Consumer Court orders Bank of India to pay Rs 75,000 to customer for issuing his cheque book to someone else

The District Consumer Disputes Redressal Commission-III, West Delhi bench, comprised of Ms Sonica Mehrotra (President), Ms Richa Jindal (Member), and Mr Anil Kumar Koushal (Member), held Bank of India’s Kirti Nagar branch accountable for its failure to exercise due diligence under RBI’s Cheque Truncating System (CTS) Scheme and the Negotiable Instruments Act, 1881. The bank’s negligence resulted in the unauthorized issuance of a chequebook to an individual, leading to the transfer of two cheques and financial loss for the original account owner.

Complainant’s Allegations

Mr. Umesh Arora, the sole proprietor of M/s Kailash Overseas, maintained a current account with the Bank of India at Kirti Nagar, Delhi Branch, for twenty years. In 2010, the complainant applied for a new chequebook, but the bank inadvertently issued it to someone else. Subsequently, two cheques totaling Rs. 1,26,500 were transferred from the complainant’s account without authorization.

Legal Proceedings

The complainant reported the incident to the bank’s AGM, filed a police complaint, and sent a legal notice seeking compensation. The bank denied wrongdoing, claiming the cheques belonged to an employee introduced to the bank by the complainant’s father. Unsatisfied with the bank’s response, the complainant filed a consumer complaint with the District Consumer Disputes Redressal Commission-III, West Delhi.

Bank’s Defense

The bank argued that the complaint was based on fabricated fraud to pressure the bank into compensating for losses caused by the complainant’s negligence. It claimed the cheques were issued without bank negligence, following the complainant’s instructions. The bank maintained that any connivance would be between the complainant and the introduced employee, not involving bank officials.

Commission’s Findings

The District Commission referred to the CTS Scheme introduced by RBI in 2010, emphasizing the bank’s responsibility for due diligence, particularly under the Preliminary Verification Scheme. The bank was required to adhere to Know Your Customer (KYC) norms, including verification of the instrument’s tenor and apparent physical condition. The commission noted the bank’s failure to provide adequate evidence regarding the issuance of the chequebook and verification of the complainant’s signatures.

Verdict

The District Commission held the bank liable for deficiency of service and non-compliance with CTS norms, citing a previous case precedent. The bank was directed to pay compensation of Rs. 50,000 to the complainant and Rs. 25,000 for litigation costs.