These two Revision Petitions, under Section 21(b) of the Consumer Protection Act, 1986 (for short “the Act”) have been preferred by State Bank of India (for short “the Bank”) and one of its Customers’ against order, dated 19.02.2009, passed by the State Consumer Disputes Redressal Commission, Uttar Pradesh (for short “the State Commission”) in Appeal Nos. 2450/SC/04 & 127/SC/05.  The State Commission has affirmed order dated 30.11.2004 passed by the District Consumer Disputes Redressal Forum, Gorakhpur (for short “the District Forum”) in CC No 429/2002, whereby the District Forum had directed the Bank to refund a sum of Rs.2,71,800/- to the Complainant, being the amount credited in his savings Bank account from time to time.  However, the quantum of the amount, so payable, has been reduced by the State Commission.

2.      The Complainant was maintaining a Savings Bank Account No. 01190025039 with the Bank, at its Branch at Railway Colony, Gorakhpur, UP, in his name to be operated singly.  He used to deposit in this account his pensionary benefits.  A pass book and cheque book were issued to him as per the normal practice.  In the month of December 2000, the Complainant informed the Bank that a sum of `2,71,800/- had been fraudulently withdrawn from his account between the period from 09.03.2000 to 07.12.2000, by means of nineteen cheques. He claimed that during this period he was staying in Delhi with his son due to an accident and wedding.  It was alleged that the cheques used for withdrawal of the said amount were not issued from the cheque book supplied to him nor did he sign any of these cheques. A complaint, alleging cheating, was also lodged by him with the police. Investigations conducted by the police and the Bank revealed involvement of the Branch Manager and one Vishal Srivastava.  It transpired that two cheque books for his account were issued to one Krishan Kant Sharma.  The first cheque book was issued on an application and the second one on the requisition slip of the first cheque book.  However, the requisition application in relation to the first cheque book was not found in the records of the Bank.

3.      All his efforts to get the said amount reimbursed were unsuccessful.  Therefore, alleging deficiency in service, he filed complaint against the Bank, praying for a direction to the Bank to pay to him a sum of Rs.2,71,960/-, the amount withdrawn from his account along with Rs.50,000/- and Rs.3,500/- as compensation for harassment and as costs respectively.

4.      On being served, the Bank contested the claim by filing its written version, which was one of the total denial.  It was, however, stated that according to the expert opinion, obtained by the Bank, signatures on the cheques in question tallied with the specimen signatures of the Complainant with the Bank. The allegation of any deficiency in service on the part of the Bank was refuted.

5.      On consideration of the material on record, the District Forum came to the conclusion that since, despite direction, the Bank had failed to produce the application on which the first cheque book was issued, there was deficiency in rendering service on the part of the Bank.  Accordingly, the Bank was directed to pay a sum of Rs.2,71,800/- to the Complainant along with interest @ 9% p.a. from the date of filing of the complaint and costs.

6.      Being aggrieved, the Bank filed appeal before the State Commission.  Rejecting the plea of the Bank that the Complaint was not maintainable as its adjudication required recording of voluminous evidence and that the report of the handwriting expert, obtained by the police, could not be relied upon without examining the handwriting expert, the State Commission reiterated that issuing cheque book without a requisition slip to an unauthorized person, which resulted in cheating and forgery, amounted to deficiency in service.  Nevertheless, the State Commission was of the view that since one cheque in the sum of `14,500/- had not been sent to the Forensic Science Laboratory, the said amount was not payable to the Complainant. The principal amount directed to be paid by the District Forum (Rs.2,71,800/-) was thus, reduced by Rs.14,500/-. Being dissatisfied, both the parties are before us in these Revision Petitions.

7.      Having heard Learned Counsel for the parties, we are of the opinion that the Revision Petition filed by the Bank is without any substance and deserves to be dismissed and at the same time, the Revision Petition preferred by the Complainant merits acceptance.

8.      The main thrust of the submission made by Mr. S.L. Gupta, Ld. Counsel appearing for the Bank, was that proceedings under the Act being summary in nature, the subject dispute could not be adjudicated upon merely on evidence by way of Affidavits. A charge of forgery and cheating has to be proved by leading voluminous oral and documentary evidence, which would include cross-examination of the Experts, who had examined the relevant documents, which is beyond the scope of proceedings under the Act. It was also contended that the delay of almost nine months from the date of first withdrawal, in intimating the Bank about the said withdrawals clearly shows that the Complainant was in cahoots with Krishan Kant Sharma, who had obtained the cheque books and used them for making withdrawals from the account, as his agent.

9.      We are convinced that since the factum of issue of cheque book to the said Krishan Kant Sharma, on a requisition letter is not in dispute, deficiency in rendering service by the Bank to its customer, i.e. the Complainant is writ large and, therefore, the plea of insufficiency of evidence, does not hold any water.  It is manifest that the first cheque book was issued in complete violation of the guidelines/circular issued by the Reserve Bank of India.  Paragraph 5.4 of the “Master Circular on Maintenance of Deposit Accounts – UCBs” (updated up to June 30, 2006), which reads as follows:

“Fresh cheque books should be issued only against production of duly signed requisition slips from previous cheque book issued to the party.  In case the cheque book is issued against a requisition letter, the drawer should be asked to come personally to the bank or cheque book should be sent to him under registered post directly without being delivered to the bearer.  Loose cheques should be issued to account holder only when they come personally with a requisition letter and on production of passbooks.” (Emphasis supplied)

10.    Had the Bank followed the said guidelines, which it was bound to follow, the cheque book, used for the aforesaid purpose, would not fallen in wrong hands, and the entire controversy could be avoided.  Furthermore, admittedly, even the requisition letter is not traceable from the records of the Bank.  Under the circumstances, the Bank cannot be absolved of its obligation towards one of its Customers’, namely, the Complainant. The relationship of a Banker and customer, as a civil obligation, in the Tort Law has been lucidly stated by the Privy Council in Tai Hing Cotton Mill Ltd. v. Liu Chong Bank, (1985) 2 All ER 947, in the following words:

“The business of banking is the business not of the customer but of the bank. They offer a service, which is to honour their customer’s cheques when drawn on an account in credit or within an agreed overdraft limit. If they pay out on cheques which are not his, they are acting outside their mandate and cannot plead his authority in justification of their debit to his account.  This is a risk of the service which it is their business to offer.”

11.    In so far as the question of alleged silence on the part of the Complainant is concerned, it does not perse shows his acquiescence, more so when apparently he does not stand to gain from the modus oparandi adopted for withdrawal of amounts. He could very well withdraw any amount from the said account by issuing cheque from the cheque book issued to him. His averment that he was held up in Delhi, because of the accident is not seriously contested, Even otherwise, it is well settled that mere inaction on the part of a customer for long period of time in not discovering fraud or irregularity, in absence of knowledge, cannot by itself be a defence to defeat the customer in an action for loss. (See: Canara Bank V. Canara Sales Corporation & Ors. (1987) 2 SCC 666.)

12.    For the aforegoing reasons, in so far as concurrent finding of the Fora below to the effect that there was deficiency in rendering service by the Bank to the Complainant is concerned, we do not find any illegality or material irregularity in the said finding, warranting interference in our Revisional jurisdiction.

13.    As regards the Revision Petition filed by the Complainant, we are of the view that withdrawal of a sum of Rs.14,500/- by using a cheque from the same cheque book, obtained fraudulently, being a part of the same transaction, the State Commission erred in deducting the said amount from the amount directed to be paid by the District Forum solely on the ground that the cheque was not sent to FSL.  The order of the State Commission to that extent is reversed and that of the District Forum is restored.   

14.    We are, however, of the opinion that since the amounts in question were parked by the Complainant in a Savings Bank Account, the interest awarded by the State Commission is on the higher side.  Therefore, we modify the direction with regard to the rate of interest to the extent that the Complainant would be entitled to receive interest at the rate(s) applicable to a Savings Bank Account, during the relevant period(s), from the date of filing of the Complaint till realization of Rs.2,71,800/-.  In case the Complainant has withdrawn a sum of  Rs.1,00,000/- in terms of order dated 28.05.2009, interest on the said amount shall not be payable after the date of its withdrawal.  The balance amount due in terms of this order shall be paid to the Complainant within six weeks from the date of receipt of a copy of this order, failing which the interest payable in terms of this order would be @ 9% per annum.  It will be open to the Bank to withdraw the balance amount lying in deposit with the District Forum, with accrued interest, if any.

15.    Both the Revision Petitions stand disposed of in the above terms. However, in the facts and circumstances of the case, there will no order as to costs.                                             

Ar/Yd