PROJECT MANAGING UNIT 21 C. & D.S. U.P. JAL NIGAM V. MANAGING DIRECTOR, BANK OF BARODA & 4 ORS.

HEAD OFFICE: T.C-38-V, VIBHUTI KHAND GOMIT
NAGAR,
Versus

BARODA CORPORATE SECTOR C-24, C BLOCK
BANDRAWALI COMPLEX BANDRA EAST
2. BANK OF BARODA,
GENERAL MANAGER, VIBHUTIKHAND, GOMTI NAGAR,
LUCKNOW
3. BRANCH MANAGER,
BANK OF BARODA, GATEHGANJ ROAD,
FAIZABAD.
4. BRANCH MANAGER,
BANK OF BARODA, MAIN BRANCH
FAIZABAD.
5. BRANCH MANAGER,
BANK OF BAROADA, CHINHUT,
LUCKNOW.

Case No: CONSUMER CASE NO. 460 OF 2015

Date of Judgement: 11 Jan 2023

Judges:

For the Complainant : Mr Anubhava Mehrotra, Advocate with

Mr S K Tiwari, Advocate
For the Opp.Party : Mr Arun Aggarwal, Advocate

Facts:

Complainant is a government entity executing engineering projects in UP. It had accounts with Bank of Baroda branches. 18 unsigned cheques were reported stolen on 18.05.2012. FIR lodged. 3 out of these cheques worth Rs 1,46,27,000 were encashed by Bank of Baroda creditsing the amount to an account of M/s Sara Construction in Chinhat branch. The encashed cheques had varying signatures as per forensic report. Sara Construction account was found to be fake. Complainant alleges deficiency in service by bank in allowing encashment of stolen cheques. Seeks refund of amount with interest and compensation.

Arguments:

Complainant:
Bank was negligent in allowing encashment of stolen cheques to fake account without checking signatures or account details properly. Supplementary reports show complicity of bank staff in clearing cheques. Despite complaints, bank has not refunded the amount.

Opposite Parties:
Sections:
Section 21 of Consumer Protection Act 1986

Cases Referred:
Preliminary objections on maintainability have no merit. Complaint is valid. However, theft intimation was not given nor payment stopping advice issued to bank regarding stolen cheques. Primary responsibility for cheque security lies with complainant. Reliance on cited cases not applicable as facts are different. No standing advice to bank prohibiting encashment. In absence of conclusive findings of alleged fraud, deficiency in service of bank cannot be determined. Complaint devoid of merit and dismissed.

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Full Text of Judgment:

1. This complaint under section 21 of the Consumer Protection Act, 1986 (in short, the ‘Act’) has been filed by the complainant alleging deficiency in service by the opposite party in allowing three cheques to be encashed by its branch although these were presented after being stolen from the possession of the complainant.
SNo Cheque and
Account No. Date of
encashment Amount
(Rs) Branch of
Bank Credited in
name/account of 1 190597
006701000015085 14.05.2012 26,42,000 Bank of
Baroda,
Main
Branch,
Faizabad M/s Sara
Construction,
A/c with Bank of
Baroda, Chinhut,
Lucknow 2 518188

2260100010540 15.05.2012 73,65,000 Bank of
Baroda,
Fatehganj
Road,
Faizabad M/s Sara
Construction,
A/c with Bank of
Baroda, Chinhut,
Lucknow 3 51890

36480200000094 17.05.2012 46,20,000 Bank of
Baroda,
Fatehganj
Road,
Faizabad M/s Sara
Construction,
A/c with Bank of
Baroda, Chinhut,
Lucknow

36480200000094

Information regarding the theft of the cheques was provided by Unit Accountant Nasir Ali to the Inspector of FIR, Bank of Baroda, Fatehganj, Faizabad Road branch on 19.05.2012. Following investigations by the police in the FIR filed, a charge sheet was filed in the court of the Chief Judicial Magistrate, Faizabad that the Bank of Baroda, Chinhut Branch, Lucknow had negligently allowed encashment of the crediting of large sums of money in the bank account of M/s Sara Construction.
4. It is also averred that vide letter dated 309/S/561/16 dated 19.07.2012 the complainant’s Head Office requested opposite party no.1 to refund the money which has not been done. Information sought under the Right to Information Act has also not been provided. The Banking Lokpal who was approached in the matter did not consider the request vide their letter dated 31.12.2012 on the ground that the amount involved exceeded its limit of Rs 10,000/-. As attempts with the opposite party at various levels had not succeeded, the complainant is before this Commission with the following prayer:
A. The complainant should be awarded Rs 1,46,27,000/- from 19.05.2012 to the date of payment from the respondents along with interest @ 12% per annum.

B. The complainant should be provided compensation of Rs 5,00,000/- against mental and physical loss from the respondents.

C. The complainant should be provided Rs 2,00,000/- as complaint expenses from the respondents.

D. Any other relief that the Hon’ble Forum find appropriate should be provided to the complainant from the respondent.

5. The complaint has been resisted by the opposite party by way of a reply. By way of preliminary objections it is stated that the complainant is not a ‘consumer’ under the purview of the Act as it is an organization and not an individual. It is submitted that this Commission may lack pecuniary jurisdiction since some amounts have already been recovered. It is contended that there has been misjoinder of parties by the impleading of senior officials of the opposite party as there is no allegation against them.
6. On merits, it is contended that the complaint is based on the FSL report dated 28.02.2013 which does not state that the alleged forgery of signatures could have been recovered by the collecting or payee banker. It is contended that this report has been selectively relied upon and that there are no conclusive findings either in favour of the complainant or against the opposite parties. The matter is still sub judice before the CJM at the preliminary stage. None of the opposite parties or its officials have been arrayed as accused in the case. The complainant has failed to disclose that 9 cheques went missing from his custody in April, 2012 and the action taken as a sequel to that. In fact, the complainant has been negligent in safeguarding its own valuables. It is contended that there is no finding against the opposite party that there had been negligence in allowing the
cheques to be encashed without either scanning the signatures or through inspection by the eye and that no documents to this effect had been brought on record.
7. It is contended that a case of forgery cannot be pursued in summary proceedings before this Commission. The responsibility for the encashment of cheques is attributable to the employees of the complainant according to the opposite party as the responsibility for the security of the cheques was that of the complainant. It is the contention of the opposite party that the cheques were not securely kept and that the presentation of cheques to the bank is the handiwork of officials of the complainant itself. The opposite party states that the payments were made in the normal course of business by the bank and that it is the employees of the complainant who are responsible for any act of commission or omission in the siphoning of funds. It is also stated that as the cheque was presented towards end of business hours on 18.05.2012, its discovery the same day was strange.
9. Parties led their evidence by way of affidavit and filed rejoinder. I have heard the learned counsel for both sides and carefully perused the material on record. Written arguments were filed by both parties.
We find merit in the contention raised on behalf of the petitioners that there has to be full and proper adjudication if liability is to be fastened on the petitioners. There is serious dispute whether the cheques carried genuine signatures in which case even if there was some negligence on the part of the concerned employee of the bank, the bank may not be liable for damages. In any case, liability of the bank may not be in entirety as safe custody of cheques was responsibility of the respondent. At the same time, Bank account be entirely free from blemish. Having regard to the entirety of the matter, we are of the view that the claim of the respondent ought to be satisfied by paying a total amount of Rs 50,00,000/- by the petitioners to the credit account of the
“acts of bank/post office employees, when done during their course of employment, are binding on the bank/post office at the instance of the person who is damnified by the fraud and wrongful acts of the officers of the bank/post office”.
12. On behalf of the opposite party it was argued that no prior information was provided by the complainant to it to stop payment of the cheques alleged to have been stolen from its custody. Negligence of the complainant is also alleged citing the theft of 9 cheques earlier in April 2012 which has not been disclosed by them nor the remedial measures instituted brought out. In fact, there was no communication made to the opposite party to stop payment of cheques. It was submitted that payment of Rs 28,96,526/- was in fact stopped by the opposite party no. 5 on being apprised of the same and therefore there was no negligence/ deficiency in service. It is argued that the complaint is premature as the matter was sub judice before the Chief Judicial Magistrate with regard to the alleged fraud. It is denied that there was any complicity of the Bank/opposite party in the opening of the account in the name of M/s Sara Constructions which was as per the defined process.
13. The preliminary objections of the opposite party relating to the maintainability of the complaint on the grounds of (a) the complainant being a ‘consumer’ under the provisions of the Act, (b) whether the pecuniary jurisdiction of this Commission permits the filing of the complaint as some money ‘may’ have been recovered, and (c) whether the complaint is barred by limitation have been considered. The Act recognises a ‘complainant’ to include the State government under Section 2(i)(b)(iii). Banking is also a service recognised under the Act as per section 2(i)(o). The issue of pecuniary jurisdiction raised is speculative and clearly non est as the opposite party has not led any evidence to support his contention. On the issue of limitation, the opposite party contends that all concerns of the complainant were addressed. This argument is, however, not sustainable as the complainant has been raising issue with the opposite party which provide a continuing cause of action. The complaint is, therefore, valid.
14. In so far as the merits of the complaint are concerned, from the foregoing it is evident that the issue raised by the complainant though this complaint, i.e. the encashment/transfer of Rs 1,46,27,000/- by cheques that were genuine is yet to be conclusively proved. The issue is admittedly currently pending before the CJM’s court, Faizabad. The issue of whether the account of ‘Sara Construction’ and the encashment/transfer of cheques are genuine or an act of fraud will be established only on the basis of the findings of the court. It is striking that despite the fact of the encashment of non-genuine cheques that were stolen from the custody of the complainant having come to its notice on 18.05.2012, no formal letter for stopping payment of such cheques was submitted to the Bank/opposite party. The complainant has not brought any letter on record. The previous instance of loss of 9 cheques in April, 2012 alleged by the opposite party has neither been refuted by the complainant nor the remedial steps to prevent such instances recurring brought out. The fact that the responsibility for the safe custody of the cheques is primarily that of the complainant has been rightly brought out by the opposite party.
16. In view of the foregoing, the complaint is found to be without merit and is accordingly dismissed.