National Consumer Disputes Redressal
Branch Manager, Idbi Bank vs Sameer Jain & Ors. on 26 April, 2024
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 147 OF 2011 (Against the Order dated 04/03/2011 in Complaint No. 21/2010 of the State Commission Chandigarh) 1. BRANCH MANAGER, IDBI BANK the branch manager ,I.D.B.I.Bank,SCOB Nos.55-56-57 Madhya Marg Road,Sector 8-c CHANDIGARH CHANDIGARH ...........Appellant(s) Versus 1. SAMEER JAIN & ORS. Sameer jain S/O sh .Sudarshan Kumar jain ,Proietor,Net Solutions,first Floor,Tower -c,DLF infocity Rajiv Gandhi Chandigarh Technology Park, CHANDIGARH CHANDIGARH 2. NET SOLUTIONS FIRST FLOOR,TOWER -C propr net Solutions First Floor ,TOwer-c DLF infocity,Rajiv Gandhi chandigarh Technology Park , CHANDIGARH CHANDIGARH 3. THE BRANCH MANAGER, The Branch Manager, Kotak Mahindra Bank Limited ,SCO No 826,NCA Manimajra, CHANDIGARH CHANDIGARH ...........Respondent(s)
BEFORE: HON'BLE DR. SADHNA SHANKER,PRESIDING MEMBER
FOR THE APPELLANT : MR. SUMIT NAGPAL, ADVOCATE FOR THE RESPONDENT : FOR THE RESPONDENT NOS. 1&2 : MR. SARAD KUMAR SUNNY, ADVOCATE WITH
MR. KESHAV MANN, ADVOCATE
FOR THE RESPONDENT NO. 3 : MR. FANISH K. JAIN, ADVOCATE
MS. MANJU B. JAIN, ADVOCATE
MR. ROHIT YADAV, ADVOCATE
Dated : 26 April 2024 ORDER
1. The present appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as "the Act") against the Order dated 04.03.2011 passed by the State Consumer Disputes Redressal Commission, U.T. Chandigarh (hereinafter to be referred to as "State Commission) in complaint No. 21 of 2010, whereby the complaint of the complainant was allowed.
2. Heard the learned counsel for the appellant (hereinafter referred to as the 'bank'); the learned counsel for the respondents no. 1 and 2 (hereinafter referred to as the 'complainants') and learned counsel for the respondent no. 3 (hereinafter referred to as the 'Clearing bank') and also perused the record including the State Commission's impugned Order dated 04.03.2011 and the memorandum of appeal.
3. The brief facts of the case as narrated in the complaint by the complainants is that the complainants hold a Business Gold Account with the bank and it is alleged that on 24.04.2008, an amount of Rs. 42,80,000/- was debited from the complainants' account stating the name of the drawee as "Spectra Computer" as per an SMS notification, which he overlooked due to travel preparations. Upon checking his account through Internet banking on 25.04.2008, before leaving for a business trip, he discovered the transaction. Believing it was meant for "Spectra Computech," an old vendor, he presumed an error in recording. However, upon investigation, Spectra Computech denied receiving the payment. Subsequently, complainant no. 1 discovered the cheque bearing his forged signature and the name was "Spectra CompuPech," and not "Spectra CompuTech" or "Spectra Computer" as previously indicated. Despite repeated requests, IDBI Bank did not provide a copy of the cheque. Complainant filed complaints with the Economic Offence Wing and an FIR no 196 dated 30-11-2008 with the Manimajra Police Station, leading to forensic analysis revealing significant differences in signatures. Despite notices and assurances of investigation from bank, complainants deemed their actions negligent and deficient in service.
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4. Being aggrieved, the complainants filed a complaint before the State Commission, Chandigarh seeking refund of the amount of Rs. 42,80,000/- along with interest at the rate of 18% per annum from the date of debit till the same is refunded/deposited and compensation of Rs. 50,000/- towards damages.
5. The bank contested the complaint by filing written statement before the State Commission stating therein that the complaint involves complex factual questions that necessitate detailed evidence and fall outside the jurisdiction of the forum due to the case being criminal in nature. Regarding the merits of the case, the bank admitted the opening of the account by the complainants. It is explained that transaction notifications were sent via SMS to the mobile number provided by the account holder, which happened to belong to Mr. Sameer Jain, the Proprietor of complainants. The bank further admitted the debit of Rs.42,80,000/- from the account and the remittance to "Spectra CompuPech". They claimed that a legitimate cheque was presented for clearing and the signatures on the cheque matched with the specimen signatures available in their records. They denied any negligence on the part of the bank officials who cleared the cheque.
Top of Form The bank also asserted that they provided several cheques signed by complainant No. 1 to the police authorities, showing discrepancies in signatures but the complainant No. 1 did not raise any objections to their clearance. They requested Clearing Bank to freeze the account where the cheque was deposited and refund back the amount to IDBI Bank. However, Clearing Bank refused to refund the amount despite banks' requests.
6.Top of Form The Clearing bank vehemently denied any suggestion of connivance between their officials and those of bank. They explained that the account was opened in the name of Spectra CompuPech based on Know Your Customer (KYC) documents submitted under the name of Spectra CompuPech. Any mention of "Spectra CompuTech" in internal documents of Clearing bank was deemed erroneous. Therefore, it is argued that the complainant's attempt to draw similarities between the two names was irrelevant, as the cleared cheque was indeed drawn in favour of Spectra CompuPech. Clearing Bank maintained that there was no deficiency in their service on their part and the complaint is liable to be dismissed against Clearing Bank.
7. The State Commission, vide its Order dated 04.03.2011, allowed the complaint and the bank was directed to pay to the complainants a sum of Rs.42,80,000/- along with interest at the rate of 6% per annum since the date of withdrawal till the amount is paid to the complainants. The bank was also directed to pay Rs. 10,000/- towards the cost of litigation.
8. Before us, the counsel for the bank has argued that M/s Spectra CompuPech, in whose favour the cheque no. 516670 (hereinafter, "subject cheque") was issued, has not been made a party to the complaint before the State Commission, therefore, complaint is not maintainable for non-joinder of necessary parties. Moreover, the State Commission failed to appreciate that the subject cheque was misplaced from the office of the complainants and that a Trainee Account Executive in the office of the complainants admitted under section 161 CrPC recorded by the Police that the subject cheque was misplaced in the office of the complainants, and that she forgot to issue 'Stop Payment' instructions in respect of the said cheque to the bank. This was alleged to be gross negligence on the part of the complainants. The bank further argued that the signature on the subject cheque, as visible to the naked eye, appeared to be similar to the specimen signature of complainant no. 1, who is the authorized signatory. It is stated that, in the present case, the bank made payment only after verifying/tallying the signature on the subject cheque with the specimen signature and finding no apparent discrepancy. Therefore no negligence can be attributed on the part of the bank. Further, it is contended that the State Commission did not consider the discrepancies in the signatures on the cheques provided during the investigation, which was not objected to by the complainants when they were cleared. It was contended that the State Commission overlooked the guidelines outlined by the Reserve Bank of India, which stipulate that in instances where an individual not legally entitled to do so collects funds on a stolen instrument, the bank responsible for collecting the funds (here, Kotak Mahindra Bank) is obligated to compensate the rightful payee (complainants). This argument asserts that Clearing Bank bears the sole responsibility for any potential compensation owed to the complainants. It was further submitted that the complaint filed before the State Commission raised allegations of fraud and forgery, which are criminal in nature and can be decided by the appropriate criminal proceedings only and the State Commission did not have the jurisdiction to adjudicate upon the same. Accordingly it was prayed that the impugned order be set aside.
Learned counsel for the bank has placed reliance upon the following judgments to support his arguments:-
a.Capital Charitable & Education Society (Regd.) Vs. Axis Bank Ltd. 2019 SCC ONLINE NCDRC 1648 b. Mittal Education Society Vs. Indian Overseas Bank 2017 SCC Online NCDRC 1862 c. United Commercial Bank Vs. Mehendra Popatlal Vora 1994 SCC ONLINE NCDRC 87 d. Bank of Maharashtra Vs. Automotive Engineering Co (1993) 2 SCC 97 e. R. K. Floriculture (P) Limited Vs. Punjab and Sind Bank, New Tangra Branch, 2000 (2) CPC 440.
9. Learned counsel representing the complainants has reiterated the facts of the case and argued that the cheque in question was not signed by complainant no. 1 and that although their specimen signatures were on record with the Bank, due diligence was not followed before allowing the transaction. It is further contended that the cheque was encashed despite not being issued by the complainant no. 1, thus, it constitutes a deficiency in service on the part of the bank. The counsel referenced a report from the Directorate of Forensic Sciences, Ministry of Home Affairs, Government of India, dated November 17, 2008, obtained through RTI which concluded that the individual who signed the admitted signatures did not write the signatures on the disputed cheque. The complainants, therefore, gave no authorization to the bank to pay the amount of Rs.42,80,000/- to the holder of the said cheque. Secondly, despite receiving an SMS notification on his telephone regarding the receipt of the cheque for Rs.42,80,000/-, the complainant did not respond due to valid reasons that the complainant no. 1 was scheduled to depart from India the following day and was preoccupied with preparations for his trip. Furthermore, the SMS incorrectly mentioned the name of the payee as Spectra Computer. Given these circumstances, the lack of response from the complainant no. 1 did not grant authorization to process the cheque, especially, considering it had not been signed by the complainant no. 1. It was also asserted that the registration of a criminal case or its investigation does not bar proceedings under the Consumer Protection Act, 1986.
Reliance was placed on Punjab National Bank v/s K B Shetty - II (1991 CPJ 639), where in the Hon'ble National Commission ruled that the existence of a criminal case or its investigation does not hinder proceedings under the Consumer Protection Act. Similarly, in the case of Uma Shankar Bhatt Vs. Chairman-cum-Managing Director, Punjab and Sind Bank, 2008 (51 AKAR 877) (NC) = 2008 III ALJ 590), the Hon'ble National Commission admitted a consumer complaint despite the presence of criminal proceedings against bank officials for fraudulent fund transfers. As regards the allegation of negligence on their part in not informing about the lost cheque, reliance has been placed on Canara Bank Vs. Canara Sales Corporation and Ors (1987) 2 SCC 666 and Citizen Cooperative Bank Vs. Ritesh Mittal 2002 SCC OnLine J&K 38 : AIR 2003 J&K 67 : (2004) 1 CPJ 33.
10. The main question before us is as to whether there is any deficiency of service on behalf of the appellant bank.
11. As regards the argument that the case involves complicated issues of fraud and forgery, it is seen that the FIR lodged in this case was directed against 'unknown persons' and not specifically against the bank or its employees. Before us the main ground is regarding deficiency in service in clearing a cheque not signed by the customer. Hence, relying on Punjab National Bank v/s K B Shetty - II (1991 CPJ 639) (supra), this Commission is of the view that the State commission has the jurisdiction to decide the matter. Further, to decide the issue of deficiency of service of the bank in clearing a cheque not signed by the customer, there is no need for joinder of the party that withdrew the amount.
12. The bank contended that there was negligence on the part of the complainant as he failed to keep the cheque in safe custody. It is been held in Citizen Co-operative Bank Ltd. and another vs Ritesh Mittal AIR 2003 J&K 67 : (2004) 1 CPJ 33 that if a signature on a cheque is not genuine, then there is no mandate on the part of the bank to pay and there would be no question of any negligence on the part of the customer such as leaving the cheque book carelessly etc. would not be any defense to the bank. In the present case the forensic lab has certified the forgery of the signature in question. The report also states that the other cheques mentioned in the report were signed by one and the same person. Further, no contrary evidence has been led by the bank to prove that the signature on the disputed cheque was the same as the specimen signatures. In the circumstances, the bank had no mandate to clear the cheque, and any negligence on part of the complainants cannot be attributed.
13. As regards the RBI guidelines about the collecting bank refunding the amount to the paying bank in case of fraud it is seen that the circular states as under :
Filing of FIR "Please refer to your letter IDBI/CO/Br. Ops/004 dated April 10, 2006 on the captioned subject. In this connection, we advise that para 2.3 of the Master Circular on frauds relates to encashment of forged instruments and in such cases, the paying bank which is defrauded, should report the fraud and file FIR.
As regards the issue of collection of an instrument which is genuine but the amount is collected fraudulently by a person who is not the holder in due course and has stolen the instrument, we advise that in such a case the collecting bank, which is defrauded, is obliged to compensate the actual payee of the instrument and file fraud report with RBI and also FIR with Police/CBI."
The liability of the collecting bank arises only when a genuine instrument is collected fraudulently by a person who has stolen the instrument. In this case the instrument itself is forged so the guideline relied upon does not apply. It is pertinent to note that there was no direct contractual relationship (privity of contract) between the complainant and Clearing Bank, the clearing bank. No deficiency of service arises in respect of the complainants with regard to Clearing Bank in the circumstances.
14. In view of the above discussion, I am of the view that the bank's (appellant) failure to detect and prevent the processing of a cheque with a forged signature, constitute a breach of its duty of care which certainly constitutes deficiency in service on the part of the bank. This breach has resulted in significant harm and financial loss to the complainants for which they are entitled to appropriate compensation.
15. Therefore, the direction of the State Commission for payment of Rs.42,80,000/- alongwith interest at @6% per annum since the date of withdrawal till the amount is paid to the complainants is upheld. The direction to pay Rs. 10,000/- as cost of litigation is set aside.
The bank is directed to comply with the Order within a period of two months from the date of this Order, failing which, the interest at the rate of 9% shall be paid.
16. The appeal stands disposed of in above terms. All pending applications, if any, also stand disposed of.
............................................. DR. SADHNA SHANKER PRESIDING MEMBER