State Consumer Disputes Redressal Commission
Oriental Bank Of Commerce vs M/S Shankar Chawal Udyog & Anr. on 14 August, 2012
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR
Appeal No.FA/12/140
Instituted on 20.03.12
Oriental Bank of Commerce,
Nehru Complex, Vyapar Vihar, Bilaspur,
Through: Manager, Oriental Bank of Commerce,
BILASPUR (C.G.) ... Appellant.
Vs.
1. M/S Shankar Chawal Udyog,
Pro. Ravi Kumar Agrawal, S/o: Shri Shankar Lal Agrawal,
R/o: Sakti, Tah. Sakti,
Dist. JANJGIR-CHAMPA (C.G.)
2. State Bank of India, Main Branch, Bilaspur,
Through: Manager, State Bank of India, Main Branch,
BILASPUR (C.G.) ... Respondents.
PRESENT: -
HON'BLE JUSTICE SHRI S.C. VYAS, PRESIDENT
HON'BLE SHRI V.K. PATIL, MEMBER
COUNSEL FOR THE PARTIES: -
Shri Ashok Kadam, for appellant.
Shri V.K. Dubey, for respondent no.1.
Shri Ashok Pradhan, for respondent no.2.
ORDER
Dated:14/08/2012 PER: - HON'BLE JUSTICE SHRI S. C. VYAS, PRESIDENT This appeal is directed against order dated 21.02.2012 passed by District Consumer Disputes Redressal Forum, Bilaspur (hereinafter called "District Forum" for short) in complaint case No.93/2011, whereby the appellant Oriental Bank of Commerce has been directed to pay Rs.4,00,000/- which was the amount of cheque in question, within two months from the date of order along with interest @ 6% // 2 // p.a., w.e.f. 05.08.09, till the date of payment and also to pay Rs.3,000/- as compensation for mental agony and Rs.500/- as cost of litigation.
2. In nutshell the facts of the case are that the complainant / respondent No.1 herein M/s. Shankar Chanwal Udyog sold paddy to M/s. Vinayak Agro Products, Sargaon, Bilaspur and that party issued an account payee cheque No.300979 of Rs.4,00,000/- in favour of the complainant / respondent No.1. That party was having its account with the appellant Bank. That cheque was sent by the complainant to its banker State Bank of India Branch Bilaspur through its messenger Raj Kumar Sahu for deposit, but as it was over 4:45 pm, so the Bank employees asked the messenger to drop the cheque along with voucher in the drop-in box. It was dropped by the said messenger in that drop-in box. Later on when the amount was not credited in the bank account of the complainant till 10.08.09, then inquiry was made and it was found that someone making overwriting over the cheque and converting it into a bearer cheque presented it before the Bank and got the payment in cash. It was deficiency in service on the part of the appellant Bank, so a police complaint was lodged and consumer complaint was filed before the District Forum for seeking compensation.
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3. Appellant Bank contested the complaint on the defence that if the cheque was an account payee cheque issued in the name of the complainant, then why it was not deposited in the account of the complainant and why it was handed over to an employee of the broker Manish Trading Co. for deposit. It has also been averred that the cheque was never sent through clearance to the appellant Bank, but it was directly presented before its employee by a person and so its payment was made. It has also been averred that the endorsement of A/c. payee was cancelled by the accountholder himself and therefore its payment was made as a bearer cheque and in doing so the Bank has not committed any deficiency in service.
4. So far as respondent No.2 State Bank of India is concerned, its case was that the cheque was neither presented before its any employee nor was dropped in its drop-in box, otherwise there would have been some entries to that regard in the ledgers of the Bank. Thus, the respondent No.2 Bank has also denied the allegation of deficiency in service.
5. Learned District Forum agreed with the case of the complainant and directed the appellant to pay the amount of cheuqe along with interest and compensation.
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6. We have heard arguments advanced by all parties and perused the record of the case.
7. Learned counsel for the appellant Shri Ashok Kadam has very vehemently argued that the cheque was not presented before the Bank as an Account Payee cheque and endorsement regarding its being Account Payee was already cancelled and signature was made by the concerning person, who issued that cheque. In these circumstances there was no impediment in making payment of amount of that cheque and so its amount was paid and in doing so no deficiency in service has been committeed by the appellant Bank. It has also been contended by him that as per the provisions of section 89 of the Negotiable Instruments Act 1881 payment of the instrument is permissible when the alteration is not apparent and so the payment was made. To counter these arguments learned counsel for the respondent No.1 / complainant relied upon provisions of Section 128 of the Negotiable Instruments Act 1881 and submitted that in view of the alterations made in the cheque, it was not required to be paid by the appellant Bank and in making payment of the cheque the Bank has committed deficiency in service. In this regard leaned counsel has drawn or attention towards a reported case of this Commission Chief Manager, Allahabad Bank Vs. Prafulla Mishra and ors., 2009 (1) MPHT 13 (CPC) and submitted that the employee of the Bank has failed to // 5 // compare the signature and to verify it from the person, who issued cheque, that whether the endorsement was cancelled by him or not. He has also placed reliance upon pronouncement of Hon'ble National Commission in the case of Abdul Razak & anr. Vs. South India Bank Ltd., III (2003) CPJ 20 (NC) and submitted that in case of fraudulent withdrawal of amount, the Bank is always liable and it amounts deficiency in service.
8. For the purpose of deciding the controversy between the parties, it would be useful to go through the provisions of the Negotiable Instruments Act 1881. Section 87 of the Act of 1881, clearly provides that in case of "any material alteration of a negotiable instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto unless it was made in order to carry out the common intention of the original parties." This provision clearly shows that if there is some alteration in the instrument and if it was not with the consent of the original parties, then the instrument cannot be treated as valid and no payment was required to be made by the Bank. It also shows that if alteration is made with the consent of the original parties or in order to carry out the common intention of the original parties, then only the altered instrument can be accepted. In view of this provision, when there was some material alteration in the instrument then it was // 6 // necessary for the Bank to have verified the same from the original parties i.e. the person who issued that cheque. Section 118 of the Negotiable Instruments Act 1881 provides presumptions as to negotiable instruments and section 128 is regarding protection of the Bank in case of payment of crossed cheques. So far as material alteration is concerned, if there is some alteration which changes the nature of the instrument itself or is contrary to the intention of the person who issued the cheque, then it comes in the category of material alteration and no protection is available to the Bank if such alteration can be seen by naked eyes. Cancellation of crossing of cheque amounts such material alteration, which was not authorized and were not permissible. So, the Bank was required to verify it from the original parties of the cheque and then to decide whether payment is to be made or not. In such cases no protection is available to the Bank under the provisions of Section 89 of the Negotiable Instruments Act.
9. Before District Forum affidavits of witnesses Satyanarayan Agrawal, who works as broker in the name of Manish Trading Co., Mr. Raj Kumar Sahu who is employee of Manish Trading Co. and Mr. Ravi Kumar Agrawal, the proprietor of the respondent No.1/ complainant M/s. Shankar Chanwal Udyog and Mr. Gopal Krishna Khanuja, the proprietor of Vinayak Agro Products, Sargaon, Bilsapur have been // 7 // filed. Mr. Gopal Krishna Khanuja, who issued the cheque in question, in his affidavit has clearly stated that an account payee cheque of Rs.4,00,000/- was issued by him in favour of the M/s. Shankar Chanwal Udyog and on the instructions of the party it was sent to broker Mr. Satyanarayan Agrawal of Manish Trading Co., and then employee of the broker went to State Bank of India for depositing the cheque in the account of M/s. Shankar Agrawal Udyog, but the amount was not deposited for quite sometime and ultimately it was found that someone has converted the cheque into a bearer cheque and got payment of the cheque in cash. Then he himself personally inquired from the employees of the Bank and one employee of the Bank Santosh Kumar informed him that someone came to him with an account payee cheque and asked for cash payment. He denied cash payment of an account payee cheque, then that person said that he will come after cancellation of endorsement of account payee and then produced the same cheque after such cancellation along with seal of Shankar Chanwal Udyog on the back portion. Then, payment was made by them. Similar statements were given by the other witnesses of the complainant including witness Raj Kumar Sahu, who went to State Bank of India for depositing the cheque in the account of the respondent No.1 / complainant and dropped the cheque in drop-in box. He has also written his mobile No. on back portion of the cheque which is available in the photocopy of the questioned cheque. Mr. P.S. // 8 // Dewangan, Branch Manager of the appellant Bank also stated in his affidavit that it was in his knowledge that someone came to his Bank bearing an account payee cheque in the name of Shankar Chanwal Udyog and then that person was returned by the Bank Officer on the ground that as the cheque was account payee so its amount cannot be paid in cash, but later on that person came after one hour with the same cheque and stated that the endorsement of account payee has already been cancelled by accountholder, so now the payment be made. Then the Bank made payment of that cheque on seeing seal and comparing signature of the accountholder. From this statement it is clear that it is an admitted fact between the parties that original cheque was an account payee cheque, which was in the knowledge of the Bank and later on the same cheque was presented before the Bank after converting the same into a bearer cheque.
10. Copy of the cheque in question is also available as Annexure- 63, which shows that on the left portion, at the top, the cheque was crossed by drawing two parallel lines and writing 'A/c payee' between them. Then again someone has cut by a line the words 'A/c payee' and there is signature of someone in front of it. But, the two crossed lines were still there on the cheque as it is and which kept the cheque in the category of crossed cheque, because as per the provisions of the Negotiable Instrument Act 1881 for converting a cheque into // 9 // account payee cheque merely putting two parallel lines on the left upper portion is sufficient which was there, but even then the amount was paid in cash.
11. Signature available on the endorsement after cutting the words 'A/c payee' were compared with the original signature of the accountholder by a competent handwriting expert of the Government of Chhattisgarh. His opinion is available in the record as Annexure A-
44. Mr. M.N. Pandey, State Examiner of Questioned Documents, Government of Chhattisgarh, Raipur has opined that the questioned signature marked as Q2 is not a genuine signature. The signature marked as Q2 have been produced by tracing process using model signature marked Q1. He has also assigned reasons of his opinion with similarities and dissimilarities between two signatures. We are convinced with the reasonings and conclusions given in his report that the questioned signatures were not made by the person who issued the cheque and have been produced on the instrument by tracing process. So, the signatures were not genuine and the Bank was not required to make any payment on the basis of such signatures and when two parallel lines were still available on the cheque, the Bank was further required to verify the same from the accountholder, as the amount of cheque was a high amount of Rs.4,00,000/- and confirmed as to whether the cancellation of endorsement of account payee was done // 10 // by the accountholder or not. No such steps were taken by the employees of the Bank even knowing it fully well that there was endorsement on the cheque of making it account payee and later on some alterations have been made in the endorsement and then payment was made in cash which was contrary to the provisions of Law and so it amounts high degree of deficiency in service on the part of the Bank.
12. Learned counsel for the respondent No.1 has cited many cases, decided by different State Commissions and of the Hon'ble National Commission. Few of which have been referred in the earlier paragraph hereinabove. In the case of Abdul Razak & anr. (supra), Hon'ble National Commission has observed that "when the signature on the cheque requisition application and the cheques are compared with the signatures on the Account Opening Form, then without aid from any handwriting expert it becomes clear that the respondent failed not once but twice to correctly verify / compare the signatures on these instruments and the specimen signatures with them on record. So it is a case of double default on the part of the respondent. Bank's cashiers are professional and trained to read the difference between the signatures. It is here that they appear to have failed. Deficiency in rendering service is writ large on the face of it by the respondent by not comparing the signatures on the documents / // 11 // instruments presented to them with record of signatures kept by them." In the case of Prafull Mishra (supra), this Commission has also opined that the Bank failed to tally the signature on the requisition slip with specimen signature, which amounts deficiency in service. Similarly in other cited cases all the State Commissions have also found the Bank deficient in providing service when payment was made without properly verifying the signatures or getting confirmation from the accountholder.
13. In view of the aforesaid, we find that the District Forum has come to a right conclusion and the impugned order calls for no interference. Thus the appeal fails and is dismissed. No order as to cost.
(Justice S.C.Vyas) (V.K. Patil)
President Member
/08/2012 /08/2012