Order dated 22.5.2008 passed by the State Commission in CC No.09/2005 filed by the complainant has been challenged  by the complainant as well as by the OP, Punjab National Bank by filing FA No.472 of 2009 and FA No. 267 of 2008 respectively.

2.       The facts of the case are that the complainant was holding three accounts with the OP bank being account no.26964 held by Madhu Gaur (Wife) and  Prof. Krishan Deo Gaur, Account No.57539 held by  Ritu Gaur (daughter ) and Prof. Krishan Deo Gaur and  A/c no. 58732 in the name of Anshoo Gaur (son) and  Prof. Krishan Deo Gaur.  Complainant alongwith wife went to US on 16.3.2005 and returned on 18.6.2005. Son and daughter of the complainant also reside in US.  All the three accounts were being operated by the complainant himself.  After coming back from  America, the  complainant realized that various cheques totalling (14 nos.) have been encashed from the bank from different branches whereas the complainant alleged that he did not issue any cheque. All the cheques have been issued in the name of self. The following are the details of cheques withdrawn  from different accounts.

3.       Apart from the above fraudulent withdrawal  of cheques,  the complainant  also found that the fixed deposit receipt which was amounting to Rs.2,50,000/- in the  name of complainant and his wife which was maturing on 2.5.2005 was fraudulently encashed prematurely and the proceeds were deposited in the Account No.26964 which was held by Madhu Gaur and Prof. Krishan Deo Gaur.          The complaint was filed for reimbursement of Rs.4,44,800/- which was fraudulently withdrawn through cheques  by some unknown person  in connivance with the bank officials.

4.       The complaint was resisted by the bank on the ground that custody of all the cheques was with the complainant  and prima facie,  it was not possible to distinguish between the actual signatures of the complainant as well as the signature on the cheques by naked eyes.  Hence, the bank authorized the  payments. The premature payment of FDR was made as an application in the name of the complainant was presented for premature encashment of the  FDR and for depositing the amount in the account no.26964  held by the complainant and his wife.  As the amount was to be transferred in the account, no suspicion was felt by the bank official and the amount was transferred to the account of the complainant as requested. Claiming no deficiency, it was requested to dismiss the complaint. The State Commission has, however, allowed the complaint vide order dated 22.5.2008  which reads as under:

                                                ORDER

“The complaint is allowed and it is ordered that accounts from which Rs.4,44,800/- (Rupees four lakh forty thousand eight hundred) were withdrawn without signatures and by forged signatures, at the admissible interest rate prevailing in those accounts calculating from date of withdrawal to the date of actual payment, FDR which was prematurely cancelled by adding the balance of maturity amount alongwith cost of Rs.5,000/- as expenses on suit shall be paid within two months from the date of receiving true copy of this order. In case of default interest at the rate of 15% shall be admissible.

This amount can be recovered from those officials whose remiss caused the withdrawals.

These conclusions would not affect the police investigations in the criminal case registered and hearings of the competent court of Penal Law.

Copies of this judgment and order be made available to both parties  as per the rule.”

5.       Hence, the present appeals.

6.       Heard the learned counsel for the parties and perused the record.

7.       Learned counsel for the appellant bank stated that all the cheque books were in the custody of complainant himself and it seems that some of his family members or other acquaintances have misused these cheques  if the cheques were  not really issued by the complainant. It was argued by learned counsel that the complainant did not notice the withdrawal of these cheques from 27.12.2004 to 14.7.2005.  The complainant did not  get these passbooks  updated within this period. The complainant was in America between 16.3.2005 to 18.6 .2005 and the alleged fraud has happened from December, 2004 till July, 2005 when for most of the time the complainant was very much in India.  The learned counsel also refuted the allegation of the complainant that while issuing the bundle of  loose cheques to the complainant, it was quite possible that these cheques were withheld by the bank  officials and were not really issued to the complainant and later on were misused. It was the duty of the  complainant to have taken the cheques after duly counting them and therefore, if the complainant has failed in his duty, he cannot allege the deficiency on the part of the bank without any proof.

8.       It was further stated by the learned counsel for the bank that an FIR was lodged in the matter on 26.7.2005.  However, Final Report (FR) was given by the concerned Police on 31.12.2006 and the FR was accepted on 19.12.2008 by the competent court.

9.       Learned counsel for the bank further stated that it is not possible to check each and every signatures through ultra violet ray lamp test and other means  and  their signature are only visually checked  by the concerned officers and cheques are passed and  in such circumstances,  no deficiency can be assigned to the bank. In support of his arguments, learned counsel referred to the judgment in Bank of Maharashtra Vs. Automotive Engineering Company,  1993(2) SCC 97, wherein Hon’ble Supreme Court observed the following:

“Section 464 and 467 – Negotiable Instrument Act, 1881, Sections 10, and Negligence on the part of bank when the cheque was presented for payment –Drawer having sufficient fund in the bank – Superficially there was no infirmity in the cheque and the payment  was made by the Bank in good faith, however, later on forgery was detected and it was alleged that bank cannot be held liable merely because it failed to scrutinize the cheque in ultra violet ray lamp. Moreover, such modern devices are not availbale in all the branches –bank held not liable.       “

10.     In respect of the pre-mature encashment of the FDR,  learned counsel for the bank referred a letter dated 9.3.2005 which was received in the bank from  the complainant  for making pre-mature payment of the FDR with the instruction to transfer the maturity proceeds to the account  no.26964 of the complainant.  Accordingly, the proceeds were  transferred to account no.26964.  Thus, there is no deficiency on the part of the bank  as the amount has been credited to the account of the complainant himself.

11.     Learned counsel for the bank further argued that the complainant has filed his appeal for enhancement of compensation for mental agony and  harassment. The bank is  contesting the impugned order of the State Commission as all payments have been released by  the bank as per the procedure adopted in the bank and there is no deficiency on the part of the bank in giving the payments of the cheques.  Even the FIR lodged by the complainant has been dismissed in the sense that after investigation   nothing was found  and final report was filed by the police which was accepted by the concerned court. Thus, all the allegations of the complainant  have proved wrong.   In these circumstances, there can be no question of any compensation to be given to the complainant.

12.     On the other hand, learned counsel for the complainant stated that the cheques have been encashed  even when the complainant was outside India from 16.3.2005 to 18.6.2005.  The complainant was busy and could not have tracked all the payments made by the bank on fraudulent cheques. This can be no ground   for allowing   payment of fraud cheques.   Complainant has filed complaint on oath  that these cheques were not signed by him. Even the FSL report has proved that the cheques were not signed by the complainant . It was the prime duty of the bank to have checked the signatures before making payments. 

13.     The State Commission has analysed all the points raised by the appellant bank and has allowed the reimbursement of the claimed amounts as the complainant   has not signed  any of these cheques. He is entitled to  reimbursement  of the said amount withdrawn against the cheques.  It is quite possible that while issuing cheque books of loose cheques, the bank official might have retained  few cheques which were later misused. Nobody counts the cheques while  taking the delivery from the bank and the cheque book is taken on good faith. It was further stated by the learned counsel that letter dated 9.3.2005 was never written by the   complainant for premature payment of the FDR.  The State Commission has clearly mentioned in its order as under:

        “Signature of Sri K.D. Gaur on it has been said as forged one and in fact not having been addressed to any branch, absence of endorsement of any officer of the bank and no mention of how it reached the bank gives rise to serious doubts and clearly the bank ought not have given recognition to its encashment. In fact, it should have been addressed to the branch manager Gomti Nagar from where it was obtained but the money was fraudulently withdrawn by presenting it in Indira Nagar branch.. The complainant has argued that all this happened in preplanned manner. Report was sought by Additional Chief Judicial Magistrate IInd  on signature of Sri K.D. gaur as present on cheques and FDR and the report dated 28.3.2006 of forensic Science Laboratory Mahanagar was presented, in which it is mentioned  that the person who made specimen signatures marked from S-1 to S-10, A-1 to A-7, A-12 has not written disputed signatures Q-1 to 26, QQ-30 to 46, Q-10A. An argument was placed, and the argument is not baseless that all the 14 cheques by means of which Rs.4,80,800/- have been fraudulently withdrawn and concerned letter which is in respect of withdrawing FDR prematurely, has also been drawn fraudulently and that does not carry signature of Sri Gaur. Forensic Science Lab found that 14 cheques by means of which amount has been withdrawn and  the letter for encashment of and  the FDR on the basis of which premature encashment took place, do not carry signature of Sri K.D. Gaur.”

14.     Learned counsel for the complainant relied upon the decision in  Canara Bank Vs. Canara Sales Corporation and others, (1987) 2 SCC 666, wherein  it has been observed:    

“The principles so settled by the House of Lords was pressed into service before this Court in the above case. This Court held that the principle settled by the House of Lords could not help the bank. The accepted principle that if the signatures on the cheque is genuine, there is a mandate by the customer to the bank to pay was reiterated. It was also held that if an unauthorised person got hold of such a cheque and encashed it, the bank might have had a good defence but, however, if the signatures on the cheque or at least one of the signatures are or is not genuine ,' there is no mandate on the bank to pay and the question of any negligence on the part of the customer, such as leaving the cheque book carelessly so that a third party could easily get hold of it would afford no defence to the bank. This Court distinguished Macmillan's case, observing that if any of the signatures was forged the question of negligence of the customer in between the signature and the presentation of the cheque never arose. The suit was, however, dismissed on another point and that of jurisdiction.

15.     Learned counsel for the complainant further stated though the bank is saying that the bank officials paid the amount in good faith as the cheques were issued in the name of ‘Self’. However, question is that the bank has to prove that the bank has acted in good faith. To support his contention, learned counsel referred to the decision of Hon’ble Supreme Court in Kerala State Cooperative Marketing Federation Vs. State Bank of India and others, (2004) 2 SCC 425, wherein it has been observed that:      

“7.      In the case of Syndicate bank Vs. United Commercial Bank it was held that the appellant Bank had to prove that it had acted in good faith and without negligence. It was held that the fact that the customer had just opened the account and had only one transaction with the bank, namely, the encashment of the cheque, showed that the Bank had not acted in good faith and without negligence.”                          

16.     I have given a  thoughtful consideration to the arguments advanced by learned counsel  for both the parties and have examined the material on record. 

17.     It is true that the report of FSL corroborates the assertion of the complainant that he has not signed the cheques. However, it is seen that the cheques have been encashed fraudulently from 27.12.2004 to 14.7.2005 and the complainant also has been careless to not have noted these withdrawals either by updating the pass books of these accounts or by checking cheque books themselves which were in his custody only. Clearly,  the cheque books were with the complainant and FDR was also with the complainant. Complainant has not averred anything in respect of the fact as to how the cheque leaves were taken away by somebody else from the custody of the complainant. The complainant has also not stated whether he has original FDR. On the contrary, the bank in the written statement has stated the following:

“6.  That the contents of para 8 of the complaint are vehemently denied. It is further stated that the bearer was holding the authority letter with original FDR, which was in sole possession of the complainant as he has not reported the same stolen or misplaced to the answering opposite parties, and without his consent the same could not be provided to the answering opposite parties. The authority letter shows the correct material, which was also accepted by the complainant, and it was not in knowledge of the answering opposite parties earlier.

18.     From the above assertion of the bank, it also comes out that even the FDR was taken out from the custody of the complainant and was presented before the bank alongwith forged application.  All these aspects clearly go on to show that there was  lapse and negligence on the part of the complainant as well. Had it been a case of one or two cheques, the  carelessness on the part of the complainant could have been excusable in the light of the judgment of Canara Bank Vs. Canara Sales Corporation and others (supra) and the full advantage could have been given to the complainant.   It cannot be denied that the basic  responsibility for passing the cheque lies with the bank officials and they are responsible to verify the signature of the issuer. However, the bank officials  deal with large number of cheques daily and they have to verify the signatures only manually. In this regard,  the bank has placed reliance on Bank of Maharashtra Vs. Automotive Engineering Company,  (supra),  wherein it has been observed by the Hon’ble Supreme Court that the bank cannot be held liable merely because it failed to scrutinize the cheque in ultra violet ray lamp.  In the present case, it seems that some insider was also involved in defrauding the complainant. Though orally it was also argued that during those days bound cheque books were not being issued by the bank, rather loose cheques were being issued and it was quite likely that some of the cheques were actually taken out of that bundle which could not be noticed by the receiver of the cheque bundle.  However, this argument is devoid of any merit because it was the duty of the receiver to   check thoroughly whether the bundle contained all the loose cheques.  This was particularly more important when cheques  were not issued in the form of bound cheque  book. Thus, in this case also,  the responsibility lies with the complainant to have checked that he has received all the loose cheques.

19.     The FIR was also lodged in the matter. However, the final report has been filed by the police which has been accepted by the competent court. It is mentioned that no culprits can be traced and there was no hope of making any lead in the matter any further.  As the complainant has not come out with clear facts as to how the FDR or the cheques in question went out from his custody, his negligence cannot be ruled out in the matter. So far as the FDR is concerned, the amount was prematurely withdrawn but the same was deposited in the account of the complainant bearing Account No.26964. Thus, in fact the amount of FDR has not been withdrawn by any outsider but the amount has been credited to the account of the complainant. It is another matter that the amount from Account No. 26964 has later on been withdrawn by the fraudulent cheques. As the FDR was also presented alongwith application for premature payment of FDR and the amount was deposited in the account of the complainant, prima facie there seems to be no deficiency in service on the part of the bank   and particularly when no loss has really occurred to the complainant in this regard.

20.     The State Commission has also mentioned in its order as under:

          “As regards the FDR,  we have already expressed that otherwise also there was no reason to trust the letter as also no reason to make payment against the FDR but the bank’s argument is forceful that proceeds of the FDR was credited to the account of Sri Gaur jointly with others. But the amount was withdrawn from the account by means of forged cheques.

21.     The loss to the complainant is due to fraudulent withdrawal of certain cheques. The complainant has not filed any proof that the complainant has filed any FIR in respect of misplaced/stolen cheques and he has also not explained the circumstances under which these cheques were taken out from his custody, therefore, the deficiency on the part of the bank is to be considered in this light. It is seen that  the following cheques have been withdrawn from the other accounts and not from the account for which these cheques were issued.

22.     From the above details, it is clear that bank has allowed withdrawal of cheques issued for one account from other account which is against the banking norms. Clearly, the bank officials have flouted the rules in this regard. Had the signatures been genuine on these cheques, the withdrawal would be treated as irregular. As the signatures have been denied on these cheques and the cheques have been allowed to be withdrawn from other accounts, therefore, the bank is definitely deficient in its service and is  liable to reimburse the amounts involved in regard to these   five cheques to the complainant. 

23.     So far as the FDR is concerned, it has been prematurely withdrawn and the complainant  has definitely suffered the difference of full maturity amount and the amount actually credited to his account. Though it is not possible to do the exact calculation in this regard, as full details are not available, in my view, as the FDR was to mature on 25.5.2005 and the FDR was prematurely withdrawn on 2.4.2005, an amount of Rs.15,000/- can be treated as the loss in the maturity value of the complainant at the most.

24.     Based on the above discussion, clearly the bank is liable to pay Rs.1,92,000/- for the amount that was wrongly allowed from the other accounts  and Rs.15,000/- for shortage in the maturity amount of the FDR. Thus the bank is liable to pay Rs.2,07,000/- to the complainant  instead of Rs.4,40,800/- allowed by the State Commission. This amount of Rs.2,07,000/- shall be paid to the complainant alongwith 7% p.a. interest from 1.8.2005 till actual payment. 45 days time is granted for compliance  from the date of receipt/service of this order, failing which additional interest @ 3% p.a. shall be payable to the complainant from the date of this order till compliance. Accordingly, the appeal filed by the bank is disposed of.

25.     So far as the appeal filed by the complainant is concerned, the same has been filed for enhancement of compensation. It has been argued by learned counsel for the complainant that the State Commission only provided the relief for refund of the amount fraudulently withdrawn from the accounts of the complainant and has not awarded any compensation for the mental agony and harassment suffered by the complainant.  It is clear that there has been negligence on the part of the complainant as well with regard to fraudulent withdrawal of cheques as the complainant has not explained the circumstances under which the cheques went out from the custody of the complainant and even the original FDR was presented before the bank alongwith alleged forged application for premature withdrawal. The FIR lodged by the complainant has resulted in the final report which clearly stated that no culprit was found and it was unlikely to find any culprit in near future and the final report has also been accepted by competent court. Though these facts clearly speak out the weakness in the complainant’s case, however, it is true that the bank has not followed the norms in allowing payment of at least five cheques as mentioned above. Thus, clearly the complainant has suffered lot of mental agony and harassment due to fraudulent withdrawal of these cheques with the connivance of the bank officials at least for these five cheques. Hence, in these circumstances, I deem it appropriate to allow a compensation of Rs.50,000/- to the complainant to be paid by the OP bank. Accordingly, the FA No. 472 of 2008 filed by the complainant stands partly allowed with above direction to the OP bank. This amount of Rs.50,000/- shall be paid alongwith the awarded amount as ordered in FA No.267 of 2008.