BANK OF BARODA vs PRAKASH J.JHAVERI

THIS appeal is directed against the order dated 17.12.1996 rendered by the learned Consumer Disputes Redressal Forum, Ahmedabad City in Complaint No. 1005 of 1994. The impugned order reads as under : "The complaint against the opponent No. 2 is hereby dismissed. However, the complaint against the opponent No. 1 is allowed and the opponent No. 1 is directed to pay the complainant No. 2 the sum of Rs. 9,100/- with interest at the rate of 18 per cent per annum from the date of the complaint, till the payment is made and to also pay Rs. 400/- as cost. The opponent No. 1 to comply with this order within one month from the date of the receipt of the copy of this order."

THE complainants went before the learned City Forum with the case that Dhampur Sugar Mills Ltd., being opponent No. 2 issued a letter in November, 1993 for the offer of secured redeemable debentures @ 170/- against the original value of Rs. 270/- as a matter of right on account of the fact that such offer was made to a registered share holder. THE offer was accompanied with one detachable warrant which could be exercised for getting allotment of 5 equity shares of Rs. 10/- each at a premium of Rs. 38/- per share on right basis. Accordingly complainant No. 2 was entitled to get 10 bonds. She applied for the same and sent the cheque issued by complainant No. 1 from his account for the sum of Rs. 1,000/-. It was the case of the complainant that though there was sufficient balance in the account of the complainant No. 1, the first opponent Bank being the appellant herein dishonoured the cheque. According to the complainant, it was an act of negligence on the part of the concerned Bank. When the complainant approached the higher Authority of the Bank, the Bank agreed to issue demand draft in the name of opponent No. 2 Company. However, the Bank did not send application alongwith demand draft and the result was that opponent No. 2 returned the demand draft with the application on the ground that time to apply for the debentures had expired long before. This resulted into loss to the complainant on account of negligence on the part of the opponent No. 1 Bank. THE complainants, therefore, prayed for loss of Rs. 13,300/- on account of deficiency in service as aforesaid on the part of the first opponent Bank. The first opponent Bank resisted the complaint inter alia on the ground that complainant No. 2 could not be said to be a consumer and complainant No. 1 did not suffer any loss, when the cheque was returned with endorsement ''refer to drawer'' as ''the signature of the drawer differed'' and that it was on account of complainant No. 1''s default that the cheque was dishonoured on account of variation in the signature. It was the case of the opponent No. 1 that demand draft was issued out of grace. However, since the issue of debentures was closed on 7.1.1994, the application and the demand draft were not accepted by the Company. Under such circumstances, the opponent No. 1 Bank asserted that there was no deficiency in service rendered by the opponent No. 1 Bank. Upon hearing of the matter, the learned City Forum came to the conclusion that although there was sufficient balance in the account of the complainant No. 1, the cheque was returned and the cause of return of the cheque being variation/difference in signature of the drawer would hardly matter. Dealing with other contentions with regard to whether complainant No. 2 could be said to be consumer, the learned City Forum held that she could be said to be a beneficiary of the banking services through medium of cheque issued by complainant No. 1. The learned City Forum accordingly passed the aforesaid order which has been the subject matter of this appeal.

Upon hearing of the submissions of both the parties and upon verifying the statement of accounts it would clearly appear that the original cheque was dishonoured/returned on account of the reasons assigned by the opponent No. 1 Bank. When the same was returned to complainant No. 1, it would appear that he had taken the cheque to the Bank and the Bank upon accepting consideration of the amount of cheque not in the form of same cheque but in the form of some other remittance issued demand draft in favour of the opponent No. 2 Company. However, that was too late in the day since the issue closed on 7.1.1994 and all that exercise had taken place much after that date. The question that has been agitated before this Commission is as to whose burden it was before the learned Forum to establish the reasons for dishonour of the cheque. It could be seen from the impugned order that even the learned Forum has stated that cheque was dishonoured on account of variation in the signature, but the learned Forum has assigned a reason that the cause of dishonour of the cheque would not be available to the banker if there was sufficient balance. This reasoning is apparently contrary to the known banking practice. It is obvious that a cheque is to be honoured only if it is drawn by the person holding the account. For the purpose of identity of person holding account, specimen signatures are maintained by the bankers. This is so because the account cannot be permitted to be operated by a person who is stranger to the account. It would be hazardous if some one other than the account holder operates the account by forging the signature of the account holder. It would, therefore, be appropriate to hold that when the signature differs from signature which is given to the banker, it would be legitimate to return the cheque on that account. As a matter of fact, non-returning of cheque on that count would amount to deficiency in service because it would be part of banking service to see that account is operated by one who is entitled to operate the account. In that view of the matter, the reasoning given by the City Forum is basically not correct. The result is that dishonour of the cheque on the ground of variation in the signature of the drawer would be a legitimate defence against the alleged deficiency in service. Rest of the allegations with regard to issuing of draft and return of draft on account of closure of the issue of debenture at an earlier point of time would be insignificant inasmuch as if the Company did not accept the application and the demand draft by extending similar grace as Bank has extended, the Bank cannot be blamed. The result is that the complainants have failed to establish their case with regard to deficiency in service before the learned City Forum and this complaint will stand dismissed.

HAVING regard to the aforesaid facts of the case, we allow this appeal while setting aside the impugned order, with no order as to costs. Appeal allowed.