Consumer Cases on Banking

Consumer Cases on Banking

The difference in the Interest

paid to the 'Saving bank account' holder and the interest earned by the bank by lending his amount is the 'Consideration' for the Service of

the bank. 

It was held that a person holding a savings bank a/c

with a bank would fall within the definition of consumer under the Consumer Protection Act

Branch Manager, Canara Bank Vs. K.R. Hanumatha Rao - 1992(1) CPR 401 (SCRDC – Kar)

The principles laid down by the various decisions of the Consumer Commissions and the Supreme Court and included in

the compilation can be summarized as under:

(i) Failure /Delay in repaying deposits

Withholding of the amount due on a fixed deposit after its maturity, amounts to deficiency in service. Delayed payment of

term deposits on maturity also amounts to deficiency in service. The principle applies to cases of inordinate delay in

payment of proceeds of premature encashment of deposits as well.

(ii) Payment and Collection of Cheques/Drafts

Wrongful dishonour of cheques due to the negligence or mistake on the part of the bank has been held to amount

deficiency in service. Dishonour of DDs due to the lapse or omission on the part of the officials of the bank like non-

affixation of signatures, failure to mention code number etc. have also been held to be amounting to deficiency in service.

(iii) Locker:

A bank is liable for loss of articles kept in the locker with the bank. The bank cannot contract out of its responsibilities in

relation to a locker by describing the agreement as that between a landlord and a tenant. When locker was found emptied

and contents lost, the banks have been held liable for deficiency in service. However, in some such cases, the disputes

were left open to be decided by the Civil Court after taking detailed evidence.

(iv) Security in bank’s premises

A bank is responsible for deficiency in service for lack of security in its premises and loss caused to customers accordingly.

This is on the ground that ensuring the safety of the money to be deposited and/or withdrawn inside the bank premises is

implicitly a part of the service rendered by a bank to a customer.

 

The complainant has alleged that the bank has debited certain amount without any authority or permission. The District

Forum had dismissed the complaint and hence this appeal. It was found that the facts stated by the bank in its written

statement were not proved by filing any evidence before the District Forum and that the District Forum failed to consider the

evidence which was filed by the complainant-appellant which should have been done before coming to any conclusion. The

order of District Forum was set aside and the case was sent back to the District Forum for reconsideration. Vijay Singh v.

Allahabad Bank 1998 (1) CPR 8 (SCDRC - Uttar Pradesh)

Failure of the bank to confirm remittance received from

outside country within a reasonable period amounts to deficiency in service. The AGM, State Bank of India, Pondicherry

& Ors V/s N.Ganesan- 2000(3) CPR 423 SCDRC (Pond)

When cheques given by the complainant to the bank for collection were lost due to negligence of the employees of the

bank it was held that such account holder cannot be made to suffer. It was held that a person holding a savings bank a/c

with a bank would fall within the definition of consumer under the Consumer Protection Act and the difference in the interest

paid to the account holder and the interest earned by the bank by lending his amount is the consideration for the service of

the bank. Branch Manager, Canara Bank Vs. K.R. Hanumatha Rao - 1992(1) CPR 401 (SCRDC – Kar)

The bank wrongly dishonoured a cheque issued by the complainant. Even though the bank had admitted its mistake it failed

to contact the complainant after the cheque was dishonoured. The cheque was payable to GSFC, a financial institution. The

Commission held that the complainant has to be awarded damages for such indifference and awarded Rs.500/- towards

compensation with interest on 18% on the amount of cheque from the date of cheque till it was again credited in his

account. Vasudevbhai Valjibhai Patel Vs. Manager, Bank of Baroda 1993(2) CPR 422 (SCDRC-Gujarat)

A Cheque being dishonoured by Punjab & Sind Bank despite sufficient funds in the account of the customer on the ground

that dealing official being an old man misread the figures of amount outstanding in the account is a deficiency in service.

The District Forum had awarded Rs.5000/- as compensation and Rs.1000/- as costs and the State Commission concurred

with the observation of the District Forum. Punjab & Sind Bank Vs. Manpreet Singh Sood 1994(2) CPR 627 (SCDRC,

Punjab)

The complainant/appellant deposited a cheque for crediting it in her account but the bank lost it. The complainant filed the

captioned complaint against the bank for deficiency of service. It was held that complainant is entitled to get interest at

prevailing rate of 5% from date of deposit of cheque till receipt of the amount. Dr.Smt.Vidya Jain Vrs.Manager, PNB, CPR

1995(1) 158 (SCDRC - Madhya Pradesh).

A complaint was filed for deficiency in banking service for dishonouring of cheque by bank despite sufficient amount in the

account. It was held that dishonouring cheque despite sufficient funds due to negligence is a deficiency in service on part of

opposite party bank. Ishwar Prakash Chopra Vs. State Bank of India,CPR 1995(1) 429 (SCDRC - Maharashtra).

Where the bank honoured a cheque issued by the complainant, subsequent to the written instruction issued by the

complainant not to honour the subject cheque, which fact was not in dispute, the bank was held liable for deficiency in

service. Harjivandas Valjibhai Patel v. The Manager, Dena Bank, Saraspur Branch 1996 (3) CPR 342 (SCDRC-

Gujarat)

Where the District Forum held that the bank has been deficient in rendering service to its customer by allowing withdrawal

of a sum of Rs.25,000/- form the account of the complainant without the complainant actually withdrawing the said amount

on the said date, allegedly on a forged cheque, the State Commission confirmed the same on the ground that the bank

failed to recognize the apparent dissimilarity between the signature on the cheque and the specimen signature, and

dismissed the appeal. H.P. State Co-op Bank Ltd., v. Smt. Nisha Raj 1997 (3) CPR 410 (SCDRC-HP)

It was held that dishonour of cheque of a customer on the ground of insufficiency of funds when the customer had sufficient

balance will obviously amount to ‘faulty’ and ‘imperfect’ manner of performance of service. This default is certainly covered

in the definition of ‘deficiency’ in service under section 2 (1) (g) of the Consumer Protection Act. On the quantum of

damages, it was found that there was a clear nexus between the default of the respondent bank and the denial of allotment

of debentures to complainant and the bank is liable to compensate the loss. Ram Kanwar v. Punjab National Bank 1998

(1) CPR 646 (SCDRC - Delhi)

A cheque deposited with the bank for collection was dishonoured, but the bank failed to return it on the plea that it was lost

in transit. It was held that due to the deficiency of service on the part of the bank, the complainant has suffered mental

agony and harassment, as neither the money has not been credited to the account of the complainant nor has the cheque

which is alleged to be dishonoured has been returned to the complainant and such the complainant is clearly entitled for

compensation. Smt. Harmohinder Kaur v. State Bank of Patiala 1999(2) CPR 553 (SCDRC - Himachal Pradesh)

the bank couldn't escape responsibility in comparing signatures. The issuance of cheque book by bank without comparing

signature with that of the account holder and then clearing cheque to imposter amounts to deficiency in service. Abdul

Razak & Anr Vs. The South Indian Bank Ltd - 2003 (1) CPR 145 (NC)

late return of dishonored cheque is a deficiency

in banking service. Union of India & ors Vs. Suman Kanwar & ors- 2004 (3) CPR 719 SCDRC (Raj).

The National Commission held that payment on forged cheque by a bank

would amount to deficiency of service and that the customer cannot be held liable for contributory negligence by not

keeping the pass book in safe custody. Venkanna Vs. Andhra Bank - 2005 (2) CPR 75 (NC).

if the bank official was not careful and

vigilant in verifying signatures of account holder with signatures presented while withdrawing amount and some

unauthorized person withdrew the money, it would amount to deficiency in service on the part of the bank. State Bank of

India Vs. Amar Kumar Prem - 2005 (2) CPR 261

was held that where agent of the bank having collected money from account

holder did not deposit it in the bank and committed fraud, the bank will be responsible for misconduct of its agent to pay

amount to the account holder. Branch Manager, Central Bank of India Vs. Bagwan Vishnoo Mahadeshwar - 2004 (2)

CPR 185

The complaint was filed for deficiency in banking service for withholding of amount even after date of maturity of a term

deposit. It was held that withholding of amount even after date of maturity is deficiency in service and the complainat was

entitled to get the maturity amount with interest at 15% from date of its maturity till payment. Sumangal Rao & another

Vs.Vijaya Bank, CPR(1) 163 (SCDRC - Karnataka).

the bank is liable to pay compensation for deficiency in not making available the amount of FDR to account holder even

in absence of evidence about actual loss suffered. Malkiat Singh & Anr v. Punjab National Bank and Anr 1998 (2) CPR

416 (SCDRC -Punjab).

f the bank fails to pay the amount of deposit with accrued interest on the date of maturity it

will tantamount to deficiency in service.V.Ramasamy Vs. The Deputy Registrar of Co-operative Societies & Ors - 2003

(2) CPR 18.

the non-payment of

fixed deposit on maturity gives rise to consumer dispute and amounts to deficiency in service. Sanjay Kumar Ahuja & ors

Vs. Shanta Rani & Ors - 2003 (2) CPR 8 (NC).

the bank is vicariously liable for fraud of its employee in which

customer is not a party to it. Allahabad Bank Vs. Shiv Swaroop Srivastava- 2004 (3) CPR 652SCDRC (UP).

the fundamental principle for determining the quantum of

compensation which naturally flows from the consequence of the deficiency in service on the part of the bank is that as far

as possible the injured party should be placed in as good a situation as if there has been no deficiency in the service and

the complainant would have succeeded in obtaining the shares from the Company. Samanya Sahayak Prabandhak, SBI

& Anr., v. Abdul Moin 1997 (2) CPR 205 (SCDRC-UP).

The bank, by mistake did not make any debit entry in the account of the complainant. And later, it made a debit entry in the

account and also debited the interest on it. It was held that the charging of interest for belated mistaken credit from the

customer by the bank is not valid. Anjana Kundu Vs. Branch Manager, Bank of Baroda - 2003 (3) CPR 67 (NC).

Bank is liable for loss of ornaments in the locker hired by it to the customer. Punjab National Bank,

Bombay Vs. K.B.Shetty 1991 (2) CPR 633 (NC).

Where the complainants alleged that their accounts were debited on the basis of forged cheques and as such the bank, by

not re-crediting those amounts, is liable for deficiency of service, the State Commission opined that the said matter involved

determination of liabilities based on elaborate appreciation of evidence which cannot be undertaken under the summary

procedure laid down in the Consumer Protection Act and as such disposed of the matter directing the complainants to seek

remedy before a competent civil court. Motlib Ali & Ors., v. Canara Bank. 1997 (3) CPR 164 (SCDRC-Assam).

The complainant claimed from the bank an amount of Rs.45, 000/- with interest since he was robbed at the counter of the

bank on his visit to deposit the amount in his current account. The bank was held responsible for deficiency of service under

Section 2 (1) (o) on the ground that ensuring safety of the money to be deposited and/or withdrawn inside the bank

premises is implicitly part of service rendered by a bank to a customer. Col.D.S.Sachar Vs. Punjab & Sind Bank-Order of

the National Consumer Disputes Redressal Commission dated April 28, 2005 passed in Revision Petition No.1046

of 2003/A

Where a locker was alleged to be already open and the ornaments therein were missing, the conduct on the part of the

bank in not conducting any departmental enquiry nor being able to produce evidence as to the details of persons who have

accessed the locker, the Commission held, in the light of the decision of the National Commission in Punjab National Bank,

Bombay v. M.B. Shetty (FA No. 7 of 1991 decided on 06/08/1991) that the bank has been deficient in providing service and

allowed the complaint in part. Ugam Singh v. GM, SBI & Ors. 1996 (1) CPR 188 (SCDRC-Rajasthan).

Source: 

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