Date of filing:15.10.2020

                                                      Date of Disposal:22.04.2024

BEFORE THE KARNATAKA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, BENGALURU (PRINCIPAL BENCH)

DATED: 22^nd DAY OF APRIL 2024

PRESENT

HON’BLE Mr. JUSTICE HULUVADI G. RAMESH: PRESIDENT

Mr. K B SANGANNANAVAR: JUDICIAL MEMBER

Mrs.M.DIVYASHREE : LADY MEMBER

CONSUMER COMPLAINT NO. 177/2020

ORDER

BY HON’BLE Mr. JUSTICE HULUVADI G RAMESH : PRESIDENT

1. This is a complaint filed U/s 47 of CPA, 2019, to direct OP to refund Rs.71,33,266/- along with interest @ 24% p.a. from 03.07.2019 till date of realization, to direct OP to pay compensation of Rs.3,00,00,000/- as damages and such other reliefs as the Commission deems fit to meet the ends of justice.

2. The brief facts of the case of the complainant is stated below:

Complainant is an Educational Institution running a school in Bailhongala, is the customer of OP Bank having its Savings Bank Account bearing No.652401001438 at Bailhongala Branch, Belgaum.On 03.07.2019, Rs.3,95,50,000/- has been debited by OP Bank from the complainant aforesaid bank account.As on 03.07.2019, complainant has a credit balance of Rs.12,41,30,249/- in its Savings Bank Account.On 04.07.2019, when complainant had come to the knowledge of the fraudulent bank transaction, had immediately called the Zonal Head of the OP Bank and the Regional Head of ICICI Bank and also lodged a complaint with OP Bank to freeze the account and to take immediate action to restore the fraudulently debited amount in the complainant’s account. OP bank informed that a Cheque No.103061 has been encashed by one M/s Creative Interiors through their own branch at Ramamurthy Nagar and an amount of Rs.3,95,50,000/- was debited from the complainant’s account. Complainant had produced the original unused cheque leaf bearing no.103061 to the OP Bank.The Ramamurthy Nagar Branch Manager, Mr.Prasad K of the OP Bank himself lodged a Police Complaint with the Ramamurthy Nagar Police Station on 05.07.2019 and FIR in Cr.No.308/2019 was registered U/s 403, 406, 420, 467, 468, 471 R/w Sec.34 of IPC by Police.Complainant also lodged a complaint to the Bailhongal Police Station and Ramamurthy Nagar Police Station on 05.07.2019 against OP Bank for the fraudulent embezzlement of complainant’s money of Rs.3,95,50,000/-.A Letter dated 22.07.2019 was issued by OP Bank to complainant stating that complainant’s account had been frozen and regarding refund of the amount, OP stated that the Police is investigating the case and that the bank will have to wait until completion of investigation.

3. Subsequently, after preliminary investigation, the Police arrested 09 Accused including the ICICI Bank, Ramamurthy Nagar Branch Manager, Mr.Prasad K, confirming the involvement of the ICICI Branch Manager.  Report dated 27.08.2019 came to be filed by the Police before IV Addl. CMM with all Bank account details of the accused stolen money.  The total amount traced and frozen in the various bank account is Rs.2,85,94,256/-.  Further the Police had seized cash of Rs.67,50,030/- in P.F.No.82/2019 from the Accused.  Therefore, the total amount including the seized cash is Rs.3,53,44,286/- out of the total Rs.3,95,50,000/-.  The Complainant, being the victim of the crime and being entitled for refund of the entire amount of Rs.3,95,50,000/- filed an application U/s 451 R/w Sec.457 of Cr.P.C. before the Magistrate to release the embezzled money in the complainant’s favour.  The IV Addl. CMM, Bengaluru by its order dated 15.10.2019 directed the concerned Police Station to release cash seized of Rs.67,50,030/- to the complainant.  Further directed defreezing of the bank Accounts of the Accused accomplices and allowed withdrawal of the proceeds of crime by the third party accomplices from their Account.  Therefore, complainant filed a Criminal Revision Petition No.836/2019 challenging the said order before the City Civil and Sessions Judge, Bengaluru at his own cost and expenses.  The said Criminal Revision Petition No.836/2019 on 22.03.2022 was withdrawn by the complainant since some of the Accused were not traceable.  Subsequently, the complainant filed another application U/s 451 R/w Sec.457 of Cr.P.C before learned IV ACMM in C.C.No.31605/2021 on 04.01.2021 to release Rs.2,56,84,832/- frozen in the bank accounts of Accused No.4&5.  The said application was rejected on 01.09.2022 by the IV ACMM Court without assigning proper reasons, even though the Police had no objections to release of the amount.  Hence, the complainant preferred to challenge the said Order before Sessions Court and filed a Revision Petition in Crl.R.P.No.472/2022, which came allowed on 21.10.2022 by modifying the order dated 18.01.2023 and ordered to release Rs.2,56,84,832/- in favour of the complainant.

4. Complainant alleges that the amount has been fraudulently and deliberately debited by the criminal conspiracy of the bank officials who were hand-in-glove with the Accused.  The Bank Manager of OP Bank Mr.Prasad K was arrested by Ramamurthy Nagar Police Station for being king-pin of the forgery and fraud and has been arrayed as Accused No.9 in Cr.No.308/2019.  The Preliminary police report and the order of the IV ACMM clearly establishes that the complainant is entitled to the entire amount of Rs.3,95,50,000/- and the bank Manager of the OP Bank is involved in the fraud.  The OP Bank themselves filed a Criminal Complaint against the Accused persons after satisfying that the cheque was fake and fabricated but is now deliberately evading from their duty to refund the amount.  The complainant is a school and was unable to pay salaries to its employees due to the bogus debit by the OP Bank. Also has suffered a severe setback due to the fraudulent debit and has been suffering heavy losses.  The OP Bank is guilty of passing a fake cheque while the original cheque is still lying with the complainant.  Thus alleged deficiency of service and filed the present complaint to get redress of his grievance.

5.  Upon service of notice, OP appeared through learned counsel and resisted the complaint by way of replies.  OP in its version submits that the allegations are of criminal in nature and as admitted by the complainant a complaint is lodged against the fraudsters by the Bank itself on 05.07.2019 and the same got registered vide Cr.No.308/2019 at Ramamurthy Nagar Police Station, and the same is pending for investigation, however, before the trial in the criminal case, the bank cannot be held liable for deficiency in service or any other offense.  Further it is submitted that prior to transfer of money had called the complainant on the registered mobile number available with the bank records and on confirmation of the complainant only, the account was debited.  It is therefore, it is a clear case that both the bank and the complainant were hoodwinked by third parties and hence holding the bank alone liable is uncalled for. OP Bank during the course of their business was approached by Harish K, Proprietor of Creative Interiors (Cunningham Road Branch, Bangalore) on 03.07.2019 with a cheque No.103061 purportedly issued by the complainant for sum of Rs.3,95,50,000/- drawn in favour of Creative Interiors (Account No.142105500074).  The Employee of the bank as required did ‘Call and Confirmation’ on registered mobile number of complainant, as available in the Bank records and did mandatory checks on the instrument by using UV light to spot water marks on the cheque leaf and on a naked eye view, signature of the authorized signatories were matching with the records of the Bank and hence the transfer was processed into the account of Creative Interiors.  Thereafter Mr.Harish K, proprietor of Creative Interiors, the very same day came back after an hour and carried out a RTGS of Rs.30.0Mn to one of his account with HDFC Bank in the name of Creative Interiors.  In addition, he had purchased Life Insurance Policy from ICICI Prudential, by paying a premium amount of Rs.0.05Mn.  Subsequent to same Mr.Harsha Babu Dhammanagi, Authorized Representative of complainant complained about the illegal transaction. The OP bank immediately lodged a complaint at Ramamurthy Nagar Police Station on 05.07.2019 and thereafter, a FIR in Cr.No.308/2019 was registered on the same day against the main beneficiary Mr.Harish K, Parishit and unknown persons.  Therefore, the bank cannot be held liable for deficiency in service.  Hence complaint filed by complainant deserves to be dismissed.

6. In view of rival contentions of the respective parties, Commission held an enquiry by receiving affidavit evidence and documents and after closure of enquiry, heard learned counsels on record for the parties to the complaint.  Now the following points arise for consideration of the Commission:

1. Whether complainant has proved that due to the negligence of official of OP Bank had lost a sum of Rs.3,95,50,000/- lying in their Savings Bank Account bearing no.652401001438?
2. Whether complainant has proved the alleged rendering of deficiency in service on the part of OP Bank?
3. For what relief does the complainant is entitle for?

The findings are recorded as below:

Point No.1 & 2:           In the affirmative.

Point no.3:                   As per final order for the following:

REASONS

7. On point no.1 & 2: In order to avoid repetition certain facts and circumstances found in the enquiry it would be convenient for the Commission to take all these points together for discussion and determination.

8. It is not in dispute that complainant is a registered trust and running Educational Institution in Bailhongal, holding a Savings Bank Account bearing No.6524010001438 in the Bailhongal Branch of OP Bank.  As on 03.07.2019 complainant was having balance of Rs.12,41,30,249/- in the account stated supra is also not in dispute at all.  On 03.07.2019, a cheque bearing no.103061 has been encashed by one M/s Creative Interiors due to which complainant’s account was debited with a sum of Rs.3,95,50,000/-.  Complainant alleged that due to the criminal conspiracy of one of the official of the OP Bank had honoured the counterfeit cheque leaf due to which complainant was under great financial constrains.  The Signatures on the cheque were clearly mismatched and not the signatures of the Authorized Signatories.  Further, the Seal of the Trust on the fake cheque is also fabricated and not as per the seal imposed at the time of opening the account. On the contrary, OP denies the said allegation of complainant and submits that as per the process have adopted ‘Call and Confirmation’ on the registered mobile number as available in the Bank records and did mandatory checks on the instrument by using UV light to spot water marks on the cheque leaf and on a naked eye view, signature of the authorized signatories were matching with the records of the Bank and hence the transfer was processed into the account of Creative Interiors and hence bank cannot be held liable for negligence.

9. Let us examine the documents produced by parties to this complaint.   Complainant has produced as many as 19 documents which are marked as Ex.P1 to Ex.P19.  Ex.P1 is the copy of Trust Deed dated 28.08.2006 wherein could see Smt.Mangala Dhammanagi, W/o Babu Adiveppa Dhammanagi, Sri.Harsha Dhammanagi, S/o Adiveppa Dhammanagi, Kum.Divya Dhammangai, D/o Babu Adiveppa Dhammanagi and Sri.Babu Adiveppa Dhammanagi, S/o Adiveppa Virupakshappa Dhammangagi are the Founder Trustees/Executive Trustees of the trust named “Shri A.V.Dhammangai Vision Foundation”.  On 28.05.2007 a Supplementary Deed to the Original Trust Deed of Shri.A.V.Dhammanagi Vision Foundation was made wherein Sri.Narayan Rachappa Chadichal, S/o Sri.Rachappa Chandichal and Sri.Arun Gurappa Gadad, S/o Sri.Gurappa Gadad were appointed as Trustees who will retire by rotation once in 05 years and are eligible for re-appointment.  The total number of Trustees at any point of time shall not be more than 06.  Out of which at least 02 persons shall be members other than the founder members and their relatives.  On 10.06.2008, a Rectification Deed to the Supplementary Deed of Shri.A.V.Dhammanagi Vision Foundation was made rectifying the name from Sri.Narayan Rachappa Chandichal to Sri.Narayan Rudrappa Chandichal.  Ex.P2 is the Board Resolution dated 04.07.2019 authorizing Sri.Babu Adiveppa Dhammanagi and Sri.Harsha Babu Dhammanagi to sign, represent and provide statement wherever necessary in police station, all court of law, bank, RBI, Consumer Forums and to any other governmental and non-governmental authorities.  Ex.P3 is the Statement of Transactions in Savings Account No.662401001438 for the period from 01.07.2019 to 04.07.2019 wherein could see that on 03.07.2019 Rs.3,95,50,000/- by way of cheque bearing no.103061 was transferred to Creative Interiors. Ex.P4 is the complaint dated 04.07.2019 written to The Branch Manager, ICICI Bank, Bailhongal Branch, Belagavi District and Ramamurthy Nagar Branch, Bangalore to freeze all debit transactions and to take immediate action to restore the fraudulently debited amount in their account.  This complaint was received by Zonal Head – Mr.Sahil, Chamrajpet, Bangalore for further investigation and forwarded to Ramamurthy Nagar Branch to verification. Ex.P5 is the photocopy of the counterfeit cheque and Ex.P6 is the photocopy of the original cheque. On examining Ex.P5 and
   Ex.P6 found that there is a difference in seal of the trust since Ex.P5 holds the seal of the trust as “For M/s Shri A.V.Dhammanagi Vision Foundation (R)” and also bears the “Chairman and Founder Trustee” in the seal, while in Ex.P6 holds as “CHAIRPERSON Sri A V Dhammanagi Vision Foundation (R) Bailhongal”.  At this juncture, it would be appropriate to reiterate herein that complainant alleges that the seal of the trust in the counterfeit cheque is not the seal imposed at the time of opening the bank account and the seal imposed at the time of opening the bank account is on the original cheque which is marked as Ex.P6.  Ex.P8 is the copy of Police Complaint lodged before Ramamurthy Nagar Police Station by Mr.Prasad K, Manager of ICICI Bank, Ramamurthy Nagar Branch on 05.07.2019 and on the same day Cr.No.0308/2019 has been registered for the offences punishable U/s 34, 403, 406, 467, 468, 420 and 471 of IPC and to that effect concerned police submitted FIR to the court and the said matter is still pending investigation.  This Copy of FIR is marked as Ex.P9.  Ex.P10 and Ex.P11 are the copy of the complaint dated 05.07.2019 filed by complainant to Bailhongal Police Station and Ramamurthy Nagar Police Station regarding fraud done by ICICI Bank.  A complaint was also written to The Governor, RBI, Bangalore on 09.07.2019 regarding the same, which is marked as Ex.P12.  Ex.P14 is the copy of the police report dated 27.08.2019 submitted by Inspector of Police, Ramamuthy Nagar Police Station, Bangalore to the Court of IV Additional Chief Metropolitan Magistrate, Bengaluru wherein states as – “PÉù£À vÀ¤SÁPÁ®zÀ°è ªÉÄ.J.«.qsÀªÀÄätV «µÀ£ï ¥ËAqÉõÀ£ï UÉ ¸ÀA§A¢ü¹zÀ L¹L¹L ¨ÁåAPï CPËAmï £ÀA:652401001438 CPËAmï¤ßAzÀ gÀÆ.3,95,50,000/-UÀ¼ÀÄ CPÀæªÀĪÁV ªÀUÁðªÀuÉAiÀiÁVgÀĪÀÅzÀÄ PÀAqÀħA¢gÀÄvÀÛzÉ.  DzÀÝjAzÀ F PɼÀPÀAqÀ ¨ÁåAPïUÀ¼À°ègÀĪÀ CPËAmïzÁgÀgÀ CPËAmïUÉ CPÀæªÀĪÁV ªÀUÁðªÀuÉAiÀiÁVgÀĪÀ ºÀtªÀ£ÀÄß ªÀÄÄA¢£À PÀæªÀÄ PÉÊUÉƼÀî®Ä ¦æÃeï ªÀiÁrgÀÄvÀÛzÉAzÀÄ ªÀiÁ£Àå £ÁåAiÀiÁ®AiÀÄzÀ°è ¤ªÉâ¹PÉÆArgÀÄvÀÛzÉ.” Ex.P15 is copy of application filed U/s 451 and 457 of Cr.P.C. before IV Additional CMM, Bengaluru seeking to direct police and the respective banks to release the seized Rs.3,53,44,286/- to the applicant as per police report dated 27.08.2019.  Ex.P16 is the copy of the order dated 15.10.2019 passed by IV Addl. CMM, Bengaluru, Ex.P17 is the letter dated 18.10.2019 written to The South India Head, ICICI Bank Ltd., M.G.Road Office, Bengaluru asking upon them to credit Rs.67,50,030/- to their account in compliance of the order passed by learned IV Addl. CMM, Bengaluru and Ex.P18 and Ex.P19 are the postal acknowledgements. It is submitted by the complainant that pursuant to the orders of the learned Principal District and Session Judge, at Bengaluru, Rs.2,56,66,704/- is released in favour of complainant.  The copy of the order dated 12.10.2022 and 18.01.2023 passed by Principal City Civil and Session Judge and also copy of Bank statement from 01.01.2023 to 14.03.2023 are also hereby produced by complainant to substantiate the same.  Further complainant had produced the Copy of Charge Sheet in CC No.31605 of 2021 and Copy of PF no.215/2021 wherein could see Mr.Ravikiran Hegde and Mr.Prasad K are arrayed as Accused No.1 and 2 who are none other the Branch Manager of OP Bank. The said Charge Sheet prepared by the Inspector of Police, Ramamurthy Nagar, Bengaluru clearly specifies that these A1 and A2 along with other accused had fraudulently transferred the amount of Rs.3,95,50,000/-. It is submitted that complainant was able to recover a sum of Rs.67,50,030/- and Rs.2,56,66,704/- in total a sum of Rs.3,24,16,734/- out of sum of Rs.3,95,50,000/-.

10. Let us examine the documents produced by OP. One Mr.Vyshak Kannan, S/o K.K.Chandran, Legal Manager of OP is examined before this Commission on behalf of OP bank.  OP herein had produced as many as 05 documents, which are marked as Ex.R1 to Ex.R5.  Ex.R1 is the true copy of cheque which is said to be presented before the bank for honouring on 03.07.2019. In the front of the said cheque bears signature verified seal, UV Checked seal and transfer seal of ICICI Bank Ltd., Ramamurthy Nagar Branch, Bengaluru dated 03.07.2019 and at the back side of the said cheque there is a mention of call confirmation to the mobile No.9880224255 and contacted the person named Harsha by the employee of the OP Bank named Sulagna, to show that OP bank had conducted all check to confirm the authenticity of the instrument.  It is pertinent to note here that this cheque does not have the endorsement at the back of the cheque.  Ex.R2 is the deposit slip to show that creative Interior is deposited with Rs.3,95,50,000/-  in honouring of cheque no.103061.  Ex.R3 is the copy of the order dated 15.10.2019 passed by IV Addl. CMM, Bengaluru in Cr.No.308/2019 wherein the learned court was pleased to grant interim custody of cash amount of Rs.67,50,030/- seized in PF.No.82/2019 in favour of complainant subject to execution of indemnity bond for Rs.1,40,00,000/-.  Ex.R4 is the complaint dated 05.07.2019 given to the Inspector of Police, Ramurthynagar Police Station, Bengaluru against M/s Creative Interiors and other unknown person regarding forgery, cheating, criminal breach of trust and other offences.  Ex.R5 is reply to the notice dated 06.07.2019 with ref.No.308/2019 given by ICICI Bank on an unknown date to the Police Inspector, R.M.Nagar Police Station, Bengaluru. It is pertinent to mention herein that Mr.Prasad K, Branch Manager of ICICI Bank, Ramamurthy Nagar, Bengaluru had lodged the complaint before the police inspector as per Ex.R4 and Ex.R5.

11. Thus on examining all the documents produced by respective parties found that Rs.3,95,50,000/- has been fraudulently transferred from complainant account to one M/s.Creative Interiors account.  Learned counsel for complainant contend that due to the negligence on the part of officials of OP Bank who had honoured the counterfeit cheque, had a huge loss to the tune of Rs.3,95,50,000/-.  On the contrary, learned counsel for OP bank contend that as per the bank records, bank officials had done all the mandatory checks on the instrument by using UV light to spot water marks on the cheque leaf and on a naked eye view, signature of the authorized signatories were matching with the records of the bank.  It is true that the cheque leaf holds UV checked seal and signature verified seal at the front and the call confirmation seal at the back, facts remained the seal of the trust in the original cheque which is in the custody of complainant is contrary to the seal of the trust in the cheque leaf honoured by the OP Bank.  Though OP bank contend that the signature and seal of the trust were matching with the records of the bank, facts remain nothing is placed on record to show that the signature and seal of the trust are matching with the records of the bank, since complainant specifically alleges that they are not imposed at the time of opening the bank account.  Thus this aspect draws an adverse inference on the OP Bank.  Further to be noted herein that as per Ex.R4, the OP bank themselves had given complaint to the Inspector of Police, Ramurthynagar Police Station, Bengaluru stating that “…..Mr.Harish K in collusion/connivance with some unknown persons, if any with dishonest intention, fraudulently had forged, fabricated and submitted the “said Cheque”….” Thus it is evident that there is a breach of duty on the part of the OP Bank officials for honouring the fabricated cheque and had transferred an amount of Rs.3,95,50,000/- from the account of complainant, which in our view has to be held rendered deficiency in service on the part of OP Bank.  In other words, bank is an institution which handles money of the public in large and its duty is to safeguard such money deposited by the public.  Herein this case, bank themselves had agreed that the complainant is in the possession of the original cheque and they had honoured the forged cheque and when OP bank agrees that the complainant is with original cheque which has the seal contrary to the seal of the fabricated cheque, it is upon the OP bank to prove that such seal on the fabricated cheque are matching with the records of the bank.  Also it is the duty to see whether the transaction of paying the cheque and the surrounding circumstances were so out of the ordinary that it should raise doubt in the banker’s mind, the bank may be found negligent if it did not inquire further about the transaction before honouring the cheque. It is therefore, OP bank has to be held rendered deficiency in service in safeguarding the money of the complainant.  Nonetheless, this Commission cannot lose sight of the fact that this matter is concerned only with regard to deficiency in service on the part of OP Bank for honouring the fabricated cheque without verifying the authenticity of the cheque presented before them and is not concerned with the fraud, cheating or any of the criminal conspiracy.  Upon examining all the documents produced by respective parties to the complaint found that complainant had already received Rs.2,56,66,704/- by issuing an indemnity bond pursuant to the order passed by Hon’ble City Civil and Session Court, CCH-1, in Crl.R.P.No.472/2022 and received cash amount of Rs.67,50,030/- seized in PF.No.82/2019 pursuant to the order dated 15.10.2019 passed by IV Addl. CMM, Bengaluru in Cr.No.308/2019 upon execution of the indemnity bond.  The total amount misappropriated from the account of complainant is Rs.3,95,50,000/-.  The balance amount of Rs.71,33,266/- is yet to be received by the complainant.  Since there is deficiency in service on the part of OP Bank official, it is for the OP bank to indemnify for such amount i.e., Rs.71,33,266/- to the complainant and also pay interest for Rs.67,50,030/- for the period from 03.07.2019 to 15.10.2019 and Rs.2,56,66,704/- for the period from 03.07.2019 to 21.02.2023 by receiving an indemnity bond from the complainant to meet ends of justice.
12. The next point for our consideration would be to what extent complainant be compensated?
13. Complainant has sought for refund of the embezzled sum of Rs.71,33,266/- along with interest @ 24% p.a. from 03.07.2019 till realization, to pay interest @ 24% p.a. for Rs.67,50,030/- for the period from 03.07.2019 to 15.10.2019 and for Rs.2,56,66,704/- for the period from 03.07.2019 to 21.02.2023 and further sought for compensation of Rs.3,00,00,000/- as damages, which in our view is exorbitant, is hereby reduced to 10% p.a. and direct OP bank to pay Rs.10,00,000/- as compensation and Rs.75,000/- towards litigation expenses, would meet ends of justice.
14.  With such conclusion, Commission proceed to pass the following

 ORDER

Complaint filed U/s 47 of CPA, 2019 by complainant is allowed in part.

OP Bank is directed to pay Rs.71,33,266/- along with interest @ 10% p.a. from 03.07.2019 till realization.

Further OP Bank is directed to pay interest @ 10% p.a. for Rs.67,50,030/- for the period from 03.07.2019 to 15.10.2019 and for Rs.2,56,66,704/- for the period from 03.07.2019 to 21.02.2023 to the complainant.

Further OP Bank is directed to pay Rs.10,00,000/- as compensation and Rs.75,000/- towards litigation expenses.

OP Bank is directed to pay the aforesaid amount after obtaining an indemnity bond from the complainant.

Further OP bank is directed to comply with the mandate of award within 20 days from the date of receipt of this order, failing which the aforesaid amount shall carry interest @ 12% p.a. from such date till realization.

15. Furnish free copy of this order to both parties.

  Lady MemberJudicial MemberPresident

*GGH*