Tamil Nadu

StateCommission

FA/158/2012

Govindaraja Srinivasan, Rep. by his POA, N.S. Srinivasan & anr. - Complainant(s)

Versus

The Branch Manager, CITI Bank & anr. - Opp.Party(s)

K. Ganesan,

07 Mar 2018

ORDER

IN THE TAMILNADU STATE CONSUMER DISPUTES REDRESSAL COMMISSION CHENNAI.

 

Present:    HON’BLE DR. JUSTICE.  S. TAMILVANAN                      PRESIDENT

              THIRU.K. BASKARAN                                                       JUDICIAL   MEMBER   

 

F.A.No.158/2012

(Against the order passed in C.C.No.21/2007 dated 08.04.2011 on the file of the District Forum Chennai (South))

 

 WEDNESDAY THE 07^th DAY OF MARCH 2018.

 

                                          

1.   Govindaraja Srinivasan

2.   Mrs. Rajeswari Srinath

 

Represented by their Power Agent

Mr. N.S. Srinivasan Flat No.B.302 Prince Villa

No.15 Rajamannar Street

T. Nagar Chennai – 600 017.                                        Appellants/Complainants

 

                       Vs

 

1.   The Branch Manager

      CITI BANK 164 Anna Salai

      Chennai – 600 002. 

 

2.   The Branch Manager

      CITI Bank N.A.

      2 Club House Road

      Chennai – 600 002.                                                Respondents/Opposite Parties   

 

 

For Appellant/Complainant                  :    M/s. K. Ganesan  Advocate.

For Respondents/Opposite Parties        :    M/s. V.V. Giridhar  Advocate.

             This appeal coming before us for final hearing on 22.02.2018 and on hearing the arguments of both sides and on perusing the material records this Commission made the following:  

 

ORDER

THIRU.K. BASKARAN JUDICIAL MEMBER.

 

                  This appeal is directed under section 15 read with section 17 (1) (a) (ii) of the Consumer Protection Act 1986 against the order of the learned District Consumer Disputes Redresssal Forum Chennai (South) passed in C.C.No.21/2007 dated 08.04.2011 dismissing the complaint.

                 For the sake of convenience and brevity the parties are referred to here as they stood arrayed in the District Forum.      

1.         The factual background culminating in this appeal is as follows;- 

            The unsuccessful complainants having suffered dismissal of their complaint which was filed for the relief of compensation of Rs.50000/- and costs of the complaint have come before this Commission by way of this appeal. The appellants/ complainants had alleged in the complaint that they were operating a NRI account with the opposite parties Bank operated by their power agent and the opposite parties had dishonoured a self-cheque issued by the complainants power agent for Rs.50000/- on 01.12.2006 even though there was sufficient fund in the account of the complainants at the relevant point of time which amounted to deficiency in service and hence the complaint.     

2.        Per contra the opposite parties would resist the complainants claim setting forth the defence that the complainants had not complied with the KYC norms in spite of repeated requests made by the opposite parties as per the guidelines of the Reserve Bank of India and hence they were left with no other option except blocking the complainants account and to diishonour the cheque dated 01.12.2006 issued for Rs.50000/- even though there was sufficient fund in their accounts.  

3.        On considering all the pleadings of the parties and  the materials available on record  the learned District Forum had dismissed the complaint holding that there was no deficiency in service on the part of the opposite parties/banks.  Hence the aggrieved complainants are before us by way of this appeal.

4.         The point for consideration is

             (1)   Whether there was any deficiency in service on the part of the opposite

                     parties?

              (2)   To what relief the complainants are entitled ? 

5.          The following facts are not in dispute between the parties.

             (a)    That the complainants through their power agent opened a NRI account with the 1^st opposite party during March 2006 and was operating the same through their power agent one Mr.N.S. Srinivasan. 

              (b) That during the period between 15.03.2006 and 02.11.2006 the complainants power agent Mr. Srinivasan had issued 16 cheques for and on behalf of the complainants and all the cheques were honoured by the 1^st opposite party bank.   

               (c)  That a self cheque bearing No.693153 dated 01.12.2006 for Rs.50000/- issued by the complainants power agent Mr. Srinvasan which was sent for collection through their bank namely M/s. Bharath Overseas Bank T. Nagar was returned dishonored by the 2^nd opposite party bank with a remark  Account Blocked  and when the agent of the complainants immediately contacted the 1^st opposite party in person and asked the reason for the blocking of the account the 1^st opposite party did not properly respond;

          (d)    There was sufficient fund in the said account of the complainants at the relevant point of time. 

          (e)     That the 1^st opposite party/bank had sent Ex B3 letter in November 2006 to the complainants calling upon them to furnish the documents for the purpose of verifying the identity and for proving the address of the complainants as per the guidelines issued by the Reserve Bank of India by way of circular under Ex B1 dated 29.11.2004.       

         (f)    That the complainants had issued lawyer notice on 05.12.2006 to the opposite parties and there was no reply from the opposite parties.  

6.     From the above it emerges that the cheque dated 01.12.2006 drawn for Rs.50000/- was not honoured by the opposite parties on the ground that the complainants NRI account was blocked by them as the complainants had not furnished the documents required by them as per the guidelines issued by the Reserve Bank of India under  KYC  Norms though there was sufficient fund in the complainants account.  Hence the learned District Forum had recorded a finding that there was no deficiency in service on the part of the opposite parties in as much the complainants had not furnished the documents required to be furnished by the banks in compliance of the guidelines issued by the Reserve Bank of India under Ex B1.   

7.         The learned counsel appearing for the appellant would submit that the KYC – Know Your Customer norms was introduced by the Reserve Bank of India much before Ex B1 circular and under Ex B1 circular dated 29.11.2004 revised guidelines were issued by the Reserve Bank of India to all the commercial banks for the purpose of combating terrorism funding using the commercial banks.  He would further submit that as per the guidelines contained in Ex B1 the commercial banks should obtain all the required documents from the customers who wanted to open new account and as far as the existing account holders are concerned they should be informed to furnish the required documents.  He would submit that admittedly the complainants had opened a new NRI account during March 2006 i.e. much after Ex B1 guidelines issued by the Reserve Bank of India came into existence.  He would further contend that as per Ex B1 all the requirements should be complied with on or before 31.12.2005.  Admittedly the complainants had opened their NRI account much after the date of Ex B1 and also after the deadline date fixed by the Reserve Bank of India for total compliance i.e. 31.12.2005 because the complainants had opened their account admittedly in March 2006.   

8.      Hence he would contend that the opposite parties should have asked the complainants to furnish those documents as stipulated in Ex B1 Reserve Bank of India guidelines at the time of opening of their NRI account in March 2006.  In our case the complainants had opened the said NRI account in March 2006 meaning thereby they had complied with the requirements set out in the KYC norms as per Ex B1 guidelines.   It is pertinent to note that the said account was not only allowed to be opened in March 2006 but also permitted to be operated by the complainants to do transactions through the said account till 02.11.2006.  Hence the presumption is that the complainants had complied with the requirements mentioned in Ex B1 KYC norms.  It is not the case of the opposite parties that subsequent to Ex B1 guidelines the Reserve Bank of India issued some other guidelines and Ex B3 letter was sent to the complainants as per the subsequent guidelines issued by the Reserve Bank of India.  

9.           Hence we are of the view that the defence set out by the opposite parties that they had issued Ex B3 letter to the complainants asking them to furnish documents in support of their identity and address which they failed to furnish constraining the opposite parties to block the account and dishonor the cheque dated 01.12.2006 though there was sufficient funds in their accounts cannot hold water and cannot be accepted. Even assuming that the opposite parties had  due to inadvertence  omitted to require the complainants to furnish those documents as mentioned in Ex B3 letter at the time of opening of the account during March 2006 itself still the act of the opposite parties in blocking their accounts on the ground of failure on the part of the complainants to furnish the documents as required under Ex B3 letter as per the Reserve Bank of India guidelines under Ex B1 cannot be said to be proper action for the following reasons.;- 

               A perusal of Ex B1 Reserve Bank of India guidelines makes it clear (page 3 and 4 vide clause 4)  that when the bank is unable to verify the identity of the customer or to obtain documents  required  as per the risk categorization due to non-cooperation of the customer or non reliability of the data/information furnished to the bank they can close the existing account after giving due notice to the customer explaining the reasons for such a decision and such decision should be taken at a reasonably high level.  This is again reiterated at page No.9 under the heading  KYC for existing accounts  in the following words where the bank is unable to apply appropriate KYC measures due to non-furnishing of information and/or non-cooperation by the customer the bank may consider closing the account or terminating the banking/business relationship  after issuing due notice to the customer explaining the reasons for taking such a decision.   Such decisions need to be taken at a reasonably senior level.  

10.        Admittedly there was no such notice issued by the opposite parties to the complainants explaining the reason for the decision to close the account.  It is surprising to note that there is no whisper regarding the date of blocking of the account of the complainants either in the written version or in the proof affidavit.  Though the closing of account is different from blocking of account still the effect of both would be the same as far as the customers are concerned and hence the opposite parties should have issued a prior notice to the complainants before blocking their account.   It is pertinent and significant to note that even after blocking the account the opposite parties did not think it wise and proper to intimate the factum of such blocking of the accounts to the complainants.  At least had it been done the complainants would not have issued a cheque which stood dishonored.  

11.       In the light of the above discussion held above we are of the considered view that blocking of the complainants account without prior notice and failure to intimate the blocking of the complainants account after the same was blocked and unwarranted dishonor of cheque issued by the complainants agent would squarely amount to deficiency in service.  Hence we cannot approve the findings recorded by the learned District Forum in this regard.

12.      Hence we hold that the acts of commission and omission by the opposite parties as stated supra would certainly amount to deficiency in service on their part of and this point is answered in favour of the appellants.  

13.   Point No.2:- The appellants/complainants had claimed Rs.50000/- as compensation for loss of reputation.  No monetary loss was pleaded in the complaint. The complainants claim that they were humiliated in the midst of staff members of their power agents bank cannot be accepted for the reason that the cheque was not dishonored on the ground of insufficiency of funds but for the reason of blocking the accounts.  Still the complainants might have suffered some mental agony because of the deficiency in service committed by the opposite parties for which the complainants have to be compensated.  Considering these circumstances and the fact that the cheque was a self cheque and it was drawn for Rs.50000/- and not issued to any third party we are of the view that fixing the quantum at Rs.10000/- as compensation for mental agony and costs of Rs.5000/- would be reasonable and meet the ends of justice and we answer this point accordingly.   

14.            In the result the appeal is allowed by setting aside the order of the District Forum Chennai (South) made in C.C.No.21/2007 dated 08.04.2011 and the complaint is partly allowed directing the opposite parties 1 & 2 jointly and severally to pay a sum of Rs.10000/- as compensation for mental agony and Rs.5000/- as costs to the complainants  within 4 weeks from the date of  receipt of copy of this order failing which the amount shall carry interest at the rate of 9% per annum from the date of default till the date of realisation.     

 

 

   K. BASKARAN                                                                       S. TAMILVANAN

JUDICIAL MEMBER.                                                                     PRESIDENT.