State Consumer Disputes Redressal Commission
Hdfc Bank Limited vs Laxmi Urban Co-Operative Bank Limited, on 3 December, 2009
STATE CONSUMER DISPUTE REDRESSAL COMMISSION, STATE CONSUMER DISPUTE REDRESSAL COMMISSION, MUMBAI, CIRCUIT BENCH AT AURANGABAD . Date of filing : 28.02.2005 Date of Order: 03.12.2009 FIRST APPEAL NO. 456 OF 2005 IN COMPLAINT CASE NO. 121 OF 2003 DISTRICT CONSUMER FORUM: LATUR. HDFC Bank Limited A Banking Company, having one Of the offices at Manekhji Wadi Building, Nanik Motiwani Marg, Fort, Mumbai-400 023 as also a branch Office at Netral Apartments, Opp. Bhandarkar Institute Law College Road, Pune. Appellant -VERSUS- Laxmi Urban Co-operative Bank Limited, Kava Road, Latur. Respondent Coram : Shri.S. G. Deshmukh, Hon`ble Presiding Judicial Member.
Mrs. Uma S.Bora, Hon`ble Member.
Present: Adv. Shri. S. R. Nehri, for appellant.
Adv. Shri. S. B. Tapadiya, for respondent.
:: ORAL ORDER::
Per Shri S.G.Deshmukh, Hon`ble Presiding Judicial Member
1. The present appeal is filed by the HDFC Bank against the judgment and order dated 27.01.2005 in complaint case No. 121/2003 passed by District Consumer Forum, Latur.
2. The respondent/complainants case before the Forum is that, respondent/complainant is the Co-operative Society registered under Maharashtra Societies Act dealing in the Banking business. The present appellant is limited company incorporated and registered under the Companies Act. Its registered office is situated at HDFC Sandoz House, Dr. Annie Besant Road, Worli, Mumbai. The appellant is also doing the bank business. It is contended that, the appellants officer offered to implement the scheme known as Funds Drawing Arrangement in which the customers of the complainant bank will get the services of the complainant Bank at the various centers of the appellant Bank for encashment of the cheque payable at par. Complainant Bank has to enter into agreement with the appellant and shall open the current account with them for providing the facilities to its customer. The complainant is to keep the minimum balance of Rs. 1,00,000/-
in the said account. It is contended that, the complainant Bank opened the account with the appellant Bank on 09.06.2000. Complainant Bank deposited the cheque of Rs.1,00,000/- dated 26.05.2000 drawn on M.S.C. Bank Ltd. Mumbai in favour of appellants Bank, and thus, the complainant Bank is the consumer of the appellant. It is contended that, according to terms and conditions of the agreement the complainant Bank used to send report the statement of issuing cheques through it on the account of the appellant payable at par at their counters with every details. It is contended that, the said operation of the account of the cheques through the counters of the appellant bank was smoothly going on till 20.12.2000.
3. It is contended that, the complainant bank had received weekly statement of its account on 23.12.2000 for the period from 12.12.2000 to 18.12.2000. They verified the cross entries in the statement from its record and noticed that, the cheuqe bearing No.510012 dated 07.12.2000 and cheuqe bearing no. 510013 dated 07.12.2000 in the name of Jai Trading Company, Mumbai and Aptech Mumbai though each for an amount of Rs. 500/- were issued were debited in the account with the appellant Bank for an amount of Rs. 5,00,174/- each on 12.12.2000 and 15.12.2000 respectively. It is contended that, the cheques were issued on 07.12.2000 and the statement of cheques was sent through courier service on 07.12.2000 which was received to the appellant Bank well in advance prior to the presentation of the cheque on its account with appellant Bank. It is contended that, the cheque in the name of Jai Trading Company, Mumbai was presented in the account as issued in the name of Sai Trading Company and the cheque issued in the name of Aptech Mumbai was presented in the name of Sai Trading Company. It is contended that, value amount of both the cheques were communicated to the appellant Bank well in advance. It is contended that, as per settled norms of the Bank business the cheques presented for the payments were required to be verified with the advice or statement, but the appellant Bank was negligent and had not even made a primary verification of the cheques and statement before passing for the payments. It is contended that on 23.12.2000 the complainant Bank issued a letter by RPAD narrating the details. It is contended that, by letter dated 23.12.2000 a complainant Bank issued a letter on fax and informed to stop the payment of the cheques. It is contended that, complainant Bank also issued a letter to the appellant Bank dated 04.01.2001 and requested to give credit of Rs. 9,99,348/- paid in excess by appellant for the payment of the cheques with interest @ 12%.
4. It is contended that, the complainant Bank received letter dated 09.01.2001 from the appellant Bank in which it was informed that they came across that the certain elements to defraud the appellant Bank indulged in the fraudulent practice. It is contended that, complainant requested the appellant Bank to lodge the complaint at Mumbai as the act of the forgery of cheuqes was made at Mumbai and the offence is committed at Mumbai but, the appellant Bank did not take initiative to lodge the complaint. The complainant lodged the complaint to Gandhi Chowk, police station, Latur on 02.01.2001. It is contended that, the complainant Bank received letter dated 10.01.2002 from appellant in which the appellant Bank had assured that, it will reimburse the amount of Rs. 9,99,348/- which has been excess debited in the account of complainant. It is further contended that, the complainant received the letter dated 13.01.2001 from the appellant in which it is mentioned that, it is practically impossible to verify each and every instrument with the funding statement before processing for payment, which itself is self explanatory about the acts of the appellant Bank. It is contended that, as both the Banks have administrative governance of Reserve Bank of India the complainant communicated all these aspects to Assistant General Manager, RBI, Nagpur through its letter dated 25.01.2001. The said authority vide its letter 28.01.2001 informed that, the complaint of the complainant has been redirected to regional office RBI at Mumbai. It is contended that, complainant also addressed its complaint to the said authority through letter dated 22.03.2001 to give the credit of amount of Rs. 9,99,348/-. It is contended that, the complainant again on 27.03.2003 made a detailed complaint to RBI, Mumbai against respondent. The complainant received the letter from RBI dated 18.06.2003 showing inability to intervene in the matter, and thus the complainant Bank approached the Forum for directing the appellant to credit the amount of Rs. 9,99,348/- in their account to give with interest @ 12% p.a. and the damages.
5. The present appellant appeared before the Forum and resisted the claim. It is contended that, appellant is entitled for protection under Section 89 of Negotiable Instrument Act. It is further contended that, forged instrument were presented and payment was collected by Apna Sahakari Bank Ltd, Mumbai. Apana Sahakari Bank Ltd. is necessary party and therefore complaint is not maintainable for non-joinder of necessary parties. It is further contended that, various complex issues are involved which requires elaborate evidence and thus, the Forum is not competent to entertain the complaint. It is further contended that, the complaint is time barred as filed beyond the period of limitation, the cause of action arose on 23.12.2000. The present complaint is filed on 25th August, 2003 and thus beyond the period of two years. It is further contended that, the amount in both the cheqeus is beyond the pecuniary jurisdiction of the District Forum. It is further contended that, cheques under the funds drawing arrangement can be issued only to customers of the complainant Bank and not to strangers. The complainant issued the cheques in the name of strangers and thereby breached the agreement. It is contended that, the funding sheet is sent only to Pune and the cheques are payable anywhere in India wherever HDFC Bank has a branch. The cheques paid at Mumbai and the data sent to current accounts section in Pune branch, cannot be made available to 150 branches in India.
6. The Forum below after going through the papers and hearing the parties allowed the complaint and directed the appellant to pay Rs.9,99,348/- in the account of complainant. Forum also directed the appellant to pay Rs.1500/- towards the cost.
7. Being aggrieved by the said judgment and order the respondent came in appeal.
8. Notices were issued to the appellant as well as the respondent. The learned counsel Shri. S. R. Nehri, appeared for appellant and Shri. S. B. Tapadiya, appeared for respondent. The learned counsel Shri. Nehri submitted the written notes of argument. We heard Adv. Shri. S. B. Tapadiya, at sufficient length. We perused the papers and gave our anxious thoughts to the argument advanced by the counsels and citation relied by them.
9. It is the contention of the complainant Bank that, they had opened the account in the appellants Bank on 09.06.2000 and deposited the amount of Rs. 1,00,000/- as a minimum balance in the account. As per fund drawing arrangement scheme offered by the present appellant the customers of the complainants Bank are to get the services of the complainant Bank at various centers of the appellant Bank for encashment of cheques payable at par. It is the contention of the complainant Bank that on 07.12.2000 complainant Bank had issued the cheques bearing No. 510012 and 510013 in the names of Jai Trading Company, Mumbai and Aptech Mumbai, each for amount of Rs. 500/-. It is contended that cheques were debited in account of complainant with the appellant Bank for amount of Rs. 5,00,174/- each on 12.12.2000 and 15.12.2000. It is also the case of complainant that, the cheque in the name of Jai Trading Co. Mumbai was presented in the account as if cheque issued in the name of Sai Trading Company and another cheque issued in the name of Aptech Mumbai was presented in the name of Sai Trading Company. The value amount of both the cheques were passed for the payments of higher amount without verifying even a list of the cheques details and its beneficiaries which received to the appellant Bank well in advance and thus, the appellant Bank had not taken care of for security of the account of appellant Bank and was negligent in acts.
10. It is the contention of the appellant Bank that, complaint does not fall within the scope of law relating to Consumer Protection Act. According to appellant, complainant Bank could not be said to be a consumer. Complainant Bank entered into contract with appellant for purpose of specific job under certain terms and condition. The appellant Bank relied on -
i) The Gauhati Co-operative Urban Bank Ltd. & Anr, vs. Santosh Kumar Tewari & Ors., reported in 1997 (2) CPR 111 (NC)
ii) M/s. Supereon vs. Executive Director, Titagarh Steel Ltd., reported in 1993 (I) CPR 395.
iii) Devashis Mitra vs. The Managing Director, M/s. Lakshmi Varsha Company & Anr., reported in 1991 (IV) CPR 434
11. In Standard Chartered Bank vs. Dr. B.N. Raman, reported in 2007 (I) CPR 59 (SC).
The Honble Apex Court held, Banking is business transaction between Bank and customers and such Customers are Consumers under C.P. Act.
In Karnataka Power Transmission Corpn. & Anr. Vs. Ashok Iron Works Pvt. Ltd., reported in 2009 (1) CPR 211 (SC), The Honble Apex Court held that, in Consumer Protection Act juristic person like company is not excluded from the definition as a person in sec. 2 (1) (m) within the meaning of sec.2 (1) (d) of C.P. Act.
12. It has come on record that, appellant Bank had offered to implement the scheme Fund drawing arrangement in which customers of the complainants Bank are to get services of appellants Bank at various centers of appellants Bank for encashment of cheques payable at par, for which complainant has to enter into agreement and has to open the current account with them and keep the minimum balance of Rs.1,00,000/- in the said account. Accordingly the complainant Bank opened the account with the appellant Bank on 09.06.2000 and thus, the complainant Bank is the consumer of appellant Bank. Plea of the appellant that complainant Bank is not consumer is not tenable.
13. It has tried to contend that, there is an arbitration clause of agreement dated 26.05.2000 and thus, the Consumer Fora is barred for entertaining the complaint under C.P. Act.
14. In Skypak Courier Ltd. & Ors. vs. Tata Chemicals Ltd., , reported in 2000 (5) SCC pg.
294. & In Fair Air Engineers Private Limited v.
N.K. Modi, reported in 1996 (6) SCC 385. The Honble Apex Court held that, existence of arbitration clause in the agreement is no bar in entertaining the complaint under C.P. Act. As per ratio of the Apex Court, arbitration clause in this agreement does not bar the Consumer Fora for entertaining the complaint under C.P. Act.
15. It is tried to contend on behalf of appellant that, the point of forgery and fraud required detail evidence complicated question of law and fact can only be decided by civil court. The appellant relied on the-
i) Lala Samachar Newspaper v. General Manager, Telecom Department., reported in 1997 (1) CPR- 148.
ii) M/s.
Reliance Industries Ltd. vs. United India Insurance Co. Ltd. reported in 1997 (2) CPR 167.
17. It is also tired to contend that, appellants Bank acted in good faith, they did not see any reason to doubt the genuineness of instrument and made payment in good faith and thus, the appellant Bank can not be held liable for deficiency. a) In United Commercial Bank vs. Mahendra Popatlal Vora, reported in 1995 (1) CPR 242,
18. In CCi Chamber Co-operative Hsg. Society Ltd., vs. Development Credit Bank Ltd., reported in 2003 (7) SCC 233 & In Dr. J.J. Merchant & Ors. vs. Shrinath Chaturvedi, reported in III (2002) CPJ 8 (SC).
It has been held by Honble Apex Court, that, even if complicated question of law and fact are involved it would not be a ground to hold that, the same can not be adjudicated upon under the C.P. Act. Thus, the contention of the appellant that complicated question of law and fact can be ground to direct the complainant to approach the civil court can not be accepted.
19. Section-89 of Negotiable Instrument Act-
envisages the Bank to be diligent and exercise precaution before allowing negotiation and clearance of Negotiable Instrument like the cheques. In the instant case, tampering appears to have done in the cheques which appear visible with the naked eye. However, the Bank did not take due precaution and wrongly made payment. The protection given to the Bank by Sec.89 of Negotiable Instrument Act is not available to the Bank for respective forged cheques. Forged cheques are not a cheques, there is no mandate of the customer to the Bank to pay such forged cheques.
19. According to the terms and conditions of agreement complainant Bank was sending the statement of issuing of the cheques through it on account of HDFC Bank, payable at par at their counters with every details. The said reports were sent through courier. Passing of cheques and debiting the said amount in the complainants account were required to be done on due verification of the statements. It has come on record that, cheques were issued on 07.05.2000. The cheque no. 510012 and 510013 in the name of Jai Trading Company, Mumbai and Aptech Mumbai, each was for an amount of Rs. 500/-. Cheque in the name of Jai Trading Company Limited was presented in the account as if issued in the name of Sai Trading Company and another cheque issued in the name of Aptech, Mumbai was presented in the name of Sai Trading Company, Mumbai. Value amount of both the cheques were communicated to the Bank well in advance. It appears that, both the cheques were passed for the payment of higher amount without verifying the list of chques details and its beneficiaries which was received to the appellant Bank that well in advance before passing both the cheques for payment by appellant Bank. It was necessary for appellant Bank that the chques presented for payments to be at least verified with the advice or statement. It appears that, the appellant Bank was negligent did not make primary verification of those chques with statement before passing for payments. It has also come on record that, courier of account statement was received well in advance. Even if it is assumed that alteration by mechanical process was not visible to the naked eyes but the fact of non verification of instruments with the list of cheuqes and names of beneficiaries which was already available before passing of cheques remained unanswered. This shows that the appellant Bank was negligent in it acts and duties and has not taken due care.
20. It is tired to contend that, the funding sheet is sent only to Pune and the cheques are payable anywhere in India wherever HDFC Bank has a branch. In the instant case, cheques were paid at Mumbai and the data was sent to the current account of section in Pune branch. As per fund drawing arrangement customers of the appellant Bank were to get service of complainant Bank at various centres of the appellant Bank for encashment of the cheques at par. Admittedly, as per agreement complainant had opened the account in the branch at Pune. As his account was in Pune Branch, the complainant Bank was sending the statement of issuing cheques through it on account of HDFC through courier to Pune Branch. There is no dispute that, statement of cheque was sent through courier service on 07.12.2000 which was received by the appellant Bank branch at Pune well in advance prior to presentation of cheques in its account with the appellant Bank. It was necessary for Mumbai branch of the appellant Bank to make inquiry with the Pune branch regarding the statement of cheques sent by complainant to Pune and to get verified the cheques before passing the same, which was admittedly not done by the appellant Bank. Certainly there was negligence on the part of appellant Bank to pass the cheques in question without verifying those with the list of cheques sent by the complainant to the appellant Bank.
21. It is tried to contend that cheques are issued to a strangers who are not consumers. No such a specific clause in the agreement has been brought to our notice by the appellant Bank that cheuqes are required to be issued only to the customers and not the strangers.
22. It is tried to contend that, the complaint is barred by the limitation. The cause of action arose on 23.12.2000 when complainant received weekly statement of its account from the appellant Bank. There is no dispute that, the complainants Bank and appellants Bank are under the administrative governance of Reserve Bank of India. It has come on record that, the complainant has communicated all these aspects to Assistant General Manager of RBI, Nagpur through its letter dated 25.01.2001. It has also come on record that, the said authority through its letter dated 28.01.2001 informed that, the complaint of the complainant has been redirected to the Regional office at RBI, Mumbai. It has also come on record, that the complainant addressed its complaint to the said authority through letter dated 22.03.2001. During this period the complainant again requested to the appellant Bank through its letter dated 19.09.2001 to give the credit of an amount of Rs.9,99,348/-. It has also come on record that, the complainant on 27.03.2003 made a detailed complaint to RBI, Mumbai against the appellant. The complainant received letter from RBI dated 18.06.2003 showing its inability to intervene the matter. It has also come on record that, the appellant Bank had written letter to the complainant date 10.01.2001 in which the appellant Bank had assured that it will reimburse the amount of Rs. 9,99,348/- which has been excess debited in the account of complainant. The last letter received by complainant from R.B.I. is dated 18.03.2006. The Forum below has rightly considered all these aspect and rightly held that, the complaint is in limitation.
23. It is tried to contend that, the payment of the cheques was collected by Apna Sahakari Bank, Lower Parell Mumbai and the said Apna Sahakari Bank is not party to the proceeding, thus, complaint is barred for want of necessary parties. The complainant has come for the negligence on the part of appellant. It is his contention that though the cheques were issued in the name of one person the same were wrongly paid to other persons by the appellant Bank. The complaint was for the deficiency on the part of appellant. Thus, the complaint can not be said to be barred for non joinder of necessary parties.
24. Forum has considered all these aspects in right perspective and rightly held that, there is deficiency on the part of appellant Bank. The money paid by the Bank under forged cheques could not be debited to the account of complainant. The appellant Bank can not avoid the liability by merely saying that it made the payment in due course according to apparent tenor of the cheques. We have mentioned that, the appellant Bank as per settled norms of Bank business ought to have verified the cheques presented for payment with the advice or statement which has already been received by the appellant Bank from the complainant well in time. The appellant Bank was negligent and had not even made primary verification of the cheques with statement before passing the payment. If the Bank would have made primary verification of the cheques and the statement sent by the complainant the complainant Bank would not have put in loss of huge amount. The Forum below has rightly considered all these aspect and rightly allowed the complaint. We are not inclined to interfere the order passed by the Forum. We pass the following order.
O R D E R
1. Appeal is dismissed
2. No order as to cost.
3. Copy of order be furnished to the parties.
Sd/- sd/-
(Mrs. Uma S. Bora) (S. G. Deshmukh) Member Presiding Judicial Member Kalyankar