Gka Impex Pvt. Ltd vs Reserve Bank Of India And Ors on 19 October, 2022

[Cites 0, Cited by 0]

Delhi High Court - Orders

Gka Impex Pvt. Ltd vs Reserve Bank Of India And Ors on 19 October, 2022

1. Petitioner-company, holder of current account no. 51731131001157 with Respondent No. 2-Punjab National Bank (formerly Oriental Bank of Commerce) [hereinafter "PNB"], is aggrieved with RTGS transaction whereby payment of Rs. 15,00,000/- has been erroneously transferred from afore-noted account to Respondent No. 3-Ficus Securities Pvt. Ltd. [hereinafter "FSPL"] maintained with Respondent No. 5-HDFC Bank Ltd. [hereinafter "HDFC Bank"]. Pursuant to complaint made for recall of the transaction, only Rs. 4,50,000/- has been reversed, and thus Petitioner's grievance for balance amount endures, leading to filing of instant petition.

2. Petitioner-company alleges that gross negligence on part of PNB has resulted in unlawful execution of above RTGS payment. Petitioner-company contends that payment was intended to be made to JV Capital Services Pvt.

Signature Not Verified Digitally Signed W.P.(C) 4295/2018 Page 1 of 7 By:AKANSHA SINGH Signing Date:27.10.2022 21:50:07

Ltd [hereinafter "JCSPL"]. However, error occurred because daughter of the Director of Petitioner-company who filled up the Application Form for initiating RTGS transaction [hereinafter "RTGS application form"] on 4th December, 2017, had limited knowledge in bank dealings and inadvertently, filled the name of JCSPL as the remitter, instead of Petitioner-company and further wrongly filled in name of beneficiary as "Ficus Securities" instead of JCSPL. Counsel for Petitioner-company contends that 'Ficus Securities' is a proprietary concern; and Director of Petitioner-company had dealings with FSPL, a private limited company and thus error arose on account of similarity in name of 'Ficus Securities Pvt. Ltd' and 'Ficus Securities'. Petitioner- company brought the inadvertent error to notice of PNB on 5 th December, 2017, which in turn sent a request to the destination bank viz. HDFC Bank to recall the transaction. Pursuant thereto, an amount of Rs. 4,50,000/- was reversed on the same day from FSPL's account, but Rs. 10,50,000/- could not be recovered.

3. Petitioner-company also made a complaint dated 19th January, 2018 before the Banking Ombudsman of Respondent No. 1-Reserve Bank of India ["RBI"], who did not find any negligence on the part of PNB and vide order dated 19th March, 2018, rejected the same.

4. Counsel for Petitioner-company argues that PNB is guilty of ignoring the Real Time Gross Settlement (RTGS) Regulations, 2013 issued by RBI [hereinafter "RTGS Regulations, 2013"] which provide for mentioning of remitting customer's account number, which is to be debited. RTGS application form mentions the account no. of remitter as "0003034001511" and name of the account holder as JCSPL, both of which are not that of Petitioner-company. PNB, therefore, has acted negligently in processing an Signature Not Verified Digitally Signed W.P.(C) 4295/2018 Page 2 of 7 By:AKANSHA SINGH Signing Date:27.10.2022 21:50:07 incorrect RTGS application form and this RTGS transaction should have been rejected in the first place. To support the contention, reliance is placed upon RTGS Regulations, 2013 and specifically, Clause 11.1 and 11.11, which are as under:

"11.1. Eligible RTGS member can send / receive customer transactions on behalf of their customers. The transaction originating member will carry out due diligence while sending the payment request to the RTGS system. The originating member should ensure two factor authentications by adopting maker-checker principle while originating a payment transaction. Depending on the risk perception, participants may introduce / implement additional security features in the on-line delivery channels for initiating RTGS transactions by the customers. The originating member should release the payment message from their system to the RTGS central system within 30 minutes of debiting a customer's account. The originating member should have the facility of time stamping of their transactions at various stages for effective grievance redressal mechanism."

"11.11. The participant / member banks have to mandatorily provide Debtor Name (the ordering customer) and Creditor Name (the beneficiary customer). The member banks have to furnish name of the beneficiary in the passbook /account statement of originator and name of ordering customer in the passbook / account statement of beneficiary from these field tags."

5. Mr. S.K. Sharma, Counsel for PNB, on the other hand states that for effecting the RTGS transaction, Petitioner-company had also issued a cheque favouring PNB, in order to facilitate debit into Petitioner-company's account and therefore, PNB acted on Petitioner-company's instructions. Further, he argues that Banking Ombudsman's decision is in accordance with law and calls for no interference.

6. Ms. Shivani Khandekar, counsel for NSE, objects to the maintainability of present petition against NSE and states that allegations are untenable. The balance amount of Rs. 10,50,000/- for which the Petitioner-company is aggrieved, was not received into NSE's account, as alleged. Rather, the transactions between NSE and its home/ trading member viz., FSPL, are separate and distinct, and towards the legitimate dues admittedly owed by Signature Not Verified Digitally Signed W.P.(C) 4295/2018 Page 3 of 7 By:AKANSHA SINGH Signing Date:27.10.2022 21:50:07 FSPL to NSE. She emphasises that dues towards NSE were paid through a separate bank account, on specific instructions of FSPL.

7. The Court has considered the afore-noted submissions. In order to decide the controversy, it would be apposite to peruse the RTGS application form on which the case is hinged. The same is extracted as under:

8. Per above extract, "Details Of Applicant (Remitter)" mention an account no. as "00030340015113" and the remitter's name as JCSPL. The Signature Not Verified Digitally Signed W.P.(C) 4295/2018 Page 4 of 7 By:AKANSHA SINGH Signing Date:27.10.2022 21:50:07 said information does not pertain to Petitioner-company and to that extent, there is indeed an incongruity. Therefore, the question arises whether on account of the afore-noted mistake the entire RTGS transaction can be said to be invalid. It emerges that RTGS transaction was effected not merely on instructions contained in RTGS application form. For debit in account, instructions were also received through cheque no. "026219" [Annexure R-2] enclosed with RTGS application form. Counsel for Petitioner-company does not deny issuing the said cheque for the purpose of RTGS. The same bears the correct name and account number and was duly signed by the authorized officer of Petitioner-company. In such circumstances, on the basis of afore- said cheque, the amount was debited from Petitioner-company's account. It is also not denied that RTGS application form was signed and filled for making the debit and corresponding credit through RTGS. There is also no dispute regarding account number wherefrom the money had to be debited. The RTGS message contained all the essential information provided by the remitter. Hence, the member of RTGS i.e., the bank has acted in good faith and with prudence and cannot be held at fault with. Moreover, the transaction is called into question is not because of wrongful debit, but erroneous credit to FSPL. For credit, as noted above, details of beneficiary viz. FSPL were mentioned in above extracted RTGS application form by the Petitioner without there being any cutting overlapping/overwriting. There is thus no discrepancy in particulars and Petitioner-company acknowledges the mistake in filling in the name and account number of intending beneficiary. Despite the above, RTGS transaction is being impugned on the basis of wrong details of remitter. In effect, Petitioner-company wants to take advantage of its' own wrong by attributing negligence on the bank. In light of the foregoing, this Signature Not Verified Digitally Signed W.P.(C) 4295/2018 Page 5 of 7 By:AKANSHA SINGH Signing Date:27.10.2022 21:50:07 Court finds no manifest arbitrariness in PNB's conduct who acted as per Petitioner's mandate.

9. That brings us to the question as to why only partial refund has been possible. On the error being brought to notice of PNB, a request for recalling said RTGS transaction was sent to destination bank viz. HDFC Bank. However, HDFC Bank denied said request as the transaction was successful and advised Petitioner-company to resolve the matter with beneficiary. The beneficiary i.e., FSPL, does not deny that the amount was received by them under mistake but contend that an amount of Rs. 10,50,000/- was blocked and retrieved from their account by NSE, of which it was a member, and thus they were able to transfer only Rs 4,50,000/- to Petitioner-company. As regards allegations against NSE qua balance amount, it has emerged from the counter affidavit filed by NSE (a copy whereof was handed over across the board and taken on record) that FSPL was NSE's trading member. All transactions between FSPL and NSE were taking place through a separate bank account of FSPL with HDFC Bank bearing account no. "009906100008376" [hereinafter "NSE settlement account"]. The amounts were paid by FSPL to NSE through the NSE settlement account towards the dues owed to NSE. Payments to NSE were made pursuant to specific instructions from FSPL towards independent dealings between NSE and FSPL. Therefore, there is no basis to hold that balance amount of Rs. 10,50,000/- wrongly remitted under the RTGS to FSPL is lying with NSE or that the same was misappropriated by NSE.

10. In light of the above, the afore-noted decision of Banking Ombudsman of RBI, relevant portion of which is reproduced as under, cannot be held to be arbitrary so as to call for interference of this Court:-

Signature Not Verified Digitally Signed W.P.(C) 4295/2018 Page 6 of 7 By:AKANSHA SINGH Signing Date:27.10.2022 21:50:07

"In the instant case it was observed from the RTGS message form that all the essential information have been provided by the remitter and there is no cutting overlapping / overwhelming therein. Hence, the (member of RTGS) has acted in good faith and with full prudence. Therefore, the bank is not at fault in the transaction."

11. In light of the foregoing, the Court does not find any merit in the present petition and it is accordingly dismissed. It is however clarified that the Petitioner shall be free to avail other remedy as available under law, for recovery of the balance amount from Respondent No. 3 i.e., FSPL, if so advised.

SANJEEV NARULA, J OCTOBER 19, 2022 as (Corrected and released on 27th October, 2022) Signature Not Verified Digitally Signed W.P.(C) 4295/2018 Page 7 of 7 By:AKANSHA SINGH Signing Date:27.10.2022 21:50:07

Unlock Advanced Research with PRISMAI

Delhi High Court - Orders