Dated: ...................... through
(Advocate)
Ver if
ifiicat ion
erif
I, .................... the above named respondent do hereby verify that the contents of paras ................
to .................... of the written statement on merits are true and correct to my knowledge.
While paras .............................. to ............ of preliminary objections and ................ to ......... of reply
on merits are true to my information, belief and legal advice received by me and
believed to be true while the last para is prayer to this Hon’ble Court. Verified at
........................ this .......................day of................. 20 .............
Sd/-
(Opposite party)

Caselaw Banking

Încărcat de

Informații document

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Caselaw Banking

Încărcat de

Drepturi de autor:

Formate disponibile

Consumer Case Laws Series-4

Department of Consumer Affairs, Government of India

Indian Institute of Public Administration

Consumer Case Laws Series-4

© Indian Institute of Public Administration, New Delhi

Price Rs. 100

Published under aegis of consultancy assignment. Promoting Involvement of

Sponsored by : The Department of Consumer Affairs, Ministry of Consumer Affairs,

Published by Indian Institute of Public Administration, New Delhi and Printed at

We are indeed grateful to the Department of Consumer Affairs (Government

26. Canara Bank v. Agnes D’mello I (2006) CPJ 8 (NC) 41

53. Principal, Guru Nanak Girls College I (2003) CPJ 171(NC) 88

announcement and is applicable only to loanee farmers/planters whereas

State Bank of India vs. Anand Prakash

Kamlesh Kumar (NRI) vs. Allahabad Bank

Jhunjhunu Primary Land Development Bank &

Bihar SStt ate Sugar C

Neel kant ha Jute De

Allahabad Bank vs. Shiv Swarup Srivastav

Allahabad Bank vs. JDS Electric Company

Shanti Devi vs. Bhojpur Rohtas Gramin Bank

American Express Bank Ltd. vs. Narender Kumar Rai

Bank of India & Ors. vs. Chinmay Barik & Ors.

Ashok Kumar Kalra vs. Allahabad Bank

Tirupati Agencies vs. HSBC Bank & Ors.

must have moved away from that address to an unknown address.

Om Prakash vs. Allahabad Bank, Daliganj Branch, Lucknow

Debabrata Mukherjee vs. Allahabad Bank & Ors.

Canara Bank vs. Agnes D’mello

Mahad Co-operative Urban Bank Ltd. vs.

Allahabad Bank, Bhopal vs. Ranbir Singh Bhadoriya

C.L. Khanna vs. Dena Bank

Deep Chand Jain vs. Bank of Baroda & Ors.

Anumati vs. Punjab National Bank

suit was yet to be quantified?

P un jab & Sin

Swadeshi Polytex Ltd. vs. Central Bank of India & Ors.

Ratnachand Morakar vs. Bank of Maharashtra, Bombay

Keshri Steel Ltd., Bombay. Thereafter, one authorized representative of the

agreed to participate in lending programme to the beneficiaries sponsored by the

ABN Amro Bank vs. Sangeeta Srivastava

Indian Export Corporation & Ors. vs. Chairman-cum Managing

St ate B ank of PPa

accompanied by technicalities. Merely because recording of evidence is required, or

Om Prakash Sahni vs. State Bank of India & Ors.

Andhra Bank vs. Vishwapriya Financial Service & Securities Ltd.

Indian Overseas Bank vs. Klebert Pierre

Indo Steels vs. Central Bank of India

Commander Rakesh Sharma vs. Punjab National Bank

Hanuman Hosiery vs. Canara Bank

State Bank of India vs. Ugam Singh

State Bank of India vs. Mohinder Sing & Ors.

Virender Narang vs. M/s Syndicate Banks Ors

Mrs. Anumati vs. Punjab National Bank

Patna Co-operative Bank Ltd. vs. Hasmukh B. Shah

Arvind Sahni vs. Punjab & Sind Bank

Vimal Chandra Grover vs. Bank of India

Bade Krishnaveni vs. Canara Bank

MODEL FORM OF NOTICE, COMPLAINT, AFFIDAVIT AND REPLY

Name and address

This is to bring to your kind notice that 1 had purchased………….............from your

The said goods are suffering from the following defects:

which you are liable to compensate to me.

(ii) replace the goods with new goods