Remedies available under consumer protection act for Refusal to encash cheque and Refusal to encash FDR by banks.

 

Remedies available under consumer protection act for Refusal to encash cheque and Refusal to encash FDR by banks.

 

Refusal to encash cheque

 

Prakash Chimanlal Sheth v. HDFC Bank limited, Maharashtra

 

Facts: The Petitioner filed the consumer complaint before concerned District

Forum alleging deficiency in service on part of bank in denying to encash

cheque presented by Petitioner as he was in need of Rs. 3 lakhs to be deposited in the hospital for the treatment of his ailing mother. The cheque was given to Complainant from his nephew Chirag Natvarlal Sheth. District Forum dismissed complaint on technical ground that Complainant not being an account holder is not consumer. State Commission dismissed complaint and instead of giving a clear finding whether the Complainant is consumer or not held that bank was justified in refusing the honour of cheque because of failure of the Complainant to produce photo identity which is as per terms

of RBI. So instant petition filed before NCDRC.

Issue: Whether deficiency in service on part of bank is proved?

Decision: NCDRC held that no doubt Complainant had not furnished his

ID but fact remains that admittedly not only cashier but also Bank Manager

separately rang up account holder on his mobile number who verified having

issued the subject cheque and gave clearance for encashment. Bank officials

however declined to encash the cheque. This is clear deficiency in the service.

The National Commission considered this case of unnecessary harassment

and humiliation and directed the bank to pay Rs. 10,000/- as compensation

to the Complainant.

 

Refusal to encash FDR

 

Pishora Singh v. Bank of Punjab and Ors 2017 SCC OnLine NCDRC 659.

48 AIR 2017 SC 2696.

 

 

Facts: The Appellant Mr. Pishora Singh had obtained two FDRs for

Rs. 1,00,000/- each on 24/02/1996. Thereafter, he also obtained another

FDR on 8/03/1996 for an amount of Rs. 2,00,000/- . The first set of FDRs

obtained by the Appellant on 24/2/1996 was renewed by the Respondent-

Bank on 10/04/1996 and on 7/06/1996. When the Appellant went to encash

two FDRs that were originally issued on 24/02/1996 as well as the FDR

issued on 8/03/1996, the Respondent-Bank refused to encash the second

FDR for Rs. 2,00,000/- on the ground that it was issued to the Appellant

without any consideration. There is no dispute with regard to the encashment of the first set of two FDRs issued originally to the Appellant on

24/02/1996. The Complainant preferred a complaint before the District

Consumer Forum with regard to the failure of the Respondent-Bank to encash the FDR for Rs. 2,00,000/- issued on 8/03/1996. District Consumer Forum on considering the materials and evidence on record, held that the Appellant was entitled to encash the FDR with interest. Feeling aggrieved, the Respondent-Bank preferred an appeal before the State Commission, where it held that the Appellant was not entitled for encashment of the said FDR.

The Appellant preferred a revision petition before the National Commission

(NCDRC) against the order of the State Commission and the same was

dismissed by NCDRC. Respondent-Bank contends that the FDR dated 8th

March, 1996 was declined to encash because it was issued by mistake. It was stated that no action was taken against the defaulting officer for having

allegedly issued FDR on 8/03/1996 without any consideration. It was

further contended by the Respondent-Bank that the Appellant had only Rs.

2,00,000/- in his account and that amount was adjusted against the first set

of FDRs issued on 24/02/1996 and that the Appellant did not have any

amount to the extent of Rs. 2,00,000/- which would enable the Bank to

issue the second FDR on 8th March, 1996.

Issue: Whether bank can refuse to encash FDR allegedly issued without

consideration?

Decision: Supreme Court held that the Appellant cannot be expected to

produce anything more than what is given to him by the Bank i.e. FDR

receipt itself. Assuming the FDR dated 8/03/1996 was issued to the

Appellant fraudulently, it was all the more obligatory on the Respondent-

Bank to have taken action against its employees. Appeal was allowed. Orders passed by the State Commission as well as the National Commission were set aside and order of the District commission was restored. Hon’ble Supreme Court directed to implement the order passed by the District Forum within a period of six weeks from the date of this judgement.