Delhi District Court
M/S. Versatile Enterprises vs Hdfc Bank on 21 January, 2014
IN THE COURT OF JITENDRA KUMAR MISHRA, ADDL.
DISTRICT JUDGE CENTRAL-09: TIS HAZARI COURTS: DELHI
CS N0. 263/09.
UID No. 02401C0284262009.
M/s. Versatile Enterprises
113, Pratap Chambers, Ist Floor
Gurudwara Road, Karol Bagh
New Delhi
(Through its partner Sh. Vipan Seth)
........... Plaintiff
Versus
HDFC Bank
(Through its Branch Manager/
Authorized Person)
Branch Office 13-B, Pusa Road,
Bazar Marg, Old Rajinder Nagar
New Delhi
......... Defendant
Date of institution of suit : 04.07.2009.
Date of reserving for judgment : 06.01.2014.
Date of judgment : 21.01.2014.
JUDGMENT
1. This is a suit filed by the plaintiff for damages and loss of Rs.
6,04,896.21 on account of negligence.
2. Brief facts of the case are :
a) Plaintiff is a registered partnership firm and Sh. Vipan Seth is one of the partner of the plaintiff who is aware of the facts of the case CS No. 263/09 M/s. Versatile Enterprises Vs. HDFC Bank Page 1 and is competent and authorized to appear in court and depose.
b) Defendant is carrying on its business under the rules and regulations of the Reserve Bank of India and is a bank under the Banking Companies Act.
c) Plaintiff is one of the customer of the defendant and is maintaining a current account no. 00262320000389 for the last more than 8 years and as such depositing and withdrawing the amount from the said account time time to time.
d) Plaintiff deposited a cheque bearing no. 116236 dated 02/08/2008 for a sum of Rs. 5,04,896.21 drawn on bank of Maharashtra, Faridabad, Haryana on 14/08/2008 with the defendant.
The same was issued in favour of the plaintiff by one of the customer of the plaintiff.
e) On tellying the account with the bank on internet on 18/08/2008, the plaintiff found that the credit of the said cheque was not given to the plaintiff. The plaintiff approached the branch manager of the defendant to enquire about the said cheque, but only on 28/08/2008 to the utter surprise and shock of the plaintiff it was revealed by Ms. Nigam Sayued, relationship manager of the plaintiff that the said cheque has been cleared through Asaf Ali Road branch of the defendant and the details of current account no. 5982020000281 to which the said cheque was credited.
f) The plaintiff is not maintaining any other account in the name and style of M/s. Versatile Enterprises with any other branch of the defendant in Delhi. During enquiry from the defendant, it came to the knowledge of the plaintiff that money of the said cheque was credited in the name of a proprietary concern M/s. Versatile Enterprises which was allegedly functioning at C 36, Jamuna Vihar Road, Noor Ilahi Mohalla, Gounda, Delhi. The said account was not opened by the CS No. 263/09 M/s. Versatile Enterprises Vs. HDFC Bank Page 2 plaintiff and this account is a fictitious account. It was also came to the knowledge that the above said proprietary account was opened on 22/08/2008 by depositing a sum of Rs. 25,000/- in which Sh. Anil Kumar was shown as proprietor from another fictitious account of M/s. Versatile Enterprises who was holding an account with Central Bank of India, Bhagirath Palace, Chandni Chowk, Delhi in the name of M/s. Versatile Enterprises. It has also came to the knowledge of the plaintiff that the officials of the defendant committed the act of deficiency in service and grave negligence in following rule and law and caused loss to the plaintiff to the tune of Rs. 6,04,896/- on account of mental agony and sufferance and on account of interest.
g) Upon visit at the address, it was revealed that there was no name plate/sign board, rather the name affixed at that place was of some other person and no activity was carried out as declared by account holder of current account no. 598202000028 at Asaf Ali Road branch of defendant, which in itself clearly proves that the cheque in question was removed from Rajinder Nagar branch of the defendant in collaboration of the officials of the defendant at Rajinder Nagar and they deliberately caused loss to the plaintiff of amounting Rs. 6,04,896.21. An FIR no. 162/2008 was also registered with PS Karol Bagh on 06/09/2008. A complaint was also lodged with the Chairperson, Banking Ombudsman, RBI, New Delhi. The defendant is guilty of negligence and deficient in rendering service to the plaintiff.
3. Written statement filed by the defendant wherein it is stated that the impugned cheque bearing no. 116232, dated 02/08/2008 for a sum of Rs. 5,04,896.21 drawn on Bank of Maharashtra and the cheque was presented for clearing with the Chandni Chowk branch of the defendant to be deposited in the bank account bearing no.
CS No. 263/09M/s. Versatile Enterprises Vs. HDFC Bank Page 3 05982020000281 opened in the name of M/s. Versatile Enterprise through its proprietor Sh. Anil Kumar with Asaf Ali branch of the defendant. It was only after getting clearance of the paying bank i.e. Bank of Maharashtra, the amount was credited in the said account with the Asaf Ali Road branch. Thereafter, the cheque amount was allowed to be withdrawn by the account holder through its proprietor. The entire sequence of event has been done in the normal course of banking transaction and the defendant has in no way the beneficiary of a single penny much less the amount as alleged by the plaintiff. It is further stated that the cheque was never presented with the Old Rajinder Nagar branch of the defendant. It is further stated that account at the Asaf Ali Raod branch was opened after following all the KYC guidelines as observed by Reserve Bank of India with regard to the identity and address proof of the account holder. It is further stated that the officers of the Old Rajinder Nagar branch and Asaf Ali Road branch have been helping the plaintiff in solving the case and had also lodged a police compliant with the Darya Ganj police station. All the details of the account have been submitted with the investigating officer of the concerned police station. It is further stated that the actual beneficiaries are already behind bars and would be prosecuted as per law. It is further stated that there are two civil proceedings, one criminal proceeding and another complaint at the banking ombudsman pending and are being proceeded simultaneously, which is resulting in loss of precious time of the legal machinery. It is further stated that it is the duty of payee bank to ensure and verify the cheque before debiting the amount from the account. The defendant acted as the agent of collection for the customer whose account was opened after observing Know Your Customer (KYC) guidelines. The defendant denied that it has caused any loss to the plaintiff. Registration of FIR CS No. 263/09 M/s. Versatile Enterprises Vs. HDFC Bank Page 4 No. 162/08 is an admitted fact. Rest of the contents of the plaint are denied.
4. Replication filed wherein it is objected that the branch of defendant at Asaf Ali Road of the defendant has not followed customary due diligence measures. Averments made in the written statement are denied and contents of the plaint are re-iterated and affirmed.
5. My ld predecessor by order dated 18/03/2010 framed following issues :
"(i) Whether the plaintiff is not entitled to interest on the amount claimed ? OPD.
(ii) Whether suit of the plaintiff is bad for want of registration of plaintiff firm ? OPD.
(iii) Whether suit of the plaintiff is bad for non-joinder of parties ? OPD.
(iv) Whether the cheque in question has been deposited in Old Rajendra Nagar or Karol Bagh Branch of defendant? If so, its effect? OPD.
(v) Whether plaintiff is entitled to amount claimed ? OPD.
(vi) Whether plaintiff is entitled to interest? If so, at what rate and for which period ? OPP.
(vii) Whether defendant is entitled to benefits U/s. 131 of Negotiable Instruments Act ? OPP.
(viii) Relief."
6. To prove its case, the plaintiff examined Sh. Vipan Seth as PW1, who tendered his evidence by way of affidavit Ex. P6. He further relied upon original of Registration of Firms dated 04/12/2008 along with original Registration of Firm of the plaintiff collectively exhibited as Ex.
P1; notice issued to the defendant as Ex. P2; postal receipts as Ex. P3, UPC served as Ex. P4; Ex. P56 is the letter sent to banking ombudsman. This witness was cross-examined at length by ld counsel for the defendant. Plaintiff further examined Clerk in Studds Accessories Ltd. Faridabad, Haryana as PW2 who was also cross-
CS No. 263/09M/s. Versatile Enterprises Vs. HDFC Bank Page 5 examined by ld counsel for the defendant. Plaintiff further examined concerned official from Registrar Firm and Societies, Punjab Chandigarh as PW3. All witnesses were cross-examined and thereafter by separate statement AR of the plaintiff closed PE. In defence, the defendant examined Sh. Shashank Bhargava, Deputy Vice President of the defendant who tendered his evidence by way of affidavit Ex DW1/1. He further relied upon documents Ex. DW1/A to Ex. DW1/J. This witness was cross-examined by ld counsel for the plaintiff and thereafter by separate statement, ld counsel for the defendant closed DE.
7. I have gone through the entire record of the case including pleadings of the parties, evidence led by the parties and documents proved by the parties during trial. My issuewise findings are :
8. Issue No. 5.
Whether plaintiff is entitled to amount claimed ? OPD. The onus to prove this issue is put upon the defendant but in my considered opinion, onus to prove this issue should be upon the plaintiff as the plaintiff has to prove its own case. The contents of Ex. P6 are similar to the averments made in the plaint. During cross- examination, it is stated by PW1 that the bank account of the plaintiff's firm was opened in Rajinder Nagar branch of the defendant in the year 1999-2000. It is admitted that another cheque was deposited along with cheque in question and the other cheque was also not cleared. It is further stated that there was no bank account number mentioned at the back of the cheque in question. The plaintiff firm has a normal practice to mention bank account number of the plaintiff firm at the back of the cheques. The employee Hanuman might have forgotten to mention the bank account number at the back of both the cheques including the cheque in question. It is admitted that the cheque was CS No. 263/09 M/s. Versatile Enterprises Vs. HDFC Bank Page 6 deposited at Chandni Chowk branch on 25/08/2008 and credited to the account of M/s. Versatile Enterprises, proprietorship firm at Asaf Ali Road, New Delhi. It is further stated that the cheque as mentioned in FIR Ex. PW1/D1 was dropped in the drop box of the bank as there was no procedure for giving back the acknowledgment. The contents of Ex. DW1/1 are similar to the averments made in the written statement. DW1 further proved copy of circular detailing the documents required for opening of the sole proprietorship account with the defendant and the same is Ex. DW1/D. It is stated in Ex. DW1/1 that erstwhile employee of the defendant namely Abhay Kumar Jha, working as sales executive with the Chandni Chowk branch was terminated from the job on 29/11/2008 and was arrested by the police in the case FIR No. 162/08 with PS Karol Bagh, sourced the impugned account holder namely Mr. Anil Kumar claiming himself to be the proprietor of M/s. Versatile Enterprises in the month of August, 2009 for opening a bank account at its Asaf Ali branch. He had also submitted account opening form, PAN card bearing no. AZBPK2058G and a cheque along with account statement of current account no. 3025619432 maintained with the CBI, Chandni Chowk branch. It is further stated that when the police made arrest of the fraudsters who were involved in the crime as alleged by the plaintiff in the FIR, which fortifies that defendant has nothing to do with the alleged transactions. The bank collected the cheque in good faith without any negligence on behalf of the customer whose account was opened as per guidelines of the RBI. The cheque was received from the clearing house in due course and the proceeds were credited to the impugned account. During cross-examination, it is stated by DW1 that there was no registration certificate of PF and PF Commissioner when Mr. Anil Kumar (Proprietor of Versatile Enterprise) applied and opened an account with Asaf Ali branch of the defendant.
CS No. 263/09M/s. Versatile Enterprises Vs. HDFC Bank Page 7 It is also stated that there was no mention in Ex. DW1/D that only one document required as mentioned therein to fulfill the norms of KYC for sole proprietorship/resident non individual bank account. It is stated only one document is required out of the list furnished as per Ex. DW1/D. He has further stated that he did not bring any document pertaining to the bank process of 2008 in regard for only accepting one document each as per Ex. DW1/D. He has further stated that he had taken the PAN card of Anil Kumar. DW1 further admitted that these documents are essential as per Government and RBI policy but not mandatory for opening an account. He could not produce any document of RBI which says that only one document is required to open an account. He has further stated that RBI has given powers to banks to formulate their own KYC guidelines inconformity to the law of land and each bank has to take adequate precaution while opening of an account so that KYC guidelines are not compromised. This court observes here that this piece of evidence of DW1 is sufficient to hold that it is the defendant who is at fault for not taking due care and precaution at the time of opening of the account in 2008 of the proprietorship concern. It is admitted case that there were two accounts, one by partnership concern i.e. the plaintiff (Versatile Enterprise) and another account was opened by one Mr. Anil Kumar i.e. the defendant by the same name but a proprietorship concern i.e. proprietor of M/s. Versatile Enterprise'. It is also admitted case that account of plaintiff was being maintained by the defendant much prior to the account which was opened by Sh. Anil Kumar i.e. the account of the plaintiff was being maintained since the year 2000 while Sh. Anil Kumar opened the account in the year 2008.
9. Today we are living in the age of internet and fast communication.
Definitely the defendant which is a bank with having faster CS No. 263/09 M/s. Versatile Enterprises Vs. HDFC Bank Page 8 communication devices as well as trained and professional staff. If a person comes to open an account similar with the name of another account which was being maintained by the bank then definitely from the data base of the bank it could be found out whether account in any similar name was in existence or not. If account of similar name was in existence then it was the duty of the bank i.e. the defendant to take extra precaution or extra care. Both the account numbers are of 14 digits. The account number of the plaintiff is 00262320000389 while of the proprietorship concern, the account number is 05982020000281. Thus, both the account numbers are of 14 digits. Therefore, they must have been connected through centralized banking system i.e. by a master server. Definitely, if a person comes to open an account and bank officials put the spellings of an account which may have been similarity or similar or some name of existing account then it was the duty of the bank i.e. the defendant to take extra care and precaution. In those circumstances, it was the duty of the defendant to strictly follow KYC norms issued by RBI and to protect the interest of existing customer, they should have called for more documents as mentioned in KYC norms. But the defendant did not take care of such precautions. Moreover, it is also an admitted case that at the back of the cheque, account number was not mentioned as evident from the evidence of PW1 then in those circumstances, the bank should have called the concerned person who had presented the cheque with pay in slip and should have asked the account number or may should have taken other extra care and caution by calling both account holders to ascertain the payee of the cheque.
10. The court can take judicial notice of the fact that the bank also maintain telephone numbers along with mobile numbers of their customers. In case the amount was credited into an account and if there was any CS No. 263/09 M/s. Versatile Enterprises Vs. HDFC Bank Page 9 doubt regarding the name then definitely the bank should have made a call to the customer, may be plaintiff or Mr. Anil Kumar to verify in whose account, the amount of cheque should have been credited. In those circumstances, this court is of the considered opinion that the defendant did not have taken required necessary care and precaution at the time of opening the account as well as at the time of credit of the amount of the cheque in the account concerned. This court is of the considered opinion that the defendant was negligent at the time of opening of the account as well as at the time of credit of the amount of the cheque in the account concerned. When no account number was mentioned at the back of the cheque then it was the duty of the bank to ascertain the real beneficiaries of the said cheque otherwise the bank should suspended the credit of the cheque till the verification of the real beneficiary of the cheque. But no such case has been brought by the defendant. It is further stated by DW1 that the bank had not taken any letter from Sh. Anil Kumar (proprietor of Versatile) on the letter head of the firm signed by the proprietor, address to the bank giving a declaration stating that he/she is the proprietor of the firm and does not have a current account in name of the firm. It is further stated that there was no requirement to know as to who was the beneficiary of the said cheque. In my considered opinion, the defendant did not take due care and precaution as when account was already existing in the name of the plaintiff in those circumstances, it was the extra duty of the defendant to ascertain about the identity of the customer who is going to open account with the similar name. If the defendant has not taken care then in those circumstances, it was the duty of the defendant to compensate the plaintiff. It is also admitted case of DW1 that erstwhile employee of the defendant namely Abhay Kumar Jha was arrested and sourced to impugned account holder in the month of August, 2009.
CS No. 263/09M/s. Versatile Enterprises Vs. HDFC Bank Page 10 Thus, whatever committed by the employee of the defendant then the defendant is also liable for the acts committed by the employee of the defendant as it is the plaintiff which has suffered due to acts and conduct of the employee of the defendant. Thus, issue no. 5 is answered in favour of the plaintiff and against the defendant.
11. Issues No. 6 and 1.
Issue No. 6 : Whether plaintiff is entitled to interest? If so, at what rate and for which period ? OPP.
Issue No. 1 : Whether the plaintiff is not entitled to interest on the amount claimed ? OPD.
It is an admitted case that the plaintiff had received the impugned cheque during the course of his commercial activities. Therefore, the plaintiff is also entitled for interest. Moreover, every bank pays interest upon the deposit. Therefore, both these issues are answered in favour of the plaintiff and against the defendant with the observation that the plaintiff is entitled for interest on decree amount @ 9% p.a. from the date of filing of the suit till realization. Though, the plaintiff has claimed the interest @ 12% p.a., but in my considered opinion, interest @ 9% p.a. will serve the purpose of justice keeping in view the rate of interest upon fixed deposits used to be paid by the bank to their customers.
12. Issue No. 2.
Whether suit of the plaintiff is bad for want of registration of plaintiff firm ? OPD.
Onus to prove this issue is upon the defendant. The plaintiff has already proved Ex. P1 i.e. copy of the certificate of registration of the firm i.e. Form 'C' along with Form 'A' wherein PW1 i.e. the AR of the plaintiff has also been named as partner. Therefore, this issue is answered against the defendant and in favour of the plaintiff.
13. Issue No. 3.
CS No. 263/09M/s. Versatile Enterprises Vs. HDFC Bank Page 11 Whether suit of the plaintiff is bad for non-joinder of parties ? OPD.
It is the case of the defendant that the actual fraudsters who are in the judicial custody should also be impleaded in the present case and the relief should have been claimed against them. The present suit has been filed by the plaintiff against the bank i.e. by a customer against its bank for the loss caused during banking transactions. This court has already observed in this judgment herein that proper care and precaution were not taken by the bank i.e. the defendant during normal course of the business due to which the plaintiff has suffered the loss and therefore, in my considered opinion there was no requirement to implead the actual fraudsters and to claim the relief from them. Moreover, it is admitted case of the defendant that one Sh. Abhay Kumar Jha, erstwhile employee of the defendant was also arrested upon the FIR for which the loss was caused to the plaintiff. Therefore, the defendant is not able to discharge the onus to prove this issue. Thus, this issue is answered against the defendant.
14. Issue No. 4.
Whether the cheque in question has been deposited in Old Rajendra Nagar or Karol Bagh Branch of defendant? If so, its effect? OPD.
Onus to prove this issue was upon the defendant. DW1 has stated that the cheque was neither deposited in Old Rajinder Nagar branch or Karol Bagh branch of the defendant. It was deposited in Asaf Ali Road branch for collection. It is further stated that the cheque was never dropped in the drop box of Old Rajinder Nagar branch. However, whether the cheque was deposited in Old Rajinder Nagar branch or Karol Bagh branch or Asaf Ali Road branch, it hardly affects the disposal of the case as this court already observed that this court already taken judicial notice of the fact that now a days banking system CS No. 263/09 M/s. Versatile Enterprises Vs. HDFC Bank Page 12 communicated through centralized banking system and there is a common server. Therefore, in my considered opinion, this issue would have hardly effect upon the merits of the case. Therefore, this issue is answered against the defendant.
15. Issue No. 7.
Whether defendant is entitled to benefits U/s. 131 of Negotiable Instruments Act ? OPP.
Section 131 of the Negotiable Instruments Act 1881 makes a provision for non liability of bankers receiving payment of cheque in goods faith and without negligence. But this court already observed that in this case the defendant was negligent and did not take proper care while opening the account of the proprietorship concern and credit the amount of cheque. Moreover, Section 131 of the Act provides that the banker will not incur any liability to the true owner of cheque by the reason only having received the payment in case the title of the cheque proves defective. Here the title of the cheque was correct i.e. in the name of the plaintiff but due to negligence of the defendant, the amount of the cheque was credited into the proprietorship firm i.e. in a wrong account. Expression 2 also casts a duty upon the banker that the verification should have been done by the defendant with due diligence and ordinary care. In this case the defendant even did not take ordinary care i.e. like a prudent banker. Before crediting the amount of the cheque, the banker should have made a telephone call to the plaintiff and ascertain the correctness to which account the cheque would have to be credited. Therefore, this issue is also answered against the defendant.
16. Issue No. 8.
Relief.
In view of the observations made herein above, the suit of the CS No. 263/09 M/s. Versatile Enterprises Vs. HDFC Bank Page 13 plaintiff is decreed for a sum of Rs. 5,04,896.21 along with interest @ 9% p.a. from the date of filing of the suit till realization. Plaintiff shall also be entitled for proportionate costs of the suit. Decree sheet be prepared accordingly. File be consigned to record room.
Announced in the open (Jitendra Kumar Mishra) court on 21/01/2014. Additional District Judge-09 Central District, Tis Hazari Courts Delhi CS No. 263/09 M/s. Versatile Enterprises Vs. HDFC Bank Page 14 CS No. 263/09 21/01/2014 Present : None.
Vide separate judgment announced in the open court today, the suit of the plaintiff is decreed for a sum of Rs. 5,04,896.21 along with interest @ 9% p.a. from the date of filing of the suit till realization. Plaintiff shall also be entitled for proportionate costs of the suit. Decree sheet be prepared accordingly. File be consigned to record room.
(Jitendra Kumar Mishra)
Additional District Judge-09
Central District, Tis Hazari Courts
Delhi/21.01.2014
CS No. 263/09
M/s. Versatile Enterprises Vs. HDFC Bank Page 15