B. Sitharam Reddy vs Manager, Dena Bank & Ors

Rekha Gupta, J.

The present revision petition has been filed against the judgment dated 15.12.2017 of the Telangana State Consumer Disputes Redressal

Commission, Hyderabad (‘the State Commission’) in First Appeal no. 1 of 2014.

The facts of the case as per the petitioner/ complainant are that the petitioner was the account holder of the respondent no.1/ opposite party no.1

bank with account bearing No.041010027128. He had deposited an amount of Rs.4,00,000/- by way of cheque in his account with / respondent no. 1/

Opposite Party No.1 Bank. After deposit of the cheque the petitioner received an SMS on 02.08.2012 on his mobile regarding crediting of the amount.

Later on he received a telephone call from respondent No.1 bank who informed him that the said cheque had bounced. When he wanted to collect the

bounced cheque he was told that the cheque was misplaced by the bank.

After making several requests, the petitioner received a reply stating that ‘the bank is not personally liable and responsible for the amount covered in

cheque’ and they also advised the complainant to initiate the proceedings under N.I Act on the basis of ‘image scan copy’ of the cheque

and the return memo. Accordingly when the petitioner filed the complaint in the Court of Hon’ble XI Metropolitan Magistrate, Hyderabad it was

returned on the ground that the ‘Original cheque should be filed’. Subsequently, the petitioner approached Banking ‘Ombudsman’ where

the respondent No.1 submitted that the cheque was misplaced due to bonafide mistake on their part. Conciliation meeting was held with officials of

respondent banks and the Ombudsman passed an order stating that, “we do not accept the contention that a certified copy of the cheque and

cheque return memo has no evidence value in judicial proceedings†and the complaint was accordingly closed. Hence, the complaint was filed with

the following prayer:

(a) Direct the opposite parties to pay sum of Rs.4,00,000/- towards the cheque amount to the complainant for the loss incurred by the complainant in

misplacement of original cheque and return memo;

(b) Direct the opposite parties to pay the complainant a sum of Rs.6,00,000/- towards the damages for mental trauma and business loss and personal

reputation;

(c ) To award the cost of the complaint; and

(d) Any such other relief or reliefs to which the complainant is entitled which also be granted.

The respondents resisted the case and contended that the complaint may be dismissed for non-joinder of the drawer of the cheque who was a

necessary party; and also for mis-joinder of regional officials of the banks who had superannuated. They admitted that the cheque was misplaced by

them but contented that the petitioner was taking undue advantage of a small human error. They submitted that the petitioner should have initiated

legal proceedings against the drawer of the cheque and also stated that the petitioner had opened an account on 31.07.2012, and the very next date he

deposited the cheque of Rs.4,00,000/-which was dishonoured for ‘insufficient funds’.

The bank immediately sent a stop payment instruction to the UCO Bank to avoid encashment of cheque by any third party. The respondents also

obtained the image scan copy of the cheque and duplicate cheque return memo from the UCO Bank and requested the petitioner to take appropriate

action against the drawer of the cheque based on them. The petitioner refused to do so, even though the respondents informed the petitioner that they

would extend their full support and help to him in prosecuting the case under section 138 of Negotiable Instruments Act and the bank was prepared to

give evidence in any court about the misplacement of the cheque.

The drawer of the cheque Mr Y Raju did not have any amount more than Rs.700/- in his account, at any point of time and also that excepting for

the dishonoured cheque transaction petitioner’s account also had no other transactions. The respondents contended that the petitioner did not

sustain any loss due to the acts of the bank and hence claimed that they were not liable for any damages. As the complaint was filed in a frivolous and

vexatious manner, only to take undue advantage of a small human error, they prayed that the complaint may be dismissed.

The District Consumer Disputes Redressal Commission, Ranga Reddy (‘the District Forum’) vide its order dated 09.11.2013 while allowing

the complaint passed the following order:

“In the result, the complaint is allowed directing the opposite parties 1 and 2 to pay an amount of Rs.4,00,000/- along with 6% interest from

01.08.2012 till realisation. They are also directed to pay an amount of Rs.5,000/- as costs of the complaint. The complaint is dismissed against OP no.

3â€​.

Aggrieved by the order of the District Forum, both the petitioner/ complainant and OP nos.1 and 2 filed an appeal no.01 of 2014 and appeal no. 251

of 2015 before the State Commission. The State Commission while allowing the First Appeal 01 of 2014 filed by respondent nos.1 and 2 modified the

order of the District Forum. The State Commission dismissed the appeal no. 251 of 2015 filed by the petitioner/ complainant. The State Commission in

their order dated 15.12.2017 observed as under:

“14. The learned counsel for the opposite parties would contend that the misplacement of the dishonoured cheque is a bonafide mistake on their

part and in spite of best efforts they could not trace out the same. The opposite parties have informed the misplacement of the dishonoured cheque

through their letter dated 18.08.2012 by enclosing the image copy of the cheque and duplicate cheque returned memo and debit advise and basing on

the same the complainant can take action against the drawer of the cheque. Admittedly, the cheque was dishonoured due to insufficient funds. It is not

the case of the complainant that there was sufficient funds and that the opposite party no.1 lost the cheque before sending the said cheque for

clearance due to which the complainant sustained loss. Ex.B2 is the statement of account of Yelamuni Raju for the period 01.04.2012 to 17.10.2012

which discloses that between the aid period Mr Raju did not have more than Rs.700/- at any point of time and available balance in his account is only

Rs.136/-. Therefore, when admittedly there is no sufficient balance in the account of Mr Raju there is no obligation on the part of the Bank to pay the

amount covered by the cheque unless otherwise the amount is due from the Bank.

Now the question arises as to whether the District Consumer Forum, Ranga Reddy justified in directing the opposite parties no.1 and 2 to pay the

misplaced cheque amount Rs.4,00,000/- with interest of 6% per annum with effect from 01.08.2012 till realization.

The learned counsel for the opposite parties relied on the judgment of the Supreme Court in Citibank N.A. Vs Geekay Agropack (P) Ltd.,

reported in SCC 2008 (15) Page 102 the Bank may be liable for damages for not returning the cheques as it amounts to deficiency in service but there

cannot be any liability to pay the cheque amount. To the same effect, is a view taken by the Hon’ble National Commission in State Bank of

Patiala v. Rajender Lal & Anr., reported in IV (2003) CPJ 53 (NC).

The Hon’ble National Commission in the case of Manoj Khurana Vs. Rajender Banchor & Anr., reported in I (2007) CPJ 234 (NC) submitted

that though there was deficiency in service on the part of the appellant / opponent-Bank it cannot be made liable to pay entire amount of cheque.

According to him though the appellant/opponent-Bank committed deficiency in service neglecting to take care to encash the cheque by getting

clearance from the drawee bank, complainant/respondent would claim compensation and not amount of cheque. In the case of the Manoj Khurana

Vs. Rajender Banchor & Anr.(Supra) it is held by the Hon'ble Members of the National Commission that in such case bank can be burdened with

compensation, but cannot be made liable to pay entire cheque amount. But it appears the District Forum without considering this admitted facts legal

position committed error in directing the appellant / opponent - Bank to pay an amount of misplaced cheque with interest. Therefore, such erroneous

order cannot be sustained.

From the aforesaid judgments, it is clear that while the opposite parties bank could be made liable for deficiency in service, no liability can be

fastened to it for the cheque amount. Therefore, the order under challenge directing the opposite parties-Bank to pay the cheque amount with interest

is set aside. However, a sum of Rs.25,000/- is awarded to the complainant as compensation for deficiency in service on the part of the opposite

parties Bank. In the result, the appeal F.A.No.1 of 2014 is allowed by modifying the order of the District Forum by setting aside the order directing the

opposite parties no.1 and 2-Bank to pay the cheque amount with interest. However, we direct the opposite parties no.1 and 2 to pay compensation of

Rs.25,000/- to the complainant together with costs of Rs.5,000/-. Time for compliance four weeks. F.A.No.251 of 2015 filed by the complainant is

dismissed.â€​

Hence, the present revision petition.

We have heard the learned counsel for the petitioner. He contended that the State Commission has erred in allowing the appeal preferred by the

opposite parties and ignoring the petitioner and depriving him of his legal right to file a case under section 138 of the Negotiable Instruments Act, 1881

against the drawer, because the respondent nos. 1 and 2 had failed to return the original cheque and the District Forum had correctly awarded not only

compensation but also ordered the respondents to pay an amount of Rs.4.00 lakh, i.e., the value of cheque along with 6% interest. To support his

arguments he has relied upon the judgment of the National Commission in the case of M/s ICICI Bank Ltd., vs Shri Sonnegowda and Anr decided on

16.04.2012. On-going through the facts of the case, it is seen that the facts do not apply to the case on hand. In the said case the petitioner was

advised to initiate proceedings under section 138 of the said Act as the Bank had returned the cheque and returned the memo, hence, due to the delay

in receiving the information and the documents, the petitioner could not take action under the Negotiable Instruments Act, 1881.

In the instant case, it is an admitted fact that the cheque deposited by the petitioner on 01.08.2012 for Rs.4.00 lakh drawn on UCO Bank,

Hyderabad had been deposited with the respondent on 01.08.2012. The said cheque was dishonoured on 02.08.2012 due to insufficient funds. The

cheque was misplaced at the service Branch of respondent no.1 and after making serious efforts to trace the same, the Bank had orally informed the

petitioner on 07.08.2012 about the dishonouring of the said cheque. Thereafter the Bank had lodged a complaint with the UCO Bank requesting them

to stop payment of the said cheque amount to avoid encashment of the same by a third party. The Bank has also obtained the image copy of the said

cheque and duplicate cheque return memo from UCO Bank on 09.08.2012, informed the petitioner/ complainant and requested to take appropriate

action against the drawer of the cheque basing on the image copy of the cheque and duplicate cheque returned memo. However, the petitioner/

complainant refused to do the same. He then lodged a complaint with the Banking’s Ombudsman. The Banking Ombudsman vide its order dated

06.11.2012 while dismissing the complaint observed as under:

“In the conciliation meeting held on 26.10.2012 both the parties were given a personal hearing. Considering the submission made by the

complainant, the bank’s version and the submissions made by both the parties, we hold that a cheque dishonoured due to ‘insufficient funds’

is an instrument without value although it might have been received by the payee for valuable consideration. The payee does not have recourse to the

collecting bank or the drawee Bank for a cheque dishonoured on ground of ‘insufficient funds’. He would need to recover his dues from the

issuer of the cheque. We do not accept the contention that a certified copy of the cheque and cheque return memo has no evidence value in judicial

proceedings. The complaint is accordingly, closed under clause 13 (d) of the Banking Ombudsman Scheme 2006. The Bank is however, advised to

facilitate the complainant to initiate legal proceedings against the issuer of the dishonoured cheque at their own cost if so desired by the complainant, in

writing.â€​

Section 138 of the Negotiable Instruments Act, 1881 lays down the procedure to be followed for dishonouring of cheque for in sufficiency of

funds, the petitioner has nowhere mentioned that he had followed the said laid down procedure.

The Hon’ble Supreme Court in the case of Citibank N A vs Geekay Agropack (P) Ltd., and Anr decided on 24.04.2008 in a similar case has

held as under:

The appeal filed by Geekay for not getting adequate compensation for the total amount of loss incurred by it is misconceived. For the recovery of

total amount of loss, it is open for the appellant Geekay to file a civil suit before the appropriate Court which, we are informed has already been filed.

The National Commission could have awarded compensation only for the deficiency of service only. The said compensation has been awarded by the

National Commission. Therefore, there is no reason to interfere in the appeal filed by Geekay also. In the result, all these appeals are dismissed. No

order as to costs insofar as proceedings before this Court are concerned.

The National Commission in the case of State Bank of Patiala vs Rajender La and Anr., decided on 13.05.2003 in an identical case has held as

under:

In sub-para (d) of para 4 of the revision petition, it is admitted that respondent No. 2 filed its written version before the District Forum on 8.10.1999.

This sub-para also notices the plea taken by respondent No. 2 which has been noticed in above para 5 of the order of District Forum. Obviously,

immediately after filing of written version by respondent No. 2, the respondent No. 1 must have come to know that the cheque in question was

dishonoured on ground of insufficiency of funds in the account of V.K. Arora, drawer.

It was, thus, legally open to respondent No. 1 to have initiated after 8.10.1999, civil/criminal action based on the said cheque against the drawer

thereof. In this backdrop, the petitioner could not have been made to pay Rs. 75,000/- being the entire amount of the cheque with interest by the

District Forum/State Commission. However, we hasten to add that as there was deficiency in service on petitioner's part in not informing the

respondent No. 1 before filing of complaint about dishonour of cheque on 19.5.1999 and its having been lost in transit, it cannot escape liability for

payment of reasonable compensation to respondent No. 1 which we assess at Rs. 15,000/-. Therefore, order under challenge being legally erroneous

deserves to be modified.

The National Commission in the case of Manoj Khurana vs Rajender Banchor and Anr., decided on 16.01.2007 has held as under:

It is admitted case of the parties that cheques in question all dated 10.10.2003 were deposited by the petitioner with respondent No. 2 on 31.3.2004

for collection and those were sent by respondent No. 2 to their branch at Durg on 7.4.2004 and the Durg branch returned the cheques on 13.4.2004 on

ground of six months validity period having expired. State Commission had, thus, found respondent No. 2 bank deficient in service for delay in

despatching the cheques to their branch at Durg on 7.4.2004 and awarded compensation of Rs. 5,000. To be only noted that amount of Rs. 61,000 as

claimed by the petitioner also included amount of Rs. 50,000 of the cheques in question. This Commission has taken the view in State Bank of Patiala

v. Rajender Lal and Anr. IV (2003) CPJ 53 (NC), and other cases rendered subsequently that a bank on ground of deficiency in service in such like

matters can be burdened with compensation but it cannot be made to pay the entire amount of the cheque. In view of said facts, there is no scope for

increase of compensation beyond Rs. 5,000. Accordingly, revision petition is dismissed.

The above-mentioned citations are applicable to the case on hand and we agree with the State Commission that in view of the above, the petitioner

is not entitled to claim the amount of cheque from the respondents and have correctly awarded compensation for the deficiency in losing the cheque.

Further the only contention of the petitioner is that the original cheque and return memo were not given to him and he was prevented from taking

up the matter under the Negotiable Instruments Act, 1881. As per section 61 of the Indian Evidence Act, 1872, the contents of the documents may be

proved either by primary or by secondary evidence. Primary evidence means the document itself produced for the inspection of the court. Secondary

evidence includes certified copies given under the provisions contained. Certified copies made from the original mechanical process which in

themselves insure the accuracy of the copy and copies compared with such copies and copies made from or compared with the original. Hence, the

petitioner could have filed a case under the Negotiable Instruments Act, as per the Section 61 read with sections 62 and 65 of Indian Evidence Act,

1872 with the secondary evidence provided to him by the Bank.

In view of the above, we find that no jurisdictional or legal error or misrepresentation of facts have been shown to us which calls for interference

in the exercise of powers under Section 21 (b) of Act. The order of the State Commission does not call for any interference nor does it suffer from

any infirmity or erroneous exercise of jurisdiction or material irregularity. Thus, the present revision petition is dismissed.