In a case involving fraudulent account activity, the District Consumer Disputes Redressal Commission has found Punjab National Bank (PNB) guilty of negligence and deficiency in service, resulting in a significant financial loss for a private company. The case stems from the unauthorized opening and operation of an account in the name of “General Security & Information Services” at PNB’s Andheri (East) branch in Mumbai, leading to a loss of ₹18 lakh for the complainant.
The Case Background
The complainant, a private limited company engaged in contractual work with government organizations, including Indian Railways, alleged that PNB allowed one Mr. Deepak Fitter to open an account under the company’s business name without proper verification or supporting documents. Mr. Fitter then deposited two demand drafts totaling ₹18 lakh, which were intended for the complainant company but were credited to the fraudulent account. The demand drafts, issued by Krunal Enterprises, were meant for “General Security & Information Services Pvt. Ltd.,” the complainant’s business entity.
The fraudulent account opened by Mr. Fitter caused the complainant significant financial damage, leading to the termination of lucrative contracts and the return of ₹18 lakh to Krunal Enterprises. The complainant company filed a legal notice with PNB and pursued the matter under the Right to Information (RTI) Act, which revealed that the account had been opened based solely on a PAN card, passport, and an undertaking by Mr. Fitter, declaring himself the sole proprietor of the business.
PNB’s Defense
In response, PNB denied any wrongdoing, stating that they had followed due diligence and opened the account based on the documents provided by Mr. Fitter. They further claimed that Mr. Fitter had committed fraud against the complainant, not the bank, and that the pay orders were deposited into the correct account number associated with “General Security & Information Services.” PNB argued that the issue arose due to a clerical error, where the business name was mistakenly entered without the “Pvt. Ltd.” suffix.
The Commission’s Verdict
Upon reviewing the evidence, the Commission ruled that PNB had indeed failed in its duty to properly verify the credentials of Mr. Fitter before opening the account. It noted that the bank had neglected to follow standard procedures, such as obtaining comprehensive KYC documentation. The Commission concluded that PNB’s actions constituted a gross deficiency in service.
The Commission ordered PNB to:
- Pay ₹5 lakh as compensation for the mental agony and harassment caused to the complainant.
- Cover ₹50,000 in litigation costs.
Penalty and Compliance
PNB has been directed to comply with the order by December 8, 2024. Failing that, the compensation amount will accrue interest at a rate of 9% until full payment is made. The judgment has been uploaded on the Commission’s website for public viewing. This case highlights the importance of stringent banking practices and the consequences of lapses in accountability and verification procedures in financial institutions. Click here to read more court cases.