IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, KOTTAYAM
Dated this the 31st day of March, 2022
Present: Sri. Manulal V.S. President
Smt. Bindhu R. Member,
Sri. K.M. Anto, Member
C C No. 239/2018 (filed on 09-11-2018)
Petitioner : Jeevan Finance.
Rep. by Managing Partner,
Satheesh Ipe,
KMC IX 507 A1,
Valayil Building,
Sastri Road,
Kottayam – 686 001.
(Adv.T.N. Rajesh
Vs.
Opposite parties : 1) Federal Bank Ltd.
Rep. by its Managing Director,
Parackal Towers, Parur Junction,
Aluva -683102.
2) Federal Bank Ltd.
Nagampadam Branch,
Kottayam – 686001,
Rep. by Senior Manager &
Branch Head, Anitha Mathews.
O R D E R
Sri. K.M. Anto, Member
The complaint is filed under Section -12 of the Consumer Protection Act 1986.
The brief of the complainant case is as follows:
The complainant is a partnership firm and is maintaining an account with the opposite party bank of Nagampadom Branch, with account No.22020200000505. The second opposite party issued a notice dated 24.10.2018 to the complainant stating that certain undesirable transactions were detected in the account of the complainant and requesting to close the account. The particulars of the alleged undesirable transactions, date, amount etc. were not disclosed. The complainant approached the second opposite party for clarification but second opposite party was not ready to hear the complainant. The complainant had not made any illegal or undesirable transactions. The complainant has enough explanation for the transactions in the account. The complainant had every right to know the alleged undesirable transactions stated in the notice. The general statement in the notice “certain undesirable transaction” is not a sufficient ground to close the account. The above act of the opposite parties is deficiency in service and unfair trade practice. Hence this complaint.
On admission of the complaint, copy of the complaint was duly served to the opposite parties. The opposite parties appeared and filed their version.
As per the version of the opposite parties, they do admit that the complainant is maintaining an account vide account No.22020200000505 with the opposite party. The notice dated 24.10.2018 was issued to the complainant when the account was found with abnormal handling of money as defined in money laundering Act. The complainant started the account on 05/09/2017 with a deposit of Rs.5,000/-. There after the account was seen deposited with huge amounts followed with instant withdrawals. From the date of opening there were more than 32 such transactions and withdrawals upto 17.02.2018. The opposite party is functioning with the guidelines and rules issued by the Reserve Bank of India. The Reserve Bank of India issued circular giving definition of suspicious transactions as per Prevention of Money Laundering rules 2005 and RBI master directions know your customer (KYC) directions 2016. Since the transaction in the account of the complainant were suspicious in nature and not matching to the given profile of the customer and have no economic rationale, the matter was reported to the higher authorities as per the guidelines of RBI and also issued notice to the complainant requesting him to close the account. There is no unfair trade practice or deficiency in service on the part of the opposite parties.
Complainant filed proof affidavit and marked documents as Exhibits.A1 to A4. The opposite party filed proof affidavit and marked documents as Exhibits.B1 to B3.
On going through the complaint, proof affidavit of the complainant and version of the opposite parties and evidence adduced we would like to consider the following points.
- Whether there is unfair trade practice or deficiency in service on the part of the opposite parties.
- If so what are the reliefs and costs.
For the sake of convenience, we would like to consider point No.1 and 2 together.
On the basis of the complaint, version of the opposite parties, and evidence on record, it is clear that the complainant is having an account with the opposite party vide account No.22020200000505. The opposite party had issued a notice dated 24.10.2018 requesting the complainant to close the account. Ext. A1 is the notice dated 24.10.2018 issued by the second opposite party to the complainant. In Ext.A1 it is reported that the opposite party is not inclined to continue the banking relationship with the complainant as certain undesirable transactions have been detected in the account and requesting to close the account and to surrender the unissued cheque leafs within 30 days, failing which opposite party will close the account without further notice.
Ext.A2 is the statement of account of the account No.22020200000505 of the complainant. Ext.A3 is the legal notice issued to the second opposite party dated 29.10.2018 and Ext.A4 is the postal receipt.
The opposite parties filed proof affidavit and marked Ext.B1 to B3. Ext. B1 is the direction issued by the Reserve Bank of India (Know Your Customer (KYC)) directions 2016. In Ext.B1 suspicious transaction is defined as a transaction as defined below.
- gives rise to a reasonable ground of suspicion that it may involve proceeds of an offence specified in the schedule to the Act regardless of the volume involved ; or
- appear to be made in circumstances of unusual or unjustified complexity; or
- appear to not have economic rationale or bona-fide purpose ; or
- give rise to a reasonable ground of suspicion that it may involve financing of the activities relating to terrorism.
Ext. B2 is the RBI circular issued to all scheduled commercial banks regarding Prevention of Money Laundering Act 2002- Obligation of banks in terms of Rules notified there under. In this circular it is directed that Banks should introduce a system of maintaining proper record of transactions prescribed under Rule-3 as mentioned below.
- all cash transactions of the value of more than rupees ten lakhs or its equivalent in foreign currency
- all series of cash transactions integrally connected to each other which have been valued below rupees ten lakh or its equivalent in foreign currency where such series of transactions have taken place within a month and the aggregate value of such transactions exceed ten lakhs.
- all cash transactions were forged or counterfeit currency notes or bank notes have been used as genuine and where any forgery of a valuable security has taken place.
- all suspicious transactions whether or not made in cash and by way of as mentioned in the rules.
It is further advised that in terms of PMLA rules banks are required to report information relating to cash and suspicious transactions to the Director, Financial Intelligent Unit – India (FIU-IND). It is clearly stated in the circular that banks may not put any restrictions on operations in the accounts where a Suspicious Transaction Report (STR) has been made. However it should be ensured that there is no tipping off to the customer at any level. Ext. B3 is a circular issued by Federal Bank. In Ext. B3 also it is stated that no restriction shall be put on operation of an account where Suspicious Transaction Report has been filed.
On going through the Ext.A2 account statement of the complainant for the period from 15.09.2017 to 17.02.2018, it is clear that there were cash transactions in the account exceeding rupees ten lakhs in every month from September 2017 to February 2018. Thus the account comes under the purview of Suspicious Transactions as defined by Reserve Bank of India in Ext.B1 & B2 circulars. The opposite party is duty bound to submit the Suspicious Transaction Report (STR) to the Financial Intelligence Unit- India (FIU-IND). Further Ext. B2 and Ext. B3 circulars clearly directs not to put any restrictions on the operation of the accounts where a suspicious Transaction Report has been made. The act of the opposite party in issuing the Ext. A1 notice describing the transaction in the account as undesirable transactions and demanding the closure of the account is a clear violation of the directions given by Reserve Bank of India regarding the action to be taken by the banks as per Prevention of Money Laundering rules 2005. The act of the opposite parties in issuing Ext. A1 notice is clearly deficiency in service from their part and Point No.1 is found in favour of the complainant. The complaint is allowed and we pass the following orders.
- We herby set aside the notice dated 24.10.2018 issued by the second opposite party to the complainant with liberty to the opposite parties for taking further actions as per Reserve Bank of India directions without putting restrictions on the operation of the account.
- The opposite parties are directed to give Rs.5,000/- as compensation for mental agony and sufferings with cost Rs.1000/-
Dictated to the Confidential Assistant, transcribed and typed by her, corrected by me and pronounced in the Open Commission on this the 31st day of March, 2022.
Sri. K.M. Anto, Member Sd/-
Sri. Manulal V.S. President Sd/-
Smt. Bindhu R. Member Sd/-
Appendix
Exhibits marked from the side of complainant
A1- Notice dated 24.10.2018 issued by the second opposite party
A2- Statement of account of the account No.22020200000505
A3- Legal Notice issued to the second opposite party dated 29.10.2018
A4- Postal receipt
Exhibits marked from the side of opposite party
B1- The direction issued by the Reserve Bank of India
B2- RBI circular issued to all Commercial Banks
B3- A circular issued by the Federal Bank
By Order
Assistant Registrar
