Jain Irrigation System Ltd vs State Bank of India

THE complainant approached this Commission alleging deficiency in the service of the opposite party and claimed credit of Rs. 95,245/- to their account with interest. THE facts on the basis of which this consumer dispute arise are that the Jain Irrigation System Ltd. has been maintaining cash credit facility account with the opposite party viz. the State Bank of India D.N. Road Branch, Bombay bearing Account No. 4035. Now the said account had been transferred to the Industrial Finance Branch. THE complainant had instructed the opposite party to honour cheques signed by Mr. R.B. Jain amongst other people who has been designated as the authorised signatories, being the Managing Director of the complainant On or around 2.11.89 complainant drew an Account Payee Cheque bearing No. 397145 for Rs.35,245/- with opposite party and in favour or Rajashree Cement in respect of their outstanding amounts. THE said cheque was crossed account payee only and the words ''or payee'' were struck out. THE said cheque was sent to Solapur Branch of the Rajashree Cement by Registered Post with acknowledgement due. Sometimes in the month of Janurary 1990 it is learnt that, instead of Rs. 35245/- larger amount of Rs. 95245/- was debited from the accounts of the complainant. According to the complainant, it happened due to the negligence of the opposite party. Further enquiry made by the complainant revealed that said cheque was misplaced/lost in transit and was forged and altered materially making the figure from Rs. 35245/- to Rs. 95245/-. THE complainant further alleged that after several personal meetings and correspondence, the opposite party disclaimed its liability and explained away its gross negligence by a letter dated 26.6.90 which is at Ex. A. By the said letter, the OP informed that expert opinion confirmed that the said cheque was physically altered to suit the withdrawal of excess amount from complainant''s account. According to complainant, the opposite party was negligent in its service and despite the persuation of the complainant no credit was given for the excess withdrawal of amount from its account.

THE opposite party filed its written version dated 30.121991 denying the liability of loss caused to complainant as a result of negligence. THE opposite party also raised the technical points of jurisdiction, non-joinder of proper and necessary party and claimed that the matter pertains to the jurisdiction of the Civil Court. We have heard Dr. Chandrachud, Advocate for the complainant and Shri K. A. Shah, Advocate for the opposite party .We have also perused the relevant documents placed on record. Considering the allega-tions and the reasons for denial, the following points arise for our consideration. (1) Whether this Commission has jurisdiction to decide this complaint ? (2) Whether the complainant suffers for non-joinder of Bank of India as a proper and necessary party? (3) Whether there has been deficiency in the service of the opposite party? (4) Whether the complainant is entitled for the reliefs claimed in the complaint.

In view of the provisions of Sections 2(o) of the Consumer Protection Act and various pronouncements made by the National Commission any deficiency in the service of Banks due to its negligent acts provides a cause of action to a consumer of Bank to invoke the jurisdiction of the Consumer For as to decide a consumer dispute. In this complaint, complainant who is admittedly a consumer of services rendered by opposite party has alleged deficiency in the services stating the glaring negligent act of making over payment to a third party on the basis of a forged cheque which came to be forged during transit. The contention raised by the opposite party that the Bank of India is a proper and necessary party and in absence of joining it as a party, the complaint cannot be decided is not relevant and correct. In the complaint, the complainant has alleged that it had hired the banking services of the opposite party and found it deficient on account of the incidents of negligence mentioned in the complaint. Obviously, no allegations are made as regards the deficiency in the service of Bank of India and, therefore, question of its joining proper and necessary party does not arise. Thus we find that this complaint neither suffers for want of jurisdiction and for not joining necessary party.

THE facts that the complainant had a cash credit facility account with the opposite party and that Shri R.B. Jain was operating the account on behalf of the complainant and that Rs. 95245/- has been debited from complainant''s account instead of Rs. 35,245/- on the basis of the forged cheque are not in dispute. THE complainant has convincingly estabilished and demonstrated that the said cheque issued to Rajashree Cement was only for Rs. 35,245/-. THErefore, debit of Rs. 95245/- from complainant''s account is nothing but an act of gross negligence on the part of the opposite party. If an account-holder is put to financial loss due to the negligence in the service of the opposite party, it is for the Bank to compensate the loss of the account holder if it is established that such a loss has been caused due to the deficiency in the service of the Bank. It has been alleged by the complainant that despite several personal meetings and correspondence made by the complainant, the loss caused to the complainant has not been made good by the opposite party. It is clearly found from a letter of the opposite party dated 26.6,90 at Ex. A that the Bank had come to know from the expert opinion that the said cheque was physically altered and was forged. In Ex. A the opposite party has clearly stated as under:- "Hand writing expert has confirmed physical alterations in the said cheque with the use of different microtip sketch pen having black colour ink after physically erasing the letters in some of the full words or the part of the words and sum of the figures, written in the date and column of the original writings written on the said cheque No. 397145 dated 17.11.89 for the said Rs. 95245/- with the aid of sharp surgical blade/razor, safety blade or sharp pointed instrument."

Being aware of this expert opinion it was the duty of the opposite party to make good and loss of the complainant as the negligence was established on the part of opposite party not to take any action to restore the balance in complainant''s account which was reduced due to wrong payment. In any case complainant never advised opposite party to debit his account for Rs. 95245/-. In view of this situation it does not lie in the mouth of the opposite party to say that the complainant should suffered for want of necessary party and for want of cause of action. The negligence on the part of Bank had come for judicial scrutiny in the case of Canara Bank v. Canara Sales Corporation and Others. The Supreme Court of India (AIR 1987 SC 1603) has held "whenever a cheque perporting to be by a customer is presented before a Bank, it carries a mandate to the Bank to pay. If a cheque is forged, there is no such mandate. The Bank can escape liability only if it can establish knowledge to the customer of the forgery in the cheque. Inaction for a continuously long period cannot by itself afford satisfactory grounds for the bank to escape the liability."

Para 24 of the aforesaid case clearly explains the principles of law regarding this aspect. The complainant has claimed continued inaction on the part of the opposite party. It is therefore, clearly proves the allegations of the complainant that there has been continuous deficiency on the part of the opposite party while rendering the service to the customer within the meaning of Section 2(g) of the Consumer Protection Act, 1986. It has been argued by Shri Shah, the learned Advocate of the opposite party that the tenor of forgery could not be visible to the naked eye when the cheque in question was sent for collection. Shri Shah also, brought to our notice the clearing rules of the cheques between the Banks when sent for collection. The clearing rules are meant for a system of clearing the cheques when sent for collection. That by itself does not absolve the opposite party from its liability to make good the loss of the account holder, when the bank found an expert opinion that the cheque in question was a forged one. Hence, we allow this complaint as the complainant has proved his allegation successfully. Needless to say that the opposite party was negligent in its service as a result of which the complainant suffered a wrong debit and also suffered loss of interest thereon.

IN view of the discussions made above, we clearly find that the complainant is entitled to receive the compensation as the loss has been suffered due to the negligence on the part of opposite party. We therefore, pass the following order:- ORDER The complaint is allowed and the opposite party is directed to credit forthwith Rs. 95245/- with interest at the usual bank rate in account of the complainant maintained with the opposite parties Industrial Finance Branch. The interest be calculated at the usual bank rate from 21.11.1989 till realisation. The opposite party is directed to pay to the complainant an amount of Rs. 1000/- as costs. Complaint allowed with costs.