The complainant Sher Singh, the local resident of Qadian Township, jointly with his father Pritam Singh, had availed of the credit facility against property from the OP3 Bank to the tune of Rs.19 Lac, in the month of January' 2016 in their A/c 916030002544943. It all worked well in order till the beginning of 2018 when the OP3 Bank officials told them that a sum of Rs.2.50 Lac has become due for credit in the loan A/c by way of Govt Subsidy and the balance Rs.16.50 Lac only needs be deposited. Believing their words Rs.16.50 Lac were deposited with the then Bank Manager against duly signed n stamped Cash Receipts by the complainant and his father in Four nos of installments: i) Rs.5.0 Lac on 25.04.2018, ii) Rs.5.0 Lac on 02.06.2018, iii) Rs.5.0 Lac on 18.07.2018 and iv) Rs.1.50 Lac on 04.09.2018. The complainant was assured, when he got confirmed from the then Branch Manager that no amount was due for deposit by them in the related loan account that will be closed upon receipt of Rs.2.50 Lac as Subsidy and 'No-dues' will be issued along with release of securities. The complainant has pertinently mentioned here that they also had another active Cash Credit Loan A/c 916030002544914 with the OP3 Bank Branch.
2. However, to the shocking surprise of the complainant, the OP3 officials along with the OP Bank Recovery Team raided his shop on 21.07.2021 sans prior notice/intimation etc and pasted Default-Auction Notice with beating of the Drums (Munadi) putting the family to great shame and disgrace in the market/locality/society. Upon protest the complainant was told that the loan A/c has been inoperative since 2018 i.e., for the last three years and upon showing deposit receipts he was told that the then branch manager had embezzled the bank moneys in his individual capacity and they will put the shop/property on auction. The complainant approached the OP2/ OP3 the next day on 23.07.2021 vide written mails explaining the matter/issues, in detail, but all in vain and continuing with illegal threats of recovery through coercive means the OP Bank also froze their other cash-credit account.
3. And, thus prompted the present complaint seeking directives to the OP Bank to stop hurling threats of recovery and issue 'clearance letter' in loan A/c 916030002544943 and allow operations in their other Cash Credit A/c 916030002544914 besides to pay a sum of Rs.1,50,000/- as compensation and Rs.30,000/- as litigation-cost, in the interest of justice. The complainant, in support of his complaint, has filed Affidavit (Ex.CW1/A) deposing his allegations along with i) Copy of (Ex.C1) Aadhar, ii) Copy of (Ex.C2) letter 23.07.2021 to the OP explaining his situational issues, iii) Copies of Four nos of his Deposit-Receipts (Ex.C3 to Ex.C6) aggregating to Rs.16.50 Lac and iv) Copy of Statement (Ex.C7) of Loan A/c. alongwith rejoinder filed by the complainant.
4. The OP Bank upon summoning, appeared through its counsel who filed the written statement comprising of their preliminary as well as other objections (on merits) as: The complaint is not maintainable as the complainant is not a statutory consumer in terms of S-2 (7) of the C P Act, 2019 as he harvests Ag. Crops for Sale in the market for profits i.e., professing agriculture for commercial purpose. Further, the then Manager Manmeet Singh Gill with whom Rs.16.50 Lac was deposited has not been en-joined as Respondent as he had embezzled Rs.11.50 Lac in his personal capacity. The OP Bank has further briefed that Rs.19 Lac was sanctioned against Hypothecation of Ag. Crops grown upon 120 Acres of Ag. Land and Registered-Mortgage of One Acre of Ag. Land as owned by Pritam Singh and Equitable Mortgage of 4.0 Marla of Non-Agricultural land owned by the complainant.
5. However, the Loan A/c had turned NPA (Non Performing Asset) as on 23.06.2021 and the complainant had filed the present complaint in order to halt/defer/delay the Bank's Recovery proceedings. In their para-wise reply, on merits, the OP Bank in reply to the paragraph 3 of the complaint has stated that the then OP3 Branch Manager Manmeet Singh Gill had deposited Rs.5.0 Lac only in the Loan A/c out of the alleged deposit of cash of Rs.16.50 Lac and had misappropriated/embezzled balance Rs.11.50 Lac in his personal/individual capacity and not in his official capacity as the OP3 Br. Manager and as such the OP Bank will not be responsible/liable to account-for and/or refund the same. Further, in their reply to paragraph 5 the OP bank have admitted the Visit of the Branch Recovery Team at the Shop and Pasting of Auction Notice, as per Recovery Law, as the complainant had defaulted in re-payment of the availed-of credit facility. The OP Bank has also stated that penal/disciplinary action against the delinquent Manger has since been initiated as per law and he stands dismissed from service. Lastly, the OP Bank denying rest of the contents of the complaint and producing the lone affidavit (Ex.OPW1/A) of Sh.Sumit their authorized representative, has sought dismissal of the present complaint with costs.
6. We have examined the available documents/evidence on records of the present proceedings so as to statutorily interpret the meaning n purpose of each document along with scope of adverse inference on account of some documents ignored to be produced/not produced by the contesting litigants against the back-drop of the arguments as put forth by the learned counsels for their respective sides.
7. We observe that the OP Bank has alleged the complainant not to be a consumer as per its definition cum criterion under the herein applicable statute but has not produced any cogent and/or other documentary evidence in support of its allegation thus it gets autobiographically discarded/subsided and moreover it has not been the case of the OP Bank that the complainant has been utilizing the advanced funds for further financing the other small/marginal farmers as self-harvesting/planting of crops by the complainant has been duly admitted by way of its pleading vide the written statement under the Sub-para 2 of Para 1 of preliminary objections.
8. We find that the present dispute has arisen on account of the impugned ‘refusal’ of the OP Bank to account-for/afford credit of Rs.11.50 Lac in the complainant's Loan A/c out of the total deposited cash of Rs.16.50 Lac vide the deposit-receipts Ex.C3 to Ex.C6 alleging misappropriation/embezzlement by the then OP3 Br. Manager Manmeet Singh Gill.
9. We observe that the OP Bank through its written statement (duly accompanied by the requisite affidavit) have admitted the vital factual situational issues as hereunder:
That Credit Facility of Rs.19.00 Lac was sanctioned in the name of the complainant and his father Pritam Singh in their joint Overdraft A/c 916030002544943 against the primary/collateral securities of:
i) Hypothecation of Agricultural Produce harvested out of 120 Acres of Land;
ii) Registered-Mortgage of One Acre of Ag. Land in the N/o Pritam Singh;
iii) Equitable Mortgage of 4 M Non-Ag. Plot of Land in the N/o of Sher Singh;
And, further
iv) The Loan A/c was declared NPA (Non Performing Asset) on 23.06.2021 and the OP Bank initiated Recovery Proceedings in accordance with terms of sanction and the said 'Notice' was pasted by the Bank as per Law as huge amounts were due/payable by the complainant and his other family members to the OP Bank;
And, also
v) The amount of Rs.5.0 Lac (Ex.C4) was credited in the A/c on 02.06.2018 but the other three 3 nos. of deposited (Ex.C3, Ex.C5 & Ex.C6) amounts (Rs.5.0 + Rs.5.0 + Rs.1.5) aggregating Rs.11.50 Lac were not credited in the complainant loan account;
vi) The then OP3 Branch Manager had misappropriated/embezzled Rs.11.50 Lac deposited (vide Ex.C3, Ex.C5 and Ex.C6) herein, as above, and he is accountable for the same, in his individual capacity;
vii) The OP Bank has also been a victim (aggrieved party) to the fraudulent acts of the then Manager Manmeet Singh Gill and presently the OP Bank has initiated the necessary inquiry preceding the 'disciplinary-action' and has also been in the process of getting an FIR lodged against him (the delinquent);
And,
viii) The OP Bank has pertinently mentioned here that the then OP3 Br. Manager has been dismissed from the services of the OP Bank.
10. We find that the Bank's prime defense has been primarily summed up in the above 4 nos of paragraphs (bifurcated further into 8 nos of sub-paras) and here we are of the considered opinion that for mutual convenience of comprehension cum understanding and consideration towards judicious determination of issues, the OP Banks' defense as summarized/contained in each 'sub-para' are separately remarked commented upon under each of 'sub-heads' but keeping back-drop cum cumulative of the OP defense, in sight. And, we proceed like-wise re-producing the above paras/paragraphs as hereunder:
Reproduced paragraph 1 as at No. 5
“That Credit Facility of Rs.19.00 Lac was sanctioned in the name of the complainant and his father Pritam Singh in their joint Overdraft A/c 916030002544943 against the primary/collateral securities of:
i) Hypothecation of Agricultural Produce harvested out of 120 Acres of Land;
ii) Registered-Mortgage of One Acre of Ag. Land in the N/o Pritam Singh;
iii) Equitable Mortgage of 4 M Non-Ag. Plot of Land in the N/o of Sher Singh;
Remarks/Comments: From the nature of the above securities, it gets determined that the overdraft facility of Rs.19 Lac was sanctioned as an Agricultural Loan and thus SARFAESI (Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest Act), 2002 shall not be applicable and as such the Bank shall not be entitled to effect recovery on its own by pasting auction-notices, taking possession/auction-sale etc and the legal remedy shall be filing of recovery suit under the code of civil procedure, 1908; in case of default preceded by Recall/Legal Notices etc.
Reproduced paragraph 2 as at No. 6
And, further
iv) The Loan A/c was declared NPA (Non Performing Asset) on 23.06.2021 and the OP Bank initiated Recovery Proceedings in accordance with terms of sanction and the said 'Notice' was pasted by the Bank as per Law as huge amounts were due/ payable by the complainant and his other family members to the OP Bank; Remarks/Comments: As already advised herein-above, SARFAESI Act, 2002 shall not be applicable and as such the OP Bank could have followed remedy of Recovery Suit only and couldn't have pasted auction-notices/issued threats by mob-like Recovery Teams on its own sans court's orders/intervention etc. Even under the SARFAESI Act, 2002 certain prescribed procedures have to be adopted to effect Recovery etc that too in the Non-Ag. NPA Accounts. Here the Ag. A/c has been alleged to have turned NPA on 23rd June' 2021 and the OP Bank Recovery Team visits/pastes 'notice' on 21.07.2021 at the complainant shop sans pre-notice/intimation/Recall/Legal Notice. It has been the one totally illegal, arbitrary and unauthorized act of the OP Bank and places them on the adverse side of the herein applicable statute.
Reproduced paragraph 3 as at No. 7
And, also
v) The amount of Rs.5.0 Lac (Ex.C4) was credited in the A/c on 02.06.2018 but the other three 3 nos. of deposited (Ex.C3, Ex.C5 & Ex.C6) amounts (Rs.5.0 + Rs.5.0 + Rs.1.5) aggregating Rs.11.50 Lac were not credited in the complainant loan account;
vi) The then OP3 Branch Manager had misappropriated/embezzled Rs.11.50 Lac deposited (vide Ex.C3, Ex.C5 and Ex.C6) herein, as above, and he is accountable for the same, in his individual capacity;
Remarks/ Comments: Herein-above, the OP Bank have explicitly admitted deposit of Rs.16.50 Lac by the complainant and his father Pritam Singh out of which Rs.5.0 Lac only was credited in the loan A/c and the balance Rs.11.50 Lac was misappropriated embezzled by the then OP3 Manager for which he has been accountable but in his individual capacity. We certainly are not inclined to accept this pleading/argument of the OP Bank in the light of the plethora of Senior Court Judgments/Rulings etc.
Can a Bank be held liable for Fraud committed by its Employee? Supreme Court says YES!
The Supreme Court has recently made an observation in Civil Appeal Nos. 8775 & 8776 of 2016 titled Pardeep Kumar & Anr. Vs. Post Master General & Ors., that a Bank/Post Office cannot be absolved of its vicarious liablity when it is established that fraud or any wrongful act was perpetrated by an employee. The Division Bench comprising of Justice L.Nageswara Rao, Justice Sanjiv Khanna and Justice B.R.Gavai stated that the Bank/Post Office is entitled to proceed against the concerned employee, but they have to bear their liability as well.
Firstly
Reference is made here to State Bank of India Vs. Shyama Devi, 1978 Latest Case law 105 SC wherein it was held that held for the employer to be liable, it is not enough that the employment afforded the servant or agent an opportunity of committing the crime, but what is relevant is whether the crime, in the form of fraud etc., was perpetrated by the servant/employee during the course of his employment. Once this is established, the employer would be liable for the employee’s wrongful act, even if they amount to a crime. Whether the fraud is committed during the course of employment would be a question of fact that needs to be determined in the facts and circumstances of the case”. And,
Secondly
"Employees, as individuals, are capable of being dishonest and committing acts of fraud or wrongs themselves or in collusion with others. Such acts of bank/post office employees, when done during their course of employment, are binding on the bank/post office at the instance of the person who is damnified by the fraud and wrongful acts of the officers of the bank/post office. Such acts of bank/post office employees being within their course of employment will give a right to the appellants to legally proceed for injury, as this is their only remedy against the post office. Thus, the post office, like a bank, can and is entitled to proceed against the officers for the loss caused due to the fraud etc., but this would not absolve them from their liability if the employee involved was acting in the course of his employment and duties."
11. In the light of the all above we are of the considered opinion that the herein OP Bankers can neither escape not wriggle out of their vicarious liability for the acts cum omissions of their employees committed during the course of the employers' business. We also observe that the complainant has suffered much harassment, humiliation and mental agony at the hands of the OP Bank Manager as well as its Recovery Team who have acted in a totally unauthorized manner. The OP Bank has failed to plead/quote as to under what 'law' they have been performing all these acts. Further, the OP Bank has not followed up the loan account for full three years till it turned NPA and then they acted hurriedly in an unauthorized manner.
12. We find the OP Bank has exhibited an employ of unfair practices and means in its functioning cum unscrupulous exploitation of the consumer/complainant and that do display 'deficiency in service' in full display, on their part. Thus, we ORDER the OP Bank to appropriate the unaccounted-for amount of Rs.11.50 Lac (out of the total deposited sum of Rs.16.50 Lac) as deposited by the complainant and his father by way of affording respective credits into their Loan Account from the date of deposits and reversing the interest, penal interest and penalty/all other charges of whatsoever w.e.f. the date of the first deposit besides paying Rs.50,000/- to the complainant as compensation and Rs.10,000/- as cost of litigation within 45 days of receipt of certified copy of these orders otherwise the awarded amount shall attract interest @ 9% PA from the date of filing of the complaint till paid, in full.
13. The complaint could not be decided within the stipulated period due to heavy pendency of Court Cases, vacancies in the office and due to pandemic of Covid-19.
14. Copy of the order be communicated to the parties free of charges. After compliance, file be consigned to record.
(Naveen Puri)
President.
ANNOUNCED: (B.S.Matharu)
OCT. 21, 2022. Member.
YP.
