COMPLAINT FILED ON: 14.10.2010

DISPOSED ON:8.12.2011

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT BANGALORE (URBAN)

8^th DAY OF DECEMBER-2011

       PRESENT:- SRI. B.S.REDDY                PRESIDENT                        

                         SMT. M. YASHODHAMMA         MEMBER    

                         SRI.A.MUNIYAPPA                   MEMBER

O R D E R

SRI. B.S.REDDY, PRESIDENT

This is a complaint filed u/s. 12 of the C.P. Act of 1986 seeking direction against the Opposite Parties (herein after called as OPs) to compensate the complainant a sum of Rs.5,34,456/- for the deficiency of service and unfair trade practices and causing inconvenience and mental tensions and agony to the complainant and failure to honour the professional banking commitments and to pay interest at 24% on the allegation of deficiency in service on the part of the OPs.

2. The case of the complainant to be stated in brief is that:-

The complainant has S.B.Account No.140601010001052 with the OP2. The complainant has issued cheque bearing No.816030 dt.29^th April 2010 for a sum of Rs.5,339/- drawn in favour of Commissioner, Bruhat Bangalore Mahanagara Palike towards payment of property tax in respect of an immovable property owned by her. The cheque was presented to OP Bank by the payee through its banker in the inter-bank clearing on 8^th May 2010. At the time the cheque was presented, there was a credit balance of Rs.4,57,020/- in the account of the complainant, however OP dishonored the cheque and returned giving reason as “Insufficient Funds”. The complainant was shocked and taken back to know that her cheque was dishonored and returned giving reason as “INSUFFICIENT FUNDS”. OPs reckless, irresponsible act of dishonoring the cheque issued by the complainant has defamed her, caused her disrepute, discredited her and damaged her enormously. The complainant has suffered grave stigma. Apart from damages caused to the complainant who has built up a strong reputation and creditworthiness, the BBMP has informed her that in future no cheque issued by her would be accepted. The complainant was entitled to 10% rebate in property tax by making the payment before 30^th April 2010. Due to reckless and irresponsible action of dishonoring of the cheque, the complainant is not entitled for 10% rebate in property tax. The complainant has paid property tax through demand draft dt.03.06.2010 without any rebate. The complainant suffered hardship, inconvenience and mental agony and the act of OPs have defamed her, caused her disrepute, discredited her and damaged her enormously. The legal notice was issued demanding to pay compensation of Rs.5,34,456/-, the same was duly served on both the OPs. OPs have given untenable reply. Hence the complaint.

3.   On appearance OPs filed version contending that the complaint is not maintainable, the same is liable to be dismissed in limine. It is stated that there was failure on the part of the OP to send the Memo as “INSUFFICIENT FUNDS” for reasons beyond the control, yet they find that failure on the part of the OP to fulfill their contractual obligation resulted in the rendering service defectively not come within the meaning of Section-2(1)(G) of the Consumer Protection Act. ON verification of the records of the OP in the computer system it is found that on 08.05.2010, the cheque was listed by IDBI Bank Ltd, in the MICR Clearing and the same has marked for return with reason “Any other reason-instrument not received” whereas it has come to the notice that in the memo generated, the reason is mentioned as “INSUFFICIENT FUNDS”. Since no copy of the return memo is retained at the Service Branch as the same is available in the system, Service Branch was under the impression that the memo must have been interchanged with some other cheque. But it is not so. It is therefore due to some mess up in the software, the mistake must have happened. The service branch is the central point for presentation of outward clearing cheques and also for receiving of inward clearing cheques on behalf of 84 branches of the Bank in Bangalore City. Till 21^st February 2010, all inward clearing cheques which range between 9000 and 13000 per day received by the service branch were sent to the respective branches by the Service branch for passing. But after 22^nd February 2010, to improve the customer service in the branches and that they should be relieved from the job of passing clearing cheques at their end, the Bank has centralized the payment of all these inward clearing cheques at Service Branch, Bangalore. The Service Branch has evolved a software system by which all the cheques received by the Bangalore branches are segregated branch-wise and a group of branches clustered on 18 different clearing zones. This is to ensure demarcation and also to make the payment system simplified as the Zones are allocated to different supervising staff. The Canara Bank Cheque processing Centre, where the clearing cheques are processed, provides soft copy of the cheques drawn on different branches of the Bank along with physical cheques. The cheque details uploaded through the soft copy in the system and demark it zone-wise and the physical cheques of respective branches of the Zone are handed over to the supervising staff. The staff enters the names of the beneficiary and date of the cheques in the system from the physical cheques whereas the cheque numbers and amount gets uploaded automatically when the softcopy received from Canara Bank Cheque processing Centre is uploaded in the system. At certain times, physical cheques uploaded in the system gets wrongly mixed up with other bank cheques. In such cases though there is listing of cheque but due to non-availability of physical cheque, Service Branch will not be able to honour the said cheque. Therefore Service Branch notify the presenting bankers in such cases that the cheque in question is not received and re-claim the amount from them. These banks, later when they get the cheque from other banks which wrongly received it, present the same again and claim the amount from the bank.

The BTM layout branch in which the complainant is holding account is grouped under clearing zone No.15. On 08.05.2010 the cheque No.816030 which was listed in the BTM clearing zone may not have been received by the concerned staff. He must have therefore marked that the cheque as not received and this is evident from the Zone record available. But, they presume that the cheque must have been wrongly grouped up with some other Zone cheques and the staff must have entered this cheque in their Zone, to a wrong account number in which balance to cover the cheque was not available and thereby returned the same with the reason “INSUFFICIENT BALANCE”. But later in the evening, when the said Zone was to be closed, the difference must have appeared as the cheque was already listed in some other Zone (in the instance case BTM Layout Zone) and the concerned staff must have deleted the item in their clearing Zone then. Therefore for these reasons there in no other record at this office for return of he cheque for “INSUFFICIENT BALANCE”. This is the apparent possibility that the service Branch visualized. The allegation that the complainant has suffered grave stigma and has suffered damages and that BBMP informed her that in future no cheque issued by her would be accepted is not correct and there was no any deficiency in service on the part of the OP Bank. Hence it is prayed to dismiss the complaint with exemplary costs.

4.   In order to substantiate the complaint averments, complainant filed affidavit evidence. The Senior Manager of OP1 Bank filed affidavit evidence in support of the defence version.

5.   Both the parties filed written arguments.

6.   Arguments on both sides heard.

7.   In view of the above said facts the points now that arise for our consideration in this complaint are as under:

Point No.1:-Whether the complainant has proved the deficiency in service on the part of the OPs?

           Point No.2:-If so, whether the complainant is  

                             entitled for the relief’s now claimed?

           Point No.3:-To What order?

8.   We record our findings on the above points are:

    Point No.1:-Affirmative

            Point No.2:-Affirmative in part

           Point No.3:-As per final order.

R E A S O N S

9. The undisputed facts are that the complainant is having his S.B.Account No.140601010001052 with OP2 Bank and he had issued cheque bearing No.816030dt.29.04.2010 for a sum of Rs.5,339/- drawn in favour of Commissioner, Bruhat Bangalore Mahanagara Palike (BBMP) towards payment of property tax in respect of her property. The said cheque was presented to OP-Bank by the payee through its Banker in the inter-bank clearing on 08.05.2010. The complainant claims that, OP dishonored the cheque on the ground “INSUFFICIENT FUNDS”. The returned instrument invoice dt.08.05.2010 issued by the Ops in favour of the IDBI Bank is marked as document No.3. In fact the complainant had credit balance of Rs.4,57,020/- in her account as per the statement of account document No.2. In spite of having sufficient funds in the account OP-Bank has dishonored the cheque issued by the complainant giving reason as “INSUFFICIENT FUNDS”. Thus the act of Ops in dishonoured the cheque is reckless, irresponsible and the same is stated to have defamed her, caused her disrepute, discredited her and damaged her enormously and she has suffered hardship, inconvenience and mental agony.

            The complainant was entitled to 10% rebate in property tax by making the payment before 30^th April 2010. due to reckless and irresponsible action of dishonouring of the cheque, the complainant is not entitled for 10% rebate in property tax. Ultimately complainant has paid rebateless property tax to BBMP by purchasing a demand draft dt.03.06.2010. The legal notice was issued to both the Ops demanding to pay compensation of Rs.5,34,456/-. Ops issued reply notice denying the liability and deficiency in service.

10.In the reply notice dt.05.07.2010 it is stated by Ops that the cheque in question was listed by IDBI Bank, bankers to the BBMP, in the clearing schedule on 08.05.2010 but since the physical cheque was not enclosed to the schedule, they have reported non-receipt of the cheque and claimed back the amount from IDBI Bank as per the clearing House Rules. In their claim to the IDBI Bank, the reason for claim was indicated as “ANY OTHER REASON” denoting the non-receipt of the cheque. Their records do not show the return of the cheque as for insufficient balance. They therefore feel that the collecting bankers must have erred in attaching the memo sent by them. In all the cases where physical cheques are reported as not received, the presenting Bankers would obtain Image Copy of the processed cheques and claim the amount from the Drawee Banks. They do not understand how the IDBI Bank able to get he original cheque and also that why the cheque proceeds were not obtained from them either by presenting the original cheque or image copy. While expressing their deep concern and regret over the return of the cheque, they reiterate that they have not returned the cheque for the reason of “INSUFFICIENT FUNDS”.

11. We have gone through document No.3 returned instrument advise as per that document the cheque instrument for Rs.5,339/- presented is returned for the reason “INSUFFICIENT FUNDS”. Document No.2 the Statement of Account of the complainant reveals that she had sufficient funds to an extent of Rs.4,57,020/- in her account as on the date of presentation of the said cheque.

12.The learned counsel for the OP contended that in fact the said cheque was not returned as “INSUFFICIENT FUNDS”. In the Statement of objection it is stated that cheque was returned as “INSUFFICIENT FUNDS” under the circumstances which is not a mater of concern for the complainant. It is stated that though there was failure on the part of the OP to send the Memo as “INSUFFICIENT FUNDS” for reasons beyond the control, yet they find that failure on the part of OPs to fulfill their contractual obligation resulted in the rendering service defectively not come within the meaning of Section2(1)(g) of the Consumer Protection Act. On verification of the records of the OP in the computer system it is found that on 08.05.2010, the cheque was listed by IDBI Bank Ltd., in the MICR clearing and the same has marked for return with reason “Any other reason-instrument not received” whereas it has come to the notice now that in the memo generated the reason is mentioned as “INSUFFICIENT FUNDS”. Since no copy of the return memo is retained at the service Branch as the same is available in the system, Service Branch was under the impression that the memo must have been interchanged with some other cheque. But it is not so. It is therefore due to some mess up in the software, the mistake must have happened. The following may be one possibility. The Service Branch is the central point for presentation of outward clearing cheques and also for receiving of inward clearing cheques on behalf of 84 branches of the Bank in Bangalore City. Till 21^st February 2010, all inward clearing cheques which range between 9000 and 13000 per day received by the Service Branch were sent to the respective branches by the Service Branch for passing. But after 22^nd February 2010, to improve the customer service in the branches and that they should be relieved from the job of passing clearing cheques at their end, the Bank has centralized the payment of all these inward clearing cheques at Service Branch, Bangalore. The Service Branch has evolved a software system by which all the cheques received by the Bangalore branches are segregated branch-wise and a group of branches clustered on 18 different clearing zones. This is to ensure demarcation and also to make the payment system simplified as the Zones are allocated to different supervising staff. The Canara Bank Cheque processing Centre, where the clearing cheques are processed, provides soft copy of the cheques drawn on different branches of the bank along with physical cheques. The cheque details uploaded through the soft copy in the system and demark it zone-wise and the physical cheques of respective branches of the Zone are handed over to the supervising staff. The staff enters the names of the beneficiary and date of the cheques in the system from the physical cheques whereas the cheque numbers and amount gets uploaded automatically when the softcopy received from Canara Bank Cheque processing Centre is uploaded in the system. At certain times, physical cheques uploaded in the system gets wrongly mixed up with other bank cheques through there is listing of cheque but due to non-availability of physical cheque, Service Branch will not be able to honour the said cheque. Therefore Service Branch notifies the presenting bankers in such cases that the cheque in question is not received and re-claim the amount form them. These banks, later when they get the cheque from other banks which wrongly received it, present the same again and claim the amount from the bank.

            At para-5 of the version it is pleaded OP2 Branch in which the complainant is holding account is grouped under Clearing Zone No.15. On 08.05.2010 the cheque No.816030 which was listed in the BTM Clearing Zone may not have been received by the concerned staff. He must have therefore marked that the cheque as not received and this is evident from the Zone record available. But, they presume that the cheque must have been wrongly grouped with some other Zone cheques and the staff must have entered this cheque in their Zone, to a wrong account number in which balance to cover the cheque was not available and thereby returned the same with the reason “INSUFFICIENT FUNDS”. But later in the evening, when the said Zone was to be closed, the difference must have appeared as the cheque was already listed in some other Zone (in the instance case BTM Layout Zone) and the concerned staff must have deleted the item in their clearing Zone then. Therefore for these reasons there in no other record at this office for return of the cheque for “INSUFFICIENT BALANCE”. This is the apparent possibility that the service Branch visualized.

13. After perusing the defence version and reply notice of the Ops it becomes clear that as per the reply notice IDBI Bank bankers to the BBMP in the clearing schedule, the physical cheque was not enclosed to the schedule, on account of the same, the reason for claiming was indicated as that “any other reason-non receipt of the cheque” their records does not show the return of the cheque as for “Insufficient Balance”. In the defence version, it is stated that on verification of the records of the OP, in the computer system it is found that the chque was listed by IDBI Bank related in the MICR clearing and the same as marked for return with the reason ‘any other reason –instrument not received’ whereas it has come to the notice that in the Memo generated, the reason is mentioned as “INSUFFICIENT FUNDS”. Therefore, it is stated that due to some Mess-up in the software, the mistake must have happened. At Para-5 of the version it is pleaded that the cheque must have been wrongly grouped with some other zone cheques and the staff must have entered this cheque in their zone, to a wrong account number in which balance to cover the cheque was not available and thereby returned the same with reason “INSUFFICIENT FUNDS”.

It appears that Ops goes on changing their defence to avoid their liability about the dishonouring of the cheque. Ops are not serious about the dishonouring of the cheque of a customer in spite of sufficient balance in the accounts. Ops have taken it very casual regarding dishonour of the cheque, as if there is no any responsibility on the banks in discharging their duties towards the customers. We are unable to accept that the act of Ops in dishonouring the cheque as “INSUFFICIENT FUNDS” in spite of sufficient balance in the account does not amounts to deficiency in service. Mere throwing blame on the staff and software system used will not absolve the responsibility of the Ops. It is their gross negligence in discharging its duties towards the complainant while dishonouring the cheque in question. Under these circumstances, we are of the view that the complainant proved deficiency in service on the part of the Ops in dishonouring the cheque as “INSUFFICIENT FUNDS” in spite of having sufficient balance in her account.

14.The complainant produced copy of the judgment of the Hon’ble National Consumer Disputes Redressal Commission in Original Peition No.284/1997 Bihar State Sugar Corporation Ltd V/s State Bank of India, D.D.No.05.12.2006 wherein it was observed as under.

      “For the time being if we assume that the insurance policy covers the damage to the molasses and if the cheque for the premium is dishonoured, the Insurance Company would not reimburse the complainant. That means a wrongful dishonour o the cheque would result in loss to the Petitioner for more than Rs.25,00,000/-. Keeping this aspect in view, in our view, it would be just and reasonable to award punitive damages (as provided under Section 14(1)(d) of the Consumer Protection Act, 1986) for a sum of Rs.5,00,000/- so that the banks in general would keep in mind the statutory norms before dishonouring the cheque of verifying properly, particularly, cheque of reputed bodies, including the Government and semi-Government bodies”.

            The complainant has claimed an amount of Rs.5,34,456/- as compensation. The cheque for Rs.5,339/- was issued by the complainant towards payment of property tax. Due to dishonour of the cheque the complainant could not get the rebate of 10% of the tax as the payment was not made before 30^th April 2010. She paid entire property tax of Rs.5,339/- through D.D.dt.03.06.2010. Considering the mental agony, hardship and inconvenience suffered by the complainant on account of dishonour of the cheque, we are of the view that ends of justice would be met by awarding an amount of Rs.25,000/- as compensation and litigation cost of Rs.3,000/-. The amount of Rs.5,34,456/- claimed by the complainant towards compensation is at exaggerated claim. Accordingly we proceed to pass the following:

O R D E R

The complaint filed by the complainant allowed in part.  

OPs are directed to pay an amount of Rs.25,000/- as compensation and litigation cost of Rs.3,000/-to the complainant.

This order is to be complied within four weeks from the date of this order.

        Send copy of this order to both the parties free of costs.

(Dictated to the Stenographer and typed in the computer and transcribed by her, verified and corrected, and then pronounced in the Open Court by us on this the 8^th day of December-2011.)

MEMBER                            MEMBER                          PRESIDENT

Cs.