Punjab National Bank vs MAJ.A.P.LAWALE

WHETHER the contravention of the categoric instructions of the Reserve Bank of India pertaining to the mandatory purchase at par of all out-station cheques upto Rs. 2,500/- only would be a deficiency in the service of banking? This has ultimately come to be the crucial question in this set of two connected appeals i.e. First Appeal Nos. 248 and 242 of 1992, directed against the same order of the District Forum, Ambala.

SINCE the other ancillary issues now pale into insignificance, the facts deserve primal notice with reference to the aforesaid issue alone. Maj. A.P. Lawale is a retired serviceman who had maintained a long-standing personal account with Punjab National Bank at its branch in Sector 6, Panchkula. According to him on the 28th of December, 1991, he presented his cheque dated the 28th of December, 1991 for Rs. 2,200/-only which was duly purchased by the Bank. On the basis of the said purchase, the consumer-complainant issued his cheque dated the 31st of December, 1991 for Rs. 4,500/- in favour of Dr. Sudarshan Kumar, his landlord for payment of the rent due. However, this cheque was dishonoured by the Bank on the ground of insufficient funds to the great annoyance and hardship of the complainant. He was served with a somewhat offensive communication from Dr. Sudarshan Kumar aforesaid casting as persons on his conduct as an officer and pointing out that such dis-honour was also a criminal offence. The complainant then approached the Bank and was surprised to learn that his cheque dated the 28th of December, 1991 for Rs. 2,200/- purchased by the Bank on the 28th of December, 1991 was not credited to his account and for that reason, the cheque issued by him in favour of his landlord was dis-honoured. Alleging a grave deficiency in the service on the part of the Bank which had affected his reputation and his credibility as a distinguished soldier and also rendered him perhaps liable for criminal action, he claimed Rs. 25,000/- as compensation. In the written statement filed by the Bank, it was admitted that the complainant had presented the cheque for Rs. 2,200/- on the 28th of December, 1991 but the plea was taken that this was for collection. The further case set-up was that the complainant was a partner in another account maintained by a firm in the name and style of M/s. EXSEN which enjoyed loan limits from the Bank. It was alleged that the said loan account was running highly irregularly and keeping this in view, the credit for the cheque was not given to him because no cheque was discounted in the account which showed any adverse features. It as claimed that the Bank would have a lien over the cheque presented to them by the complainant. It was then the case that when the complainant explained his plight to the Manager of the Bank on the 9th of January, 1992, the Bank thereafter gave him the credit of Rs. 2,190/- to his account. It was alleged that the complaint was frivolous in nature.

The pleading material to the issue is the replication of the complainant in which he firmly took up the plea that as per the mandatory instructions of the Reserve Bank of India (hereinafter referred to as R.B.I), all out-station cheques upto Rs. 2500/- when presented have to be given instant credit provided the account is in operation for a minimum period of six months and there is no history of the cheques given for collection having been dishonoured. It was pointed out that in accordance there with earlier as many as eight cheques betwixt the period of the 6th of January, 1990 to the 11th of November, 1991, had been therefore purchased at par by the bank. It was highlighted that this facility of out-station cheques as per the RBI instructions was a right of the customer which had to be necessarily extended to him. It was further pointed out that in this context, the question of any other account of a firm of which he was partner had no relevance whatsoever and apart from this, the allegations on this score by the Bank were controverted. The bank chose to rebut the stand of the complainant in its reply to the replication in the following terms :- "4. R.B.I, circular states that the discounting of cheque is not a matter of right and is in fact, the discretion of the Branch Manager."

It was admitted that Major Lawale had been maintaining his personal account with the branch office for the last about ten years and there had never been any occasion when he lodged any complaint with the Bank.

IN support of his case the complainant himself stepped into the witness box and reiterated his averments in the complaint. He also tendered into evidence Ext. P.1to P.9, the authority of which was not challenged on behalf of the Bank. In rebuttal the Bank examined Shri A.S. Bains, its Assistant Manager and tendered into evidence Ext. R.l and R. 2. Significantly it also placed on record the consolidated instructions issued by the Reserve Bank of India and circulated by the headquarters of the Punjab National Bank vide communication dated the 28th of August, 1989 to all its offices and branches. In his evidence, Shri Bains stated that on the date when the cheque for Rs. 2,200/- was deposited, the same was not purchased because there was no express request to this effect by the complainant. It was however, admitted that subsequently on the request of the complainant, the Bank had purchased the said cheque on the 9th of January, 1992 and given credit for the same. In his cross-examination, he admitted that the bank purchases cheques on verbal requests as well.

THE District Forum on a close appraisal of all the materials before it recorded as many as six clear-cut reasons that the Bank had purchased the cheque on the 28th of December, 1991 for Rs. 2200/- but nevertheless it failed to give credit therefor to the complainant, resulting in dishonouring of his cheque in favour of his landlord. Holding this as a patent deficiency in the service which the Bank was bound to render to its clients it opined that no amount of compensation is sufficient for the loss of reputation and credibility of the complainant who is a retired Major but granted a somewhat modest sum of Rs. 2,500/- as compensation. Aggrieved by the said order, both the complainant and the Bank have come up by way of separate appeals. This order will govern both of them. As would be somewhat manifest the whole issue herein turns around the R.B.I, instructions. As noticed earlier, these were put squarely in issue in the pleadings and the Bank not only placed reliance upon them before the District Forum but has also annexed them to their appeal vide Annexure A-4. Since the whole controversy revolves around these mandatory instructions, it is apt to notice the relevant parts thereof in extenso :- "TO ALL OFFICES xx xx xx xx 1. All outstation cheques upto Rs. 2500/- in each instance, bank drafts, dividend warrants, payment orders, banker''s cheques, refund orders issued by companies in respect of share application money but exclusing bills, tendered by the individual account holders for credit of their accounts be purchased at par but after charging normal collection charges including out of pocket expenses. Immediate credit may also be afforded against salary cheques issued by Govt. Department. Govt. Authorities and Public Sector Undertakings, without waiting for advice for clearance, provided the cheque does not exceed Rs. 2,500/-.

The above facility be allowed in accounts which are properly introduced and the conduct of the account is to the satisfaction of the incumbent incharge. 3. Postage and usual collection charges including out of pocket expenses incurred are to be recovered in full. 4. Immediate credit may be extended to more than one cheque at a time within the overall limit of Rs. 2,500/-. 5. The facility will not be available when cheques purchased from an account-holder have been returned for want of funds during any of the preceding three months. 6. The facility should not be permitted in case of minor and non-resident accounts. 7. The facility is to be allowed as a matter of course without customers having to claim it.

Government had advised that they would view seriously any lapse on the part of the bank in not implementing the instructions relating to immediate credit of outstation instruments upto Rs. 2,500/- which have been issued as a measure of better customer service. Government had also desired that responsibility/accountability be squarely placed on the Zonal Managers/Regional Managers of the bank and action should be taken against branch officers wherever there is a deliberate disobedience of the instructions in this regard. In view of the above, all concerned are requested to ensure that the above instructions are implemented without fail. It is also to be noted that any lapse in this regard will be viewed seriously and necessary action will be initiated to ensure implementation of Government instructions in the matter. Sd/- N.K. Jain Assistant. General. Manager" In construing and applying the aforesaid instructions what has to be kept in the fore-ground is the fact that reliance thereon has been placed by the Bank itself and the relevant document was placed on the record both before the District Forum and also in appeal by the Bank vide Annexure. A. 4. The whole attempt of the Bank was to bring its case within the four corners of the said instructions. Before us, it was not in dispute that as a matter of law the Reserve Bank of India is entitled to issue instructions and guidelines which are binding upon the Nationalised Banks. Instructions in this regard are not new but an Annexure A-4 indicates, have been issued from time to time for well nigh six years now beginning with the 14th of October, 1986. The present mandatory instructions are on the Bank''s own showing a consolidation of these instructions. Therefore, they are well within the ken of both the bankers as also the consumer-customers. As is manifest from the penultimate part thereof, these have been issued as a measure of better customer service and their enforceability has been mandated by the Government of India itself directing that any large therefrom would be viewed seriously and responsibility will be placed on the Bank Manager wherever there is disobedience of these categoric directions. Particularly in the context of the Nationalised Banks they have been labelled as Government instructions whose implementation is to be ensured.

WITHIN this jurisdiction, it is unnecessary to labour the point in view of the earlier decision in I (1992) CPJ 135, Punjab National Bank, Faridabad v. M/s. Ashok Pipe Udyog. Therein also a somewhat analogous instruction though at a much lower pedestal with regard to the levy of service charges in respect of inland letters of credit by the Public Sector Banks had come up for consideration. It was held therein that there could possibly be nothing secret or confidential with regard to such instructions and indeed the customers of Public Sector Banks were entitled to know and the Public Sector banks were bound thereby and also to disclose the same in their dealing inter-se. Apart from principle on the basis of this ratio also the said instructions have therefore to be held as binding in the banker-consumer relationship.

ONCE it is held as above, it is somewhat elementary to record that "banking" is squarely a ''service'' under the Act and any fault, imperfection, shortcoming or inadequacy with regard to such service which has to be maintained either under any law for the time being in force or has been undertaken to be performed in pursuance of a contract or otherwise would amount to a deficiency in such service. As already indicated, these instructions are issued by the Reserve Bank of India which is authorised by law to do so, or in any case has been undertaken to be performed otherwise in relation to the service of Banking. Any infraction of these instructions would therefore clearly come within the ambit of the consumer jurisdiction. In the light of the aforesaid discussion, the answer to the question posed at the out-set is rendered in the affirmative and it is held that the contravention of the categoric instructions of the Reserve Bank of India pertaining inter-alia to the mandatory purchase at par of all out-station cheques upto Rs. 2,500/- would be a deficiency in service rendered by the Nationalised Banks.

In view of the aforesaid holding it virtually follows that the consumer-complainant has a cast iron case. There is no dispute that the complainant''s account with the Bank was properly introduced and on their own showing, the said account had functioned without any complainant or dis-satisfaction for well nigh ten years. It is somewhat plain that the aforesaid instructions have been necessitated by the long and inordinate delays in the collection of out-station cheques by nationalised Banks. To curb the evil, it has been therefore, directed that as regards the cheques of smaller amounts i.e. upto Rs. 2,500/-, they are to be credited forthwith to the individual accounts after making the necessary charges without waiting for their collection. The benefit is directly intended to be conferred to the consumers in this class. The instructions make no mention of any exception to the rule in connection with any other bank account of the depositor. What is most material is para 7 thereof which emphatically says that the facility is to be allowed as a matter of course without a customer having claimed it. In the light of this mandate, the Bank''s basis plea that the discounting of these cheques upto Rs. 2,500/- is not a matter of right and is in the discretion of the Branch Manager, is patently ill-founded and virtually amounts to a deliberate dis-obedience of the instructions. Significantly, it has to be recalled that the admitted position is that the bank had earlier purchased as many as eight cheques preceding the same without demur. The fact that later on the 9th of January, the bank did purchase the same is a proof enough of the fact that the transaction came squarely within the ambit of the mandatory instructions. This being so either the failure to conform to the said instructions or a conscious or a deliberate disobedience thereof would become patently culpable.

THE view we are inclined to take and the finding aforesaid renders the question whether a request was actually made by the depositor for purchase of the cheque at the time of its deposit or not, wholly academic. If the facility was to be allowed as a matter of course without any express claim therefore, the bank was obliged to do so. Its failure in this context as already noticed would be a patent deficiency in the service it rendered to its clients. The aforesaid holdings, The Bank''s First Appeal No. 248 of 1992 is thus rendered wholly devoid of merit and is consequently dismissed.

AS regards the consumer-appellant''s appeal for the enhancement of the compensation granted to him, we find no adequate reasons to interfere with the same. The District Forum adverted to this aspect and quantified the amount at that level. It is manifest on the record that no evidence was led by the consumer-appellant on the point of any special damages. In this situation, we are equally unable to find any merit in this appeal as well. The same is consequently dismissed without any order as to costs. Appeal dismissed.