BEFORE THE CONSUMER DISPUTES REDRESSAL FORUM,

ERNAKULAM.

Date of filing : 18/02/2011

Date of Order : 27/08/2012

Present :-

Shri. A. Rajesh, President.

Shri. Paul Gomez, Member.

Smt. C.K. Lekhamma, Member.

C.C. No. 96/2011

Between

And

O R D E R

A. Rajesh, President.

1. Briefly stated, the case of the complainant is as follows :-

The complainant is an advocate practicing before the Hon'ble High Court of Kerala. The complainant had a Savings Bank Account with the opposite party with Account No. 01190024989. The complainant issued a cheque drawn on the opposite party to M/s. Sundaram Finance Ltd. towards repayment of car loan. On 16-06-2005, the complainant was informed by the finance company that the cheque was dishonoured by the opposite party. On 17-06-2005, the complainant approached the opposite party and they informed that the cheque was dishonoured stating that 'funds insufficient' in the account. On verification, the complainant came to know that there was a withdrawal of an amount of Rs. 45,000/- each on 30-05-2005. On 18-06-2005, the complainant lodged a complaint with the Sub-Inspector of Police, Town Police Station stating that the signature and the writings in the cheques are different and further stated that the hand writing and signature are that of Mr. Jomon, who was the driver of the complainant. At the instance of the complainant, the police registered Crime No. 165/2005 and the case is pending before the Judicial 1^st class Magistrate Court, Ernakulam, as C.C. No. 2903/2005. On 21-10-2005, the complainant caused a letter to the opposite party demanding to pay the amount as per the cheques. The opposite party sent a reply dated 21-11-2005 stating that the issue is sub-judice and requested the complainant to wait till the decision from the Court. Since, the negligence on the part of the opposite party is crystal clear conviction or otherwise of the accused in the crime has no relevance. Meanwhile, the Circle Inspector of Police, Ernakulam, Town North Circle had submitted a report dated 01-04-2009 in Crime No. 265/2005 as per the order of the Hon'ble High Court of Kerala. In the meantime, the complainant approached the Banking Ombudsman seeking direction against the opposite party to pay the cheque amount with interest. But the Banking Ombudsman by letter dated 08-11-2006 refused to adjudicate the complaint. Aggrieved by the inaction of the Banking Ombudsman, the complainant filed a writ petition before the Hon'ble High Court of Kerala to direct the opposite party to pay an amount of Rs. 88,000/- with interest and compensation of Rs. 10,000/-. Against the order of the learned Single Judge, the complainant filed a Writ Appeal No. 1982/2010 before the Division Bench of the Hon'ble High Court of Kerala. The Hon'ble High Court disposed off the Writ Appeal vide order dated 25-11-2010 observing that it was open to the complainant to approach the appropriate Forum for the redressal of his grievance. The opposite party was duty bound under the Banking Regulations to verify the signature of the complainant with the specimen signature of the complainant maintained by the opposite party when a cheque is presented for payment. The Banking Rules mentioned in the pass book issued by the opposite party stipulates that withdrawal of cash above Rs. 5,000/- should be with pass book. This rule has also been violated by the opposite party. It is also to be noted that as per law cash cheques are not negotiable instruments and no payment can be made to any other person other than the depositor in this case the complainant. There is negligence on the part of the opposite party in not verifying the signature on the cash cheques presented at the counters of the opposite party. The complainant had to suffer mental agony, loss and damage. Thus, the complainant is before us seeking direction against the opposite party to pay an amount of Rs. 88,000/- with 12% p.a. from 30-05-2005 together with compensation of Rs. 50,000/- and Rs. 15,000/- towards costs of the proceedings. This complaint hence.

2. The version of the opposite party is as follows :-

The bank honored two cheques bearing No. 450389 for Rs. 45,000/- and No. 450390 for Rs. 43,000/- on 30-05-2005 and such cheques are honored by the bank in the ordinary course of business. The averment and allegation that the cheques honored by the bank are forged by Mr. Jomon is not within the knowledge of the opposite party or of its officers. During investigation by police, the Chief Manager of the opposite party identified Mr. Jomon who was the driver of the complainant and who received the money from the bank. The said Jomon is a necessary party to the proceedings and the complaint is bad for non-joinder of a necessary party. There is no negligence on the part of the opposite party. The complainant was duty bound to keep the cheque book in safe custody from the reach of third parties. The complainant did not explain in his complaint, how the cheque leaves issued to the complainant by the bank came into the hands of Mr. Jomon. The complainant alone is liable and responsible for the misdeeds of his driver Mr. Jomon. It was the usual practice of the complainant to send his driver Mr. Jomon to encash the complainant's cheques stating that he is unable to climb the steps to the bank. The allegation of the complainant that his cheques are forged is under consideration by the Judicial First Class Magistrate Court, Ernakulam and the matter is thereby sub-judice. The report of the Circle Inspector of police before the Hon'ble High Court of Kerala and the final charge sheet, pending before the Judicial First Class Magistrate Court are not admissible in evidence of the complainant. The decision of the Banking Ombudsman have confirmed by the Hon'ble High Court of Kerala in the Writ petition and the Writ Appeal filed by the complainant. The relevant banking rules and guidelines are truly followed by the bank in payment of the cheques. There is no cause of action against the opposite party as alleged. The complainant is not entitled to get any of the reliefs as claimed.

3. Witness for the complainant was examined as PW1 and Exts. A1 to A11 were marked. The witness for the opposite party was examined as DW1. Heard the counsel for the parties.

4. The points that came up for consideration are as follows :-

1. Whether the complainant is entitled to get Rs. 88,000/- from the opposite party with interest?

2. Whether the opposite party is liable to pay compensation and costs of the proceedings to the complainant?

5. Point No. i. :- The parties are in consensus on the following issues :-

1. Ext. A1 cheque to the tune of Rs. 45,000/- and Ext. A2 cheque to the tune of Rs. 43,000/- dated 30-05-2005 were encashed by the opposite party.

2. The complainant preferred Ext. A3 complaint before the S.I. of police, Town Police Station on 18-06-2005.

3. On the basis of Ext. A3, the police submitted Ext. A5 final report against Mr. Jomon before the Hon'ble Judicial First Class Magistrate Court, Ernakulam under Section 381, 406, 420, 468 and 471 of I.P.C..

4. In the meantime, the complainant caused a letter to the opposite party requesting to pay the amount as per Ext. A1 and A2.

5. The opposite party sent Ext. A6 letter to the complainant stating that the matter is sub-judice.

6. The complainant approached the Banking Ombudsman and vide Ext. A8 order dated 08-11-2006 the Learned Banking Ombudsman rejected the complaint in terms of the clause 19.2 of the Banking Ombudsman Scheme 2002.

7. The complainant approached the Hon'ble High Court of Kerala against Ext. A8 order. The Hon'ble High Court disposed off the Writ Petition.

8. Again, the complainant approached the Division Bench of the Hon'ble High Court against the disposal and the Hon'ble High Court passed Ext. A10 judgment, the direction in the order is as follows :-

“Be that as it may, we see no reason to interfere with the conclusion reached by the learned Judge. It is open to the appellant to approach the appropriate forum for the redressal of his grievance and as and when such an approach is made by the appellant, his case would be examined without being influenced by the observations made in the judgment under appeal.”

6. According to the complainant, the opposite party failed to comply with the Banking Regulations and thereby they are liable to pay the amounts as per Exts. A1 and A2 cheques. The opposite party contended that the matter is sub-judice being pending before the Judicial First Class Magistrate Court, Ernakulam.

7. It is pertinent to note that the opposite party does not have a case that the officials of the opposite party had compared or verified the signature of the complainant in Exts. A1 and A2 cheques with the specimen signatures of the account holder the complainant. It was the bounden duty of the bank to verify the signature in a negotiable instrument in which they failed for which no explanation is forthcoming. Ext. A4 is the statement of the official of the bank, which had been given to the investigating officer regarding the complaint. It is stated that the accused in the crime is the driver of the complainant and the accused approached the bank and accepted the money as per Exts. A1 and A2 though Ext. A4 statement is inadmissible in evidence, the opposite party in their version admitted the same. During evidence, DW1 the Chief Manager of the opposite party deposed that the specimen signature of the complainant is available with the bank which however is not seen verified.

8. The relationship between a bank and its customer in the context of a forged cheque arose for consideration before the Supreme Court of India in the case of Bihta Cooperative Development and Cane Marketing Union Ltd. V. Bank of Bihar, AIR 1967 SC 389. A suit was filed by the Union for the illegal withdrawal of Rs. 11,000 from the bank account. The suit was decreed by the trial Court and affirmed by the High Court. It was then taken before the Supreme Court. The Bank's submission was that if the customer chose to dispense with the ordinary precaution of taking proper care of the cheque book and if due to his own carelessness of negligence a forgery was committed and the amount was withdrawn from the account, the customer must have to bear the loss. The Supreme Court rejected the plea. It held that the accepted principle of law is that if a signature on the cheque is genuine and there is a mandate by the customer to the bank to pay then the bank has to discharge the liability and make payment. Proceeding further, the Court observed that if the signature on the cheque is not genuine then there is no mandate to the bank to pay, but if the bank still makes payment on the basis of such cheque, it cannot raise a defence of the customer's negligence of leaving the cheque book carelessly facilitating its misuse by a third party.

9. The ratio of decision of the above case was approved by the Supreme Court in the case of Canara Bank V. Canara Sales Corporation, AIR 1987 SC 1603 and observed as follows :

“When a cheque duly signed by the customer is presented before a bank with whom he has an account there is a mandate on the bank to pay the amount covered by the cheque. However, if the signature on the cheque is not genuine, there is no mandate on the bank to pay. The bank, when it makes payment on such a cheque, cannot resist the claim of the customer with the defence of negligence on his part such as leaving the cheque book carelessly so that third parties would easily get hold of it. This is because a document in cheque form, on which the customer's name as drawer is forged, is a mere nullity. The bank can succeed only when it establishes adoption or estoppel.”

The Court further held :

“The bank can escape liability only if it can establish knowledge to the customer of the forgery in the cheques. Inaction for continuously long period cannot by itself afford a satisfactory ground for the bank to escape the liability.”

10. Point No. ii. :- The primary grievance of the complainant having been satisfactorily met, we do not presume costs or compensation is called for.

11. In view of the law settled by the Hon'ble Supreme Court, we are of the firm view that there is negligence on the part of the opposite party in encashing Exts. A1 and A2 cheques without taking due precaution. So, we are of the considered opinion that the opposite party is legally liable to pay the amount as per Exts. A1 and A2 to the complainant with interest at the rate of 12% p.a. from the date of complaint till realisation. Ordered accordingly.

The order shall be complied with, within a period of one month from the date of receipt of a copy of this order.

Pronounced in the open Forum on this the 27^th day of August 2012

Sd/- A. Rajesh, President.

Sd/- Paul Gomez, Member.

Sd/- C.K. Lekhamma, Member.

Forwarded/By Order,

Senior Superintendent.

A P P E N D I X

Complainant's Exhibits :-

Opposite party's Exhibits :: Nil

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