DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, PALAKKAD

Dated this the 7^th day of March, 2022

Present    :  Sri.Vinay Menon V.,  President

                :  Smt.Vidya A., Member                                                   Date of Filing: 01/10/2019 

     CC/234/2019

Ruth Rufus T.K.

“Saivarada”, Krishna Gardens,

Olavakkode, Palakkad

(By Adv.P.Sreeprakash)                                               -           Complainant

                                                                                      Vs

Branch Manager,

Bank of Baroda,

Olavakkode Branch,

Olavakkode, Palakkad                                                -           Opposite party           

(By Adv.T.P.George)

O R D E R 

By Sri. Vinay Menon V.,  President

1. The complainant is aggrieved by the honouring of a cheque issued by her and grieves that the said cheque ought to have been dishonoured with the endorsement             “insufficient fund”. She is further aggrieved by the lien exercised by the opposite party in her account,  which account,  as per the complainant is her pension account.
2. The complainant claims to be an account holder of the opposite party. On 5/7/2019 she received a text message in her mobile stating that a sum of Rs.13,50,000/- is debited from her account, by way of clearing of a cheque issued allegedly in favour of Malappuram District Credit and Marketing Ltd., The complainant further alleges that the said cheque was initially issued to a third party who might have executed that cheque in favour of the Malappuram District Credit & Marketing Ltd. The said cheque was issued as security, a transaction that was since settled.  The complainant cries foul and seeks reversal of the debit entry of Rs.13,50,000/- and restoration of the recovery effected till date of filing of complaint and for incidental reliefs.
3. The opposite party entered appearance, filed version contenting that a cheque for Rs.13.5 lakhs duly signed and issued by the complainant in favour of M/s.MDC&MCS came up for clearing and    by a glitch of system the cheque was honoured. The snag was detected subsequently and corrected. Thereafter the complainant was directed to effect repayment of the said amount credited  but the complainant failed to do so.  Hence, a lien under section 171 of the Contract Act was marked over the account of the complainant. The aforesaid being the facts, the bank claimed to be in the clear and sought for dismissal of the complaint.  
4. The crux of the case relates to   Sections  72 & 171 of the Indian Contract Act  and its utility thereof to the bank in the facts and circumstances of the case.  In view of this, this Commission passed an order on 30/12/2021 as follows:

“Both parties represented. For hearing on the question whether the bank can exercise lien over the amounts in the account of the complainant in the facts and circumstances of the case”.

5.         Section 72 of Indian Contract Act reads as follows:

Section 72 : Liability of person to whom money is paid, or thing delivered, by mistake or under coercion. -  A person to whom money has  been paid, or anything delivered, by mistake or under coercion, must repay or return it.

The Indian situation where a bank pays money by mistake is clearly stated in Tannan’s Banking : Law & Practice in India (21^st Edition) (reprint 2006).  In Chapter 20 (Interference by Third  Parties -  Court Injunctions) under the heading “Money Paid by Mistake” and under the sub heading “When Money Received Malafide”  the situation is explained as follows:

“money received by the recipient being fully conscious that he is receiving it as a result of the mistake of the bank, and not against his entitlement, constitutes a malafide act on the part  of the recipient and such money is recoverable”

In  Mahabir Kishore & Ors. V/s. State of M.P. (1989(4) SCC1), the Hon’ble Supreme Court of India, in paragraph 11, speaks  regarding unjust enrichment as follows:

“The principle of unjust enrichment requires : firstly, that the defendant has been ‘enriched’ by the receipt of a ‘benefit’ ; secondly, that the enrichment is ‘at the expense of the plaintiff’, and thirdly ; that the retention of the enrichment be unjust.  This justifies restitution.  Enrichment may take the form of direct advantage to the recipient’s wealth such as by the receipt of money, or indirect one, for instance, where inevitable expense has been saved”.

6.         Hence the principle of law is that if the non-repayment  of the amount credited to complainant’s account by mistake on the part of the Bank is illegal if the complainant received any benefits thereof, as contemplated in Mahabir Kishore Case and  the complainant will have to regurgitate the benefits.  The Commission’s duty  is to dissect  the conduct of the complainant so as to  ascertain whether the conduct can be termed as bonafide or malafide one. 

7.         From a reading of the pleadings in the complaint as well as written version we can arrive at the following conclusions.

            a) The complainant had issued a cheque favouring some person.

            b) The said cheque was presented on 29/03/2019 and there was not enough funds in

                the account for honouring  the said cheque. 

            c) The cheque was re-presented on 30/04/2019 and even though there was no   .

                  sufficient funds, the bank debited the amount from the complainant’s account.

            d) Complaint claim is that this cheque was issued to a stranger by way of security,  a

                 transaction which was subsequently settled.

            e) The said cheque was honoured even though there was no sufficient fund in the

                 account of the complainant by way of a technical snag in the system of the bank.

8.         The important dates for consideration as availed from the pleadings and documents  are tabulated as hereunder.     

9.         The complainant avers that the said cheque was issued to a third party as a security and that transaction for which cheque was issued stood settled. It was by misusing the said cheque, the presentation was made. We are unable to digest this contention for the following reasons.

1.         Had the complainant settled her transaction with the stranger, the cheque would have been returned to the complainant herself.  Here the cheque was in the custody of the society.  Hence, we are unable to accept the contention of the complainant that the transaction as between the complainant and the stranger was a settled one.

2.         Whatever be the status of the transaction between the complainant and the third party, fact remains that issuance of a cheque without intenting to honour it  constitutes an offense under section 138 of the Negotiable Instrument Act 1881. When the cheque was initially dishonoured on 29/3/2019, the complainant was aware of the insufficiency of funds. Thereafter, without taking any steps, she permitted re-presentation of the cheque once more on 30/4/2019 knowing fully well the cheque will be dishonoured.  Pleadings in para 2, lines 2 to 4  are  to the effect that the bank ought to have dishonoured the cheque.  This shows a clear intention to commit an offence under section 138 of Negotiable Instruments Act as against the  drawee of the cheque. But unfortunately (for the OP) the cheque was honoured.

3.         The cheque was initially dishonoured on 29/3/2019 for want of Rs.13,50,000/-. When the cheque  was presented and subsequently  cleared on 30/4/2019, it cannot be for an entirely  different amount but only for Rs.13,50,000/-  for which it was dishonoured on  29/3/2019.   A conclusion that can be arrived at by a perusal of the facts and circumstances, as can be made out by the pleadings, is that the complainant was having clear knowledge of the cheque being subject to dishonor once on 29/03/2019 itself.

4.         No action whatsoever is seen taken  by the complainant after 29/3/2019 -  date of first dishonor. If the case of the complainant was bonafide, there is no doubt, the complainant would have taken steps to protect Rs.13,50,000/-, which amount is by no means a paltry sum. 

10.       The communication issued by the bank dated 13/6/2019 to the complainant and produced by the complainant along with the memorandum of complaint shows that the complainant had tried to stop payment in the event the cheque in issue in this case was presented.    The aforesaid pleadings does not bring out a case where a cheque was issued by a third party for an amount which was unknown to the complainant. What actions were taken by the complainant on 29/3/2019 is not stated. It was only after 30/4/2019 i.e. on 11/6/2019  that a communication is seen issued by the complainant to the opposite party bank.   

11.       The cheque was cleared by a glitch in the system of the opposite party bank. A glitch in the system can only be termed as a mistake and never as a deficiency in service. When the complainant is the beneficiary of such a mistake, the complainant is entitled to make good the loss suffered by the bank.  The complainant cannot be heard to say that it was incumbent on the part of the bank to dishonor the cheque and return it as such a contention would only constitute the declaration to commit an illegal act.  We hold that the complainant has not come forward with a clean hand.

12.       The judgments  produced by  the  opposite party   passed  by the Hon’ble High Court of Tamilnadu  (M/s.Bank of Baroda, Namakkal Branch V/s. P.Mohan,  Second Appeal No.94/2015), the Hon’ble High Court of Mumbai (Bank of Maharashtra V/s. United Construction Co., AIR 1985 Bom 432) and the Hon’ble Supreme Court of India in Syndicate Bank V/s. Vijayakumar and Ors.  AIR 1992 SC 1066 )  also uphold the right of the bank to exercise its right under Section 171 in cases similar to the one in this case. 

13.       In view of the aforesaid findings,  we hold that the complainant is bound by law to make good the loss suffered by the bank. There is no illegality on the part of opposite party bank in marking lien on the account.  But no lien would subsist on the pension being credited in the said account. 

We therefore hold that there is no deficiency in service on the part of the opposite party bank. The complaint stands dismissed.

                                    Pronounced in the open court on this the 7^th  day of March, 2022.

Sd/-

                                                                              Vinay Menon V

                                                 President

   Sd/-

Vidya.A

                    Member