Although section 3 of the Negotiable Instruments Act 1881 defines the connection between a banker and a client, the definition of "banker" as a person operating as a banker is a tautology. Prior to the passage of the Indian Companies Amendment Act 1936, the former had no formal significance in India. However, it is now widely accepted that banking is a commercial transaction between bankers and consumers. These clients are consumers within the sense of the Consumer Protection Act, 1986, Section 2(1) d (ii). The bank provides a service to the consumer. As a result, the client is a consumer.
Akola v. Pandurang n. mangle
If a check is dishonoured as a result of an incorrect debit entry by the drawer book, the account holder is entitled to general damages regardless of the existence of any exceptional loss or damage.
In the aforementioned instance, the complainant's check for Rs. 11000 was dishonoured and no debit entry was made to his account. After a six-year lapse, the bank recognised its error and reversed the Rs. 15880 entry, incurring interest of Rs 4880. It was eventually determined that the bank's interest charges were invalid, and the sum was ordered to be credited to the complainant's account with interest at the rate of 5%.
Indian Overseas Bank v. M.S Thahir
Cheques were dishonoured due to a lack of cash, notwithstanding account contributions. The bank said that the complainant's own employee, in cooperation with bank staff, committed fraud by failing to deposit the whole amount and engaging in systematic counterfeiting. Due to the fact that a criminal prosecution was ongoing against them, the district forum determined that there was no defect in service, but since the check was dishonoured, the complainant was compelled to pay the entire amount of the damage caused.
State Bank of India v. Bihar State Sugar Corporation Ltd.
The bank dishonoured a check despite the complainant having adequate monies in his accounts. Due to erroneous cheque dishonour, the Insurance Company rejected his claim for premium when there was an unfortunate fire in his workplace, resulting in a loss of more than Rs. 25 lakhs. Punitive damages of Rs. 5 lakhs were awarded.
Susanta Ghosh v. Hetals Negandhi Bank's draught was rejected by the university because it stated the drawee bank's name as "Karaikudi" rather than "Kolkata." Due to a bank error. The complainant was absent from one session of the MCA course. Compensation was increased from Rs. 5000 to Rs. 15000 in light of the complainant's financial loss.
Bank of Baroda v. H.B Polymer Industries Ltd.
In one example, it was shown that Bank of Baroda staff acted with indulgence by debiting the complainant's account in haste without waiting for approval, thinking the bank draught was legitimate and the payment was anticipated to be paid in due time. There could be no duty on the side of the drawee bank to make payment unless and until suitable proof was shown that any official issued a fraudulent bank draft in the course of his job. Because the customer to whom the items were sold was not made a party to the transaction, the complaint could not be maintained.
Hongkong & Shanghai Banking Corporation v. Syed Kambab Raza
A cheque was issued without verifying the appellant's signatures. The complaint was rejected on the basis that signature tallying cannot be examined in summary pleadings. The forum is entitled to seek expert reports in order to determine deficiencies. Section 13(4) of the Consumer Protection Act vests the District Forum with the authority to rehear the case.
State Bank of India v. Pratibha Bulla
Genuine complainant's check was dishonoured despite adequate cash in the account. Cheques that were forged were cleared. The District Forum dismissed the case due to a lack of jurisdiction. The case was remanded to the District Forum on the basis that honouring falsified checks constituted a failure in service.
Rajesh Silk Fabrics v. Standard Chartered Grindlays Bank
A crossed check written in favour of the complainant's company and cashed by a third party constitutes bank negligence. The bank should not have accepted the cheque's cancellation of the crossing, resulting in payment to the incorrect individual. Erasing the crossing on a check is a significant modification. Bank is accountable for the complainant's loss.
Gowri RamaKrishnan v. State Bank of India
The signatures on the cheque bore not the slightest similarity to the example signature. Bank regulations demand that all cheque revisions be confirmed with complete signatures. In this instance, the drawer's counterfeit signature was plain to see. The bank that paid the fake check was ordered to reimburse the amount paid plus interest at the rate of 12& per year and Rs. 10,000 in compensation.
Rachi Rich Traders v. Sehkari Bank Ltd.
A counterfeit check for Rs. 35,000 was passed without the account holder's signature or verification. The respondent was found to have taken precautions to notify the bank, but the allegation that the payment may have been halted was rejected. The bank was ordered to pay the remaining sum of Rs. 12,000 and Rs. 500 in damages.
Rajendar Banchor v. Manoj Khurana
Complainant placed three checks dated 10-10-2003 for Rs. 50,000 for collection on 31-3-2004. The cheques were mailed on 7-4-2004 and returned on 26-4-2004 with the message "not produced within due date." As a result, the six-month validity period had elapsed. Compensation of Rs. 5000 was given by the District Forum. According to the ruling in State Bank of Patiala v. Rajendarlal, a bank may be saddled with compensation for deficient service in such cases, but it cannot be compelled to pay the whole amount of the check. Thus, there was no room for an increase in pay over Rs. 5000.
Mond Ayub v. Indian Central Bank
The cheque was properly received but was misplaced at the bank's premises and could not be located for an extended period of time. Failure of the bank to guarantee credit for six months was deemed a shortcoming on the bank's part.
State bank of Bikaner and Jaipur v. kamlesh rani
The complainant submitted two checks totaling Rs.21,900 that were lost in transit, and the bank was negligent in failing to credit the funds to her account. Banks may absolve themselves of responsibility in the event of bill loss as specified on the pay-in slip, but they cannot absolve themselves of obligation to compensate the customer for their carelessness. The bank is not obligated to pay the amount of the check, which is recoverable from the drawer.
Anand Prakash v. State Bank of India
The complainant deposited the check with his bank but was not credited with the funds. The opposing party's contention that the check was forwarded to a service branch in Mumbai for collection was denied. Petitioner Bank cannot avoid culpability for the cheque's loss and was compelled to provide restitution. The District Forum's order crediting the sum of Rs. 1,47,500 with interest at the rate of 12% per year was sustained.
Hetals Negandhi v. Susanta Ghosh
Complainant was a joint account holder with his father in an account operated by a savings bank. Following his father's death, the bank was required to supply new check books without printing the complainant's father's name until the previous cheque book was depleted.
Singhi and Co. v. Canara Bank Complaint claiming failure in service for failing to recover an outstanding check for Rs. 15 lakhs. The check was returned due to an insufficient amount in the account. The cheques were issued by the opposite party no. 4, and the National Commission concluded that, rather than resolving the dispute with the opposite party no. 4, the complainant dropped him as a party and dragged the Bank into litigation unnecessarily by filing the complaint. As a result, the National Commission determined that the complaint was liable to be dismissed.
Goyal Traders v. Punjab National Bank
The bank refused to recognise the complainant's cheque on the grounds that it "exceeded the agreement." The complainant was informed that his account had become irregular due to the non-receipt of the October stock statement. Complainant claimed deficiency in service, alleging that his account had adequate cash despite the fact that his check was dishonoured. The District Forum was open to complaints. The State Commission supported the District Forum's order, stating that the stock was validated by the bank in October, and so limiting cash credit limits for failing to furnish the goods was not sustainable. The National Commission denied the bank's revision petition as without merit.
Punjab National Bank v. Commander Rakesh Sharma
The complainant's cheque was returned with the notation "Insufficient Funds." However, the complainant had deposited two more checks to maintain the required level in his savings account. These checks, however, were unable to be cleared due to intervening vacations. The two forums, namely the District Forum and the State Commission, concluded that there was no evidence of a bank service defect. The complainant's argument that checks should have been returned with the annotation "effects not cleared" rather than "refer to drawer" was rejected by the National Commission, which upheld the lower court's decision that the bank was not guilty of carelessness in service.
It has long been recognised how the many vulnerabilities in the banking and bureaucratic systems allow for instances of neglect, which ultimately harm the consumer/customer. To avert this, the financial system must be overhauled. The restructuring programme must include operational, financial, and systemic changes and must be completed within a certain time frame. Any delay will increase the restructuring's expense. The group's many recommendations constitute a coherent package that must be followed in its whole in order to achieve the intended objectives. Gradualism has reached a point where it will fail and, if used, would likely do more damage than good. Not only will the whole impact of the reorganisation be lost, but even the specific measures chosen for execution will lose much of their effectiveness.
This article is written by Aakash Shaji, of Symbiosis Law School, Pune.