State Consumer Disputes Redressal Commission
Axis Bank vs Dr. J. De. Souza on 23 July, 2015
1
BEFORE THE GOA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION,
PANAJI - GOA
F.A No. 37/2015
Dr. D.J. De Souza,
C/o Luz Lab, Libania Bldg,
New Market, Margao Goa .....Petitioner
v/s.
Manager, Axis Bank,
Shop No. 84, 2nd Floor,
M.G. Road, Panjim Goa .....Respondent
FA No. 43/2015
Axis Bank
a body Corporate constituted
under the provisions of
Companies Act 1956,
having its Registered Office at
Thrisul, 3rd Floor, Opposite
Samartheshwar Temple, Law Garden,
Ellis Bridge,
Ahmedabad - 380006, Gujarat
and a Branch office
Office No. 84, 2nd floor
M.G. Road, Panjim Goa
Through its Constituted Attorney
and Manager
Mr. Savio Agnelo Desouza .........Appellant
V/s.
Dr. D.J. De Souza
C/o Luz Lab, Libania Bldg
New Market, Margao Goa ........Respondent
Appellant/Complainant is present in person.
Respondent/OP is represented by Adv. Shri. S.M. Singbal.
Coram: Shri. Justice N.A. Britto, President
Smt. Vidhya R. Gurav, Member
2
Dated: 23/07/2015
ORDER
[Per Justice Shri. N. A. Britto, President] These appeals can be conveniently disposed off by this common order. The appeals have been filed by both the parties in CC No. 65/14 and are directed against final order dated 15/5/15 of the South Goa District Forum.
2. Some facts are required to be stated to dispose off these appeals.
3. Briefly stated, the complainant is the customer of the OP Bank. The complainant issued two cheques, one dated 9/9/14 in favour of one Dr. S.P. Gaitonde for Rs. 5,619/- and the other dated 4/6/14 in favour of Chief Electrical Engineer for Rs. 6,960/-. The dispute centers mainly on the second cheque issued by the complainant in favour of the Chief Electrical Engineer.
4. By letter dated 30/6/14 the Assistant Engineer, Electricity Department, informed the complainant that the said cheque dated 4/6/14 was returned by HDFC Bank Ltd., Panaji because of alterations which are not allowed and which are against RBI guidelines. The complainant was also informed that as per rules in force the complainant was charged, on account of dishonour of the cheques, penalty, re-connection charges and delayed payment charges. It appears that the complainant, on account of the dishonor of the said cheque, had subsequently to pay by a demand draft a sum of Rs. 7794/- to the Chief Electrical Engineer.
5. The complainant claiming that the cheque carried his full name as well as his account number could have been easily cleared by the Bank in consultation with him on phone as there was no alteration, save for overwriting of the long arm of single digit "6" and as the 3 amount in words was clear without any blemish. The complainant claimed that due to cavalier and high handed nature of the OP Bank, the complainant was slapped with punitive damages and reconnection charges and had to pay an amount of Rs. 834/- against the said electricity bill of Rs. 6,960/-. The complainant, therefore, inter alia, sought in the complaint for recovery of Rs. 850/- (should be Rs. 834/-, as per affidavit) with interest at the rate of 12% from 4/6/14 and punitive damages of Rs. 30,000/- .
6. The complaint was resisted by the OP stating that the cheques in question were returned unpaid because of alteration/correction on the instrument under the CTS 2010 system, as per guidelines laid down by the RBI and as such the complaint was misconceived and was not maintainable. The OP Bank pleaded that as per RBI guidelines on CTS 2010 standards, the customers should preferably use dark colored ink while writing cheques and avoid any alterations/corrections thereon and in the case at hand the complainant had made alterations/corrections and had approached the Forum with unclean hands. The OP stated that there was no question of consultation over the phone to confirm any authenticity as the guidelines are made in larger public interest and to streamline the operations systematically throughout the country and as such the OP was bound to abide by the guidelines known as "Standard Operating Procedure for Non CTS 2010 cheques which are laid down as per RBI circular dated 16/7/13 detailing the procedure for processing CTS 2010 and Non-CTS 2010 instruments in the three CTS grid locations (Chennai, Mumbai and New Delhi). The OP further pleaded that as per guidelines No. 7.4.8 of the said CTS guidelines no changes/correction should be carried out on the cheques (other than for date validation purposes, if required) and that the complainant had made alterations of the amount specified on the cheques which 4 was not permissible as per the said guidelines effective from 16/7/2013. The OP also stated that as per the said guidelines, the drawee Bank should return any cheques with material alteration even if such an alteration is duly authenticated by the drawer of the cheque (exception being date filled) as per the said CTS guidelines. The OP stated that they had acted as per the guidelines and as such there was no deficiency service on their part.
7. The Lr. District Forum relied on an unreported decision of this State Commission in the case of Mr. Shantidas Ganesh Khandolkar dated 18/7/13 in FA No. 40/13 and observed that on close scrutiny of the cheque dated 4/6/14 they found that there was hardly any alteration carried out by the complainant while issuing the cheque drawn on the Chief Electrical Engineer. The Lr. District Forum further observed that if the collecting bank could very well read the writings done on the instrument, then there should not be any problem for the OP bank in clearing the cheque. The Lr. District Forum in one breath observed, that because of the refusal to clear the cheque the complainant had to suffer and pay late payment charges to the Electricity Department, but in another breath observed that the complainant had brought nothing on record to show that he had to pay a sum of Rs. 850/- (should be Rs. 834/-, as per affidavit) but ordered the OP to pay to the complainant Rs. 5000/- by way of compensation towards harassment and mental torture and Rs. 5000/- towards the costs of the complaint. The Lr. District Forum took no note of the defence taken by the OP Bank.
8. The complainant has filed FA No. 37/15 to recover the excess amount paid by the complainant of Rs. 845/- with interest at the rate of 12% (should be Rs. 834/-) which has been disallowed by the Lr.
5District Forum. The OP has filed FA No. 43/15 to set aside the impugned order.
9. We have heard the complainant in person and Shri. S.M Singbal, the lr. advocate of the OP bank, and, perused the records.
10. The complainant may be right in submitting that the Lr. District Forum did not scrutinize the documents carefully which might have avoided the filing of appeal by the complainant, thus saving his time and money. If the Lr. District Forum was to read the affidavit in evidence filed by the complainant, alongwith letter dated 30/6/14 addressed to the complainant by the Asst. Engineer and the copy of the demand draft in favour of Chief Electrical Engineer, it would have been clear that on account of return of the cheque dishonoured by the Bank the complainant had to pay a sum of Rs. 834/- by way of delayed payment and reconnection charges. But that is different matter. It is nobody's case that the cheque issued by the complainant in favour of the Chief Electrical Engineer dated 4/6/14 for Rs. 6,960/- was dishonoured because the amount written in words differed from the amount written in figures. Therefore, reliance placed by the Lr. District Forum on the case of Shantidas Ganesh Khandolkar (supra) is totally misplaced and so also the conclusion arrived at in para 7 of the impugned order. The decision in Shantidas Ganesh Khandolkar is clearly inapplicable to the facts of the case at hand. What was held therein, relying on Section 18 of the Negotiable Instruments Act, 1881, is that when the amount in words differs from the amount in figures the amount stated in words should be taken as the amount undertaken or ordered to be paid. Moreover, the dishonour of the cheque in the case of Shantidas Ganesh Khandolkar had taken place before CTS 2010 guidelines were introduced and which according to 6 the OP has been introduced w.e.f. 16/7/13, as regards which there is no dispute raised by the complainant.
11. The complainant was informed by the letter dated 30/06/14, issued on behalf of the Chief Electrical Engineer, that the subject cheque was returned by HDFC Bank Ltd., Panaji because of alterations which were not allowed by RBI guidelines. The complainant had also pleaded in para 2 of the complaint that the cheque was rejected on account of alterations under the CTS cheque rules effective from April 2014, and being so, it was the duty of the Lr. District Forum to find out whether the rejection of the cheque or dishonour of the said cheque because of alterations/corrections would amount to deficiency in service on the part of the OP Bank. This admittedly has not been done.
12. There is no dispute that the cheques issued to the complainant by his Bank were CTS compliant. There is also no dispute that there were alterations made by the complainant on both the cheques including the cheque dated 4/6/14 issued in favour of Chief Electrical Engineer, alterations which were duly initialed by the complainant.
13. It is common knowledge that in the past the clearing of cheques was done by sending the cheques physically to the drawee bank and later to the local cheque clearing centre but today all the cheques are cleared under the CTS system through three centres or grids located at Chennai (southern grid) New Delhi (northern grid) and Mumbai (western grid) Goa comes within Western grid. (see page 31) The CTS (Cheque Truncation System) is introduced pursuant to the directions of the RBI. The guidelines placed on record, on behalf of the OP bank, would show that CTS - cheque truncation system - is a process of stopping the flow of the physical cheque issued by the drawer at some point with the presenting bank en-route to the drawee bank branch.
7In its place an electronic image of the cheque is transmitted to the drawee bank by the clearing house, alongwith relevant information like data on the MICR (magnetic ink character recognition) band, date of presentation, presenting bank, etc. CTS is the process of stopping the physical movement of cheques from the Banks to the clearing house. Physical cheques are retained at the presenting bank itself and the settlement of CTS happens on the basis of MICR data captured from the cheques and the captured images along with the data are exchanged across the banks (see page 24). There are several benefits of cheque truncation and amongst them are ease of operations and fraud prevention, quicker credit, no loss of physical instruments, complete elimination risk of tempering in transit (see page 28). The advice is that Banks/Customers should use CTS 2010 cheques which are not only image friendly but also have more security features (see page 58). The RBI guidelines on CTS 2010 standards also require that the customers should preferably use dark colored ink while writing cheques and avoid any alterations/corrections thereon and further require the drawee bank to return the instruments with material alteration even if such alternation has been authenticated by the drawer, exception being the date filled (see page 58). Alterations/corrections on cheques are prohibited under guidelines 4.7.8 other than for date validation purposes, if required.
14. In the case at hand, the subject cheques, CTS compliant, were returned dishonoured, because of the corrections made by the complainant, though duly initialed by him. Such cheques having corrections/alteration could not be cleared under CTS. The complainant, therefore, could not have blamed the OP Bank but himself for having issued cheques with corrections/alterations. There was no deficiency in service on the part of the OP Bank, in case such cheques were dishonored under CTS introduced by the R.B.I. 8
15. In view of the above discussion, FA No. 37/15 filed by the complainant is bound to be dismissed and FA No. 43/15 filed by the OP is bound to succeed.
16. Consequently, the impugned order is hereby set aside and the complaint filed by the complainant is hereby dismissed, leaving the parties to bear their own costs, throughout.
[Smt. Vidhya R. Gurav] [Justice Shri N. A. Britto]
Member President
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