APPEAL NO: 712/2006


1. Bank of India, Head Office at Star House,

Plot no.C-5 G Block, Bandra Kurla Complex,

Bandra East, Mumbai.


2. Bank of India, Br. Office Diggi Malpura Road,

Sanganer, Distt. Jaipur.


Opposite parties-appellants


Vs.


Mohan Lal Sharma r/o 119/213 Agarwal Farm,

Mansarovar, Jaipur .


Complainant-respondent


And


APPEAL NO: 881/2006


Mohan Lal Sharma r/o 119/213 Agarwal Farm,

Mansarovar, Jaipur .


Complainant-appellant


Vs.


1. Bank of India, Head Office at Star House,

Plot no.C-5 G Block, Bandra Kurla Complex,

Bandra East, Mumbai.


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2. Bank of India, Br. Office Diggi Malpura Road,

Sanganer, Distt. Jaipur.


Opposite parties-respondents



Date of judgment 17.3.2009


Before:


Mr.Justice Sunil Kumar Garg-President

Mrs.Vimla Sethia-Member


Mr. Ajay Agarwal counsel for the Bank of India

Mr.B.L.Khemka counsel for complainant Mohan Lal Sharma


The above mentioned two appeals are being decided by this common judgment as both have been preferred against order 27.3.06 passed by the District Forum, Jaipur IInd, Jaipur in complaint no.317/2005.


APPEAL NO: 712/2006


2. This appeal has been filed by the appellants bank against order 27.3.06 passed by the District Forum, Jaipur IInd, Jaipur in complaint no.317/2005 by which the complaint of the complainant respondent was allowed in the manner that the appellants were directed to pay a sum of Rs.100/- charged by the appellants bank for clearing two cheques within two months failing which the appellants would further pay interest @ 9% p.a. and further to pay a sum of Rs.10,000/- as amount of compensation and Rs.2000/- as

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costs, in all Rs.12,000/- to the complainant respondent.


3. It arises in the following circumstances-


That the complainant respondent had filed a complaint against the appellants before the District Forum, Jaipur IInd on 21.4.05 inter alia stating that the complainant respondent was having a saving bank account no.14885 with the appellants bank . It was further stated in the complaint that since two cheques bearing no. 0049339 and 0049340 issued by the complainant respondent have been lost by him, therefore, a request was made to the appellants bank for stoping the payment of the above two cheques through letter dated 25.7.03 . It was further stated in the complaint that the abovementioned two cheques though dated 4.5.04 were presented by some one in the bank of the appellants for clearance and the case of the complainant was that these cheques should not have been passed by the bank as earlier to that request for stop payment has been made by the complainant respondent on 25.7.03 through Anx.1 but even then the appellants bank had returned the cheques on 7.5.04 on the ground of insufficient fund and thus by doing so the appellants bank had violated the banking practice and for that deficiency the present complaint was filed. It was further stated in the complaint that charging of Rs.100/- was also wrong one as for the dishonoured cheques the complainant respondent is facing trial in criminal court for offence under section 138 of the Negotiable Instrumentation Act.


A reply was filed by the appellants bank before the

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District Forum,Jaipur IInd on 17.6.08 inter alia stating that as per banking rules and regulations period of limitation for making stop payment was only six months and since the request was made for stop payment of the two cheques on 25.7.03 and the cheques were presented after expiry of six months, therefore, if they were dealt with by the bank and were returned to the complainant respondent on ground of insufficient fund, no deficiency was committed by the appellant bank and it was prayed that complaint be dismissed.


After hearing the parties, the District Forum,Jaipur IInd through impugned order dated 27.3.06 had allowed the complaint of the complainant respondent as stated above and had held in para 18 of the impugned order that since the request was made by the complainant for stop payment for the above mentioned two cheques on 25.7.03, then it was the duty of the appellants bank not to clear these cheques though they were presented in the bank after expiry of six months and thus the appellants bank were guilty of deficiency in service on their part.


Agrieved from the said order dated 27.3.06 passed by the District Forum,Jaipur IInd, this appeal has been filed by the appellants bank.


4. In this appeal the following contentions have been raised on behalf of the appellants bank:-


(i) That as per rules and regulations of the bank, request for stop payment of cheques could be operative only

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for six months and since in the present case cheques were presented after expiry of six months of the request and if the cheques were cleared, therefore, there was no deficiency in service on the part of the appellants bank.


(ii) That for making the payment of cheques, a sum of Rs.100/- were charged on ground of insufficient funds, it could not be said that the bank had wrongly charged that amount from the complainant respondent.


(iii) That the amount of compensation to the tune of Rs.10,000/- as awarded by the District Forum was not just and proper and thus the findings of the District Forum could not be sustained and the impugned order dated 27.3.06 passed by the District Forum,Jaipur IInd be quashed and set aside and the appeal be allowed.


5. On the other hand the learned counsel for the respondent has supported the impugned order passed by the District Forum.


6. We have heard the learned counsel appearing for the appellants as well as for the respondent and gone through the entire materials available on record.


7. There is no dispute on the point that the complainant respondent had made a request on 25.7.03 that the payment of the disputed two cheques be not made to any one and request was made for stop payment.

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8. There is also no dispute on the point that these two cheques were presented by some one before the appellants bank on 4.5.04 for clearance.


9. There is no dispute on the point that the these two cheques were presented before the appellants bank after expiry of six months from the date of request for stop payment and the appellants bank had dealt with these cheques and had sent these cheques for clearance where they were returned on ground of insufficient funds in the account of the complainant respondent.


10. Thus, in the facts and circumstances just narrated above, the question for consideration is whether the findings recorded by the District Forum could be sustained or not.


On Banking Service


11. The banking industry is the life of a nation's economy. The banking activities have nowadays increased manyfold. The range of services rendered by the banks extends from rural finance at one end to international banking at the other.


All banking operations come within the purview of service and money lending is one of the important service rendered by the banking institutions and that too for consideration in the shape of interest. Therefore, any deficiency in these services are covered within the scope of Act.


Banking is a commercial function. ' Banking' means acceptance, for the purposes of lending or investment of deposit of money from the public repayable on demand or otherwise. The

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intention of the Consumer Protection Act is to protect consumers

of such services rendered by the Banks. Banks provide or render service/ facility to its customers or even non-customers. They render facilities/ services such as remittances, accepting deposits, providing for lockers, facility for discounting of cheques, collection of cheques, issue of bank drafts etc. Banking is a business transaction between the Banks and customers. Such customers are consumers within the meaning of the Consumer Protection Act.


12. Thus, in the present case it could easily be said that if even after expiry of six months of making the request for stop payment, the appellants bank had dealt with or had processed with the cheques , the appellants bank could be held negligent; as rider of six months could not be imposed in the present case as no notice prior to making the clearance of the cheques was given by the appellants bank to the complainant respondent and ultimately cheques were dishonoured.


13. It may be stated here that a payment despite 'stop payment' instructions is not a permissible payment and amounts to negligence. It is also not payment in due course as per section 10 of the Negotiable Instruments Act, 1881 i.e. in good faith and without negligence. If a bank receives countermand instructions then it is not a payment without negligence.


14. Further this Commission is of the view that if the complainant had issued the cheques and thereafter instructions for stop payment were duly received by the bank, all the same , if the bank cleared the cheques and the payment had been made , the bank could be found not only guilty of deficiency in service but

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further was under obligation to pay the amount of the cheques with interest. The Karnataka State Commission in the case of C. Balakrishnan Vs. Canara Bank reported in III (1995) CPJ 218 had taken the same view and had directed to pay a sum of Rs. 12,000/- being the amount of cheque with interest. We are also in agreement with the decision of the Karnataka State Commission.


15. It is further made clear that such a payment is made is beyond the mandate of the customer and is not binding on the account holder. It is clear that in the face of the countermand instructions received by the bank, the bank's liability to honour the customers' cheques comes to a halt. This is because if the banker is under an obligation to honour a customer's cheque, he is equally under an obligation not to encash, if he receives in time express instructions from the customer countermanding the payment and in this case the appellants bank were negligent in dealing the cheques in favour of drawer.


16. For the reasons stated above, deficiency in service on the part of the appellants bank is well established and the findings recorded by the District Forum as found in para 18 and 19 of the impugned order are based on correct apprciation of entire materials available on record and they do not suffer from any basic infirmity, illegality and perversity and thus they are liable to be confirmed one .


On point of compensation


17. In this case there is no dispute on the point that when the cheques in question were cleared by the appellants bank, the complainant respondent was not having sufficient fund in his

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account and that is why the cheques in question were dishonoured.


18. Further the law is well settled that in case of stop payment, if the cheque is cleared in favour of the drawer, the bank is liable to make payment of the cheques but in the present case since the cheques were dishonoured on account of insufficient fund and returned to the complainant respondent, therefore, the complainant

respondent would not be entitled to the amount of cheques but would be entitled to some sort of compensation and thus, the amount awarded by the District Forum as compensation to the tune of Rs.10,000/- from every point of view appears to be just, proper and equitable and thus no interference is called for with the same.


19. In view of the discussions made above, we are of the opinion that no illegality or irregularity has been committed by the District Forum in decreeing the claim of the complainant respondent. The findings of the District Forum are based on correct appreciation of entire materials available on record and they do not suffer from any basic infirmity, illegality and perversity and hence no interference is called for with the same and the appeal filed by the appellants bank deserves to be dismissed.


Accordingly, the appeal filed by the appellants bank is dismissed.


APPEAL NO: 881/2006


20. This appeal has been filed by the complainant appellant for

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enhancement of the amount of compensation against order 27.3.06 passed by the District Forum, Jaipur IInd, Jaipur in complaint no.317/2005.


21. It may be stated here that while deciding appeal no.712/2006 the amount of compensation as awarded by the District Forum was found just, proper and equitable, therefore, this appeal filed by the complainant appellant deserves to be dismissed.


Accordingly, the appeal filed by the complainant appellant is also dismissed.



Member President