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Judgment
A. P. Sahi, President Member
The three appellants before this Commission have come up assailing the impugned order of the State Consumer Disputes Redressal Commission, Maharashtra, Mumbai dated 20.10.2016 in CC/09/171. The complaint was filed in the year 2009, urging that the complainants were premier account holders with a quarterly balance of Rs.25,00,000/- maintained with the HSBC Bank, the respondents herein. All the three complainants applied, were issued and they availed the credit card services from the respondent/ bank.
The dispute is with regard to the allegations of the credit cards not operating and declining payments on utilisation by the complainants at several places.
In December, 2008, the complainant no. 1 received an alert about blocking the credit card on account of some suspected fraud. This disrupted the utilisation. The complainant acceded to the request made by the respondent/bank for replacement of a new premier credit card. Accordingly, the old credit card was blocked and after a few days a new premier master credit card was issued to the complainant no. 1.
The complainant no. 3 had thereafter visited the Taj President Hotel at Cuffe Parade, Mumbai, where an incident of declined services caused humiliation. The contention is that the respondent/ bank had blocked the card unilaterally without intimation. However a new additional credit card was issued by the respondent/ bank to the complainant no. 3 in December, 2008.
It was also alleged by all the complainants that they went on a vacation to Singapore and the credit cards issued by the respondent/ bank to them when swapped declined payments and were rejected at Orchard Hotel, where the complainants were staying. It is averred that the cards were also utilised at a Mall in Singapore, where also they failed. No effective services were offered by the branches there to the complainants, in spite of the international nature of the services that were promised by the respondent/ bank.
These deficiencies led to a complaint to the respondent/ bank. The Complainants came to be informed on 29.12.2008 by Ms. Leena Khatri, Senior Officer, Customer Service of the respondent/ bank that an error in the magnetic strip of the cards would have been the cause for decline of the credit cards of the complainants. An apology was also tendered by the bank.
The said deficiencies were made part of a legal notice dated 21.01.2009, that was dispatched through an advocate to the respondent/ bank and a response with a bald reply was received through letter dated 05.02.2009, that the matter will be investigated and looked into. However, on 17.02.2009, the complainants received an intimation stating that the transactions on the cards were declined due to unavoidable technical reasons for usage of the credit cards at Singapore. The said letters dated 05.02.2009 and 17.02.2009 are extracted herein under:
“CCTL/PC/2901224133
Mr. Arif Yusuf Bookwala
95 Petit Mansion
Naushir Bharucha Marg
Mumbai
05 February 2009
Dear Mr. Bookwala,
Re-Your HSBC Credit Card 5120 4299 9000 2896
We refer to your legal notice dated 21 January 2009 from Advocate Filji Frederick, regarding issues on the aforementioned card account.
At the outset, please accept my sincere apologies for the delay in providing resolution to your concerns. It appears that we require some more time to complete our investigations and we would respond to you with a conclusive reply in ten working days.
We fully appreciate that you would like this matter to be resolved as soon as possible. HSBC is committed to serving the best interests of all our customers. In view of this, we have put rigorous complaints handling service standards in place for handling any complaints fairly and speedily.
Assuring you of our cooperation as always.
Yours sincerely,
Sd/-
GS Balaji
Asst Vice President - Customer Service”
“WITHOUT PREJUDICE
CCTL/PC/2901224133
Mr. Arif Yusuf Bookwala
111 PIL Court 1 Floor Flat No. 1/D
Maharshi Karve Road Mumbai 400020
17 February 2009
Dear Mr. Bookwala,
Re-Your HSBC Credit Card Account 5120 4299 9000 5378
Primary Card 5120 4299 9000 2896
Add on Card 5120 4299 9000 5386
We refer to your legal notice dated 21 January 2009 from Advocate Filji Frederick, regarding issues on the aforementioned card account.
At the outset we deny all the allegations, contentions and statements in the notice under reference, which are contrary to and/or inconsistent with what has been stated herein. Nothing is deemed to have been admitted by us unless specifically done so.
We place on record our response in seriatim.
Referring to paragraph 1 and 2 of the legal notice and state that the contents of the same are matters of record and need not be commented upon.
Referring to paragraph 3, 4 and 5 of the notice, we confirm that the earlier card account was blocked due to security reasons on 04 December 2008 and 13 December 2008 in order to safeguard your interests. We further confirm the same was processed only upon your consent and authorization and the replacement cards bearing numbers issued. As per the Bank's policy, additional card gets blocked along with the Primary card account hence the older additional card did not function.
Given the above, the specific allegation of unilateral blockage of card is vehemently denied.
Referring to paragraphs 6 to 12 of the notice regarding the issues on usage of the credit card at Singapore, we note that the transactions on the cards were declined due to unavoidable technical reason. Hence, the allegation of deficient services is denied.
Referring to paragraphs 13 of the notice, we acknowledge your interactions with Bank Officials and Relationship Managers who have assisted in resolving your concerns. With regard to issue on cash withdrawal vide your debit card, please note that limit for Cash Withdrawal is INR 1,00,000 per day as per the Premier Service Guide available on our official website www.hsbc.co.in. Hence, transactions beyond the prescribed limit could not be processed with.
The allegations in rest of the paragraphs in the notice are denied and the explanation in the above paragraphs may be read against the same for the sake of brevity.
Given the above, we deny that Bank has committed willful negligence, deficiency of services or has caused you mental agony and harassment and hereby deny the liability of payment of compensation as claimed by you.
We trust the matter is clarified.
Please feel free to contact us at the address mentioned below.
Yours sincerely,
Sd/-
GSBalaji
Asst. Vice President-Customer Service”
After receiving the above quoted response, the complainant sent another notice through an advocate on 28.03.2009 to the respondent/ bank to which a reply was given on 02.04.2009, which is extracted herein under:
“CCTL/PC/020420092721
Mr. Arif Yusuf Bookwala
111 PIL Court 1" Floor Flat No. 1/D
Maharshi Karve Road Mumbai 400020
Dear Mr. Bookwala,
02 April 2009
Re- Your HSBC Credit Card Account 5120 4299 9000 5378
We refer to your legal notice dated 28 March 2009 from Advocate Filji Frederick, regarding issues on the aforementioned card account.
We acknowledge receipt of your complaint and have registered the same under reference 020420092721. Please allow us seven working days to investigate the matter conclusively by when a final response would be shared with you.
We fully appreciate that you would like this matter resolved as soon as possible. HSBC is committed to serving the best interests of all our customers. In view of this, we have put rigorous complaints handling service standards in place for handling any complaints fairly and speedily.
Assuring you of our cooperation as always.
Yours sincerely,
Sd/-
GS Balaji
Asst Vice President - Customer Service”
This was followed by a 09.04.2009 reply by the respondent/ bank denying the allegations of any negligence, deficiency in service or liability of payment as the inconvenience caused was unintentional. At the same time the respondent/ bank categorically stated that the request for documents as mentioned therein cannot be accepted as they are part of internal records, including any telephonic talks with relationship managers, that were not recorded. The letter dated 09.04.2019 is extracted herein under:
“WITHOUT PREJUDICE
CCON/PC/020420092721
Mr. Arif Yusuf Bookwala
111 PIL Court 1" Floor Flat No. 1/D
Maharshi Karve Road Mumbai 400020
09 April 2009
Dear Mr. Bookwala,
Re-Your HSBC Credit Card Account 5120 4299 9000 2896
We refer to your legal notice dated 28 March 2009 from Advocate Filji Frederick, regarding issues on the aforementioned card account.
At the outset we deny all the allegations, contentions and statements in the notice under reference, which are contrary to and/or inconsistent with what has been stated herein. Nothing is deemed to have been admitted by us unless specifically done so.
We refer to your earlier legal notice dated 21 January 2009 regarding the same issues on your card account and we note they were duly clarified vide our response dated 17 February 2009.
Referring to paragraph 1 to 3 regarding the address to which the above response was sent, we confirm that the same address was provided by you and accordingly updated on our records. Hence, we deny the allegations of malafide intentions in this regard.
The allegations in the rest of the paragraphs are denied the contents of our earlier response may be read against the same for the sake of brevity.
Further, we refer to your request for details of the company which supplies the credit cards and state the same cannot be shared with any third party. We also refer to your demand for voice logs of the telephonic conversation you had with the Bank personnel and state that it cannot be provided as they are a part of internal records. The telephonic conversations on the mobile phones of the Relationship Managers were not recorded and hence cannot be provided to you.
We reiterate that the transaction limit on the debit card is INR 1,00,000.00 as per the Terms and Conditions in the Debit Card Services Guide in our Official Website. The same is a matter of record.
Rest of the allegations in the legal notice is denied given the above facts.
Given the above, we deny that Bank has committed willful negligence, deficiency of services or hereby deny the liability of payment of compensation as claimed by you since the inconvenience caused to you is unintentional.
We trust the matter is clarified.
Please feel free to contact us at the address mentioned below.
Yours sincerely,
Sd/-
GS Balaji
Asst. Vice President - Customer Service”
The respondent/ bank proceeded to respond to the complainants on 16.09.2009, further stating that their records indicate that the transactions done abroad were declined due to unavoidable technical glitch. The letter dated 16.09.2009, is extracted herein under:
“CCONSM/AS/2901224133
Mr. Arif Yusuf Bookwala
111 PIL Court 1st Floor Flat No. 1/D
Maharshi Karve Road Mumbai 400020
16 September 2009
Dear Mr. Bookwala,
Re-Your HSBC Bank Accounts 5120 xxxx xxxx 2896
5120 xxxx xxxx 5386
002 xxxxxx 006
This is in reference to your letter dated 10 August 2009 regarding the aforementioned accounts held with HSBC. As the Nodal Officer and the CEO's representative, I would like to respond to your concerns as under:
Having investigated the issue, I regret the manner in which we have handled your concerns. Our processes are designed to ensure the right balance between service and security and we do not expect our customers to be inconvenienced. Let me assure you that we value your relationship with HSBC.
With respect to your specific concern on blocking your credit card, we trust you would appreciate that all card issuers monitor customer transactions to identify if a card is being fraudulently used. While these checks vary based on different parameters, they represent a significant step in protecting the interest of the cardholder, the merchant establishment where the card is being used and the card issuer. In your case, when our colleagues from the Risk Monitoring Team had suspected fraudulent usage of your credit card, they had called you to confirm the validity of the same. Subsequently, the card was blocked immediately on your consent to prevent any misuse and we had taken your request for issuance of a new credit card. I observe that both cards have subsequently been reissued.
You have raised a concern on the decline of transactions while using the credit card abroad in the month of December 2008. Our records indicate that the transactions incurred abroad were declined due to an unavoidable technical glitch.
I assure you that that such instances are rare and we have taken due care and diligence to avoid such occurrence. On being apprised of the situation, the Bank had immediately arranged to transfer the temporary credit limit on your card to your spouse' credit card, to avoid any inconvenience for you. Nevertheless, we would like to advise that the said cause was not intentional and not due to deficient services from the bank.
Mr. Bookwala, your claim for compensation is not supportive of the fact that the inconvenience caused to you was not intentional and also since the losses as claimed by you do not stand substantiated. Further, your claims for compensation cannot be justified as the same is not in line with our compensation policy.
Further to your query seeking clarification on the cash withdrawal limit, we confirm that the limit for Cash Withdrawal is INR 1, 00,000 per day. You may refer the appended link to know more details on the same.
http://www.hsbc.co.in/1/2/hsbcpremier/debit-card/features
With reference to your application for Home Loan, I understand that my colleague Mr. Digvijay S Rathod had been in touch with you on the same and has conveyed the bank's decision to sanction the loan to an extent of Rs. 82.50 lakhs, based on the valuation conducted on the property against which the loan has been sought. However, during your recent meeting with my colleagues, Mr. Ranganath Ananth and Mr. Santosh Suvarna, you had refused to accept the offer and have requested for return of your documents submitted at the time of applying for the loan. We confirm that the original documents have been delivered at your office on 15 September 2009 duly acknowledged and received by Ms. Shymala.
I would be most grateful if you could kindly reconsider your decision and provide us another opportunity to serve you better.
I hope that you will take cognizance of the points that we have detailed above, in our bid to provide you a fair resolution of your grievance. Mr. Bookwala, our banking association has spanned over 24 years and we look forward to your continued patronage.
We trust the above clarifies your concern and the bank's position in this regard.
Assuring you of our best services,
Yours sincerely,
Sd/-
Sathya Srinivasan Vice President
Customer Service Nodal Officer & CEO Representative”
In this regard the reply filed by the respondent/ bank before the State Commission is worth noting, particularly, the facts stated in paragraph 4 (vii), which is extracted herein under;
“vii) Every credit card transaction that is honoured goes through a series and sequence of events; some under the control of the OP Bank; some outside the radius of influence of the OP Bark. Therefore, whenever any transaction is declined, the immediate course of action is to see whether it could have been caused by any or many of the factors within the radius of control of the OP Bank. Only when the OP Bank is convinced that the factors under their control have been duly checked and found to be in order, the possibility of something going wrong with the factors outside the radius of the OP Bank are considered. In the instant case, when the problem was reported by the Complainants, the OP Bank did revisit all the factors under their control and found that nothing ought to have been under their control could have caused decline of the credit cards. In the absence of the physical custody of the credit cards; it became very difficult for the OP Bank to predict and identify that one single factor that was causing the decline. The OP Bank submits that despite their best possible efforts they could not identify the problem that could have caused the decline of cards. As a result, the only explanation they could offer was that it could have happened because of some technical glitch or due to a fault in the EDC machine for not being able to read the card properly or not being able to verify the card verification code; all these factors being beyond the radius of control of the OP Bank. Since the decline of cards has not happened due to any of the factors under control & jurisdiction of the OP Bank, it should not be held accountable for the same. The OP Bank further states that at some point in time, the Complainant no. 2 was able to use the credit card overseas; which itself goes to show that the technical glitch corrected itself as unpredictably as it got created in the first place. Nevertheless, during the overseas stay of the Complainants, the Relationship Manager of the OP Bank was constantly in touch with them, extending best possible assistance in getting rid of the problem by liaising with various other verticals and business units and business partners of the OP Bank.”
Learned counsel for the appellant submits that with all this material on record, it is evident that the respondent/ bank had admitted that were unable to identify the exact deficiency in the operation of the credit cards that was suspected due to technical glitches.
Learned counsel also submitted that while issuing the said cards a rosy picture was shown that all the cards would be honoured internationally and all care would be taken to replace the cards on the following day after its loss. It was also pointed out that the said cards also had the facilities of special privileges on shopping, dining, leisure and entertainment, wherever the complainants travel and the privileges at thousands of merchant outlets in over 540 countries. This has been mentioned in clause 3 (a), (b), (c) and (d) of the terms and conditions on which the said credit card facilities were offered.
The contention is that the State Commission has cast aside the entire evidence that was available and has proceeded to record that no documentary evidence was forthcoming from the complainants with regard to the incident at Singapore. It is urged that the State Commission arrived at this conclusion on the ground that no shopping details including the places where the credit cards had been used were produced by way of an acceptable evidence. This was an erroneous approach as the communications of the bank quoted above demonstrated the utilisation of the credit cards in Singapore. It is therefore urged that non-consideration of the relevant material on deficiency vitiates the impugned order. It was established that the credit cards did not work at all for any limit of amount as fixed by the respondent/ bank and therefore it was a total failure. Consequently, this is a clear deficiency in service, which also almost admitted by the respondent/ bank through the letters and the papers referred to and extracted hereinabove.
Responding to the said contentions, learned counsel for the respondent/ bank has urged that there was no obligation on the part of the respondent/ bank to extend any such services to the complainants as under Clause 6 (2.2). The services are confined to India. He further submits that according to clause 24.7, this failure of operations of the credit cards was beyond the reasonable control of the respondent/ bank for which the respondent/ bank cannot be held liable and this clause 24.7, forms part of the terms and conditions, under which the complainants have received the credit cards. The said clause absolves the respondent/bank from any such liability and hence the claim is founded on incorrect grounds. The allegations were responded to at every stage satisfactorily and the problems at Singapore had also been attended to by the Bank officials.
Learned counsel for the complainant has relied on an order of this Commission dated 09.09.2011 in RP/2322/2010, Jasmine W. Surendra Vs. Canara Bank, to contend that in similar circumstances, where failure due to technical reasons was held to be deficiency in service and the compensation awarded by the District Forum was upheld. He also referred to the order of this Commission in the case of H.S. Arya & Ors. Vs. CEO, SBI International Card & Anr., II (2006) CPJ 46 (NC), where this liability was held to be on the bank as a deficiency in service and the complaint was allowed.
Having heard learned counsel for the parties, the finding recorded by the State Commission that there was no documentary evidence forthcoming is contrary to record, in as much as, the above quoted communications are the records of the Bank itself, admitting that the transactions took place in Singapore through the credit cards in question. The failure of the operation of the cards therefore has not been denied and what has been pleaded is that this could not be exactly identified and was not within the reasonable control of the bank. The State Commission without examining this came to the conclusion that the complainants miserably failed to produce acceptable and reliable documentary evidence in support of their claim. The aforesaid letters from the respondent/ bank were evidence to indicate the cause of failure as observed by them due to technical glitches and its acceptance by the respondent/ bank, which has neither been appraised nor analysed and as a matter of fact has been totally omitted from having been considered. The Bank refused to give the details of the card supplier or the agency responsible for processing transactions of such facilities on behalf of the Bank.
Had the said documents been examined, analysed and an opinion given thereon, it could be said that the relevant material has not been ignored, but in the instant case, the aforesaid recitals highlighted above have not only been ignored but have also not been referred to at all in the impugned order.
It is evident that the Bank had indicated a possible fault in the magnetic strip of the Credit Cards in its communication dated 29.12.2008. It further indicated the default to be on account of unavoidable technical reasons in its communication dated 17.02.2009. It also acknowledged that the additional card which has been issued to the Complainant also got automatically blocked and it is evident that no prior information or any alert regarding blocking of the additional card was given to the Complainant. The technical glitches were acknowledged in the communication dated 16.09.2009 with a caveat that they were not intentional. The same communication also communicated suspected misuse being the reason for blocking the card for security reasons. These facts were also acknowledged in Paragraph No.-4 (VII) of the Reply of the Bank.
However, the plea taken is that these were the reasons beyond the control of the Bank. Another strange plea in defence is that the Complainant No.-2 could use the credit card abroad at some point of time which demonstrates the capacity of the card to auto correct itself. This inference is neither scientific nor empirical and is a complete guess work by the Bank without conducting any investigation or enquiry. This is further clouded by the attempt of the Bank to shield the card manufacturer and withholding details of the card manufacturer which is evident from the communication dated 09.04.2019.
The defence that the Bank could not predict or identify the glitches due to the card not being in its physical custody is yet another excuse inasmuch as the Bank could have retained the Credit Cards and got them examined which they did not do. To the contrary they did not even disclose as to who was the card manufacturer. They also indicated a possible fault in the EDC Machine which may not have been able to read the card properly or verify the verification code. This is also a possibility expressed with no foundation of any evidence. The excuse was that this was beyond the control of the Bank was only a defence to protect the in action and deficiency in the operation of the card itself that weighs heavily to indicate the preponderance of a probability of a serious defect in the card itself that was issued by the Bank. The Bank therefore cannot by suggesting alternative failures absolve itself of the defect and the deficiency in the card which ought to have been investigated by itself and which appears to have not been done. The replies given are only paper replies without evidence of any investigation with regard to the defect in the Credit card that was suspected by the Bank itself. Possible inferences without investigation details or proof cannot take the place of desired level of evidence.
An argument was raised about the facility being available only in India as per Clause 6 (2.2). This issue was neither raised as a defence in the communications nor any effective defence have been taken in the Written Version. The defence on the other hand by the Bank is that the possible causes of the decline of payments were due to technical glitches which the Bank pleads was beyond their reasonable control. The question as to whether it was within or beyond their control had to be determined only after investigating the possible causes as indicated by the Bank itself.
The main question in this case is whether this non-operation of the credit cards or alleged malfunctioning due to technical glitches or magnetic strips not working or otherwise was disputed in any way to establish the alleged deficiency in service.
A perusal of the communications quoted hereinabove would indicate that the plea by the Bank that since the bank did not have physical custody of the credit cards, it was difficult for them to predict and identify one single factor. They have taken a plea that a technical glitch or fault in the EDC machine that could not read the card properly or was not able to verify the card verification code could have been the cause, but the responsibility has been denied on the ground that these factors were beyond the radius of the control of the respondent/ bank and was unintentional. This plea taken by the respondent/ bank cannot be accepted, as in spite of a request for details of the company which had supplied the credit cards, the same was not shared by the respondent/ bank, which is indicated in the letter dated 09.04.2009 extracted hereinabove. Thus the respondent/ bank did not itself investigate the cause or attempted to identify the alleged technical glitches and simultaneously prevented any information forthcoming by withholding the details of the company that had supplied the credit cards. It was the duty of the Bank to have examined and investigated itself, which it did not do for reasons best known to it nor did it provide any material to evidence the same. Thus, the excuse that the cards could not be read properly or there was any technical glitch in the magnetic strip could not be identified, cannot be a shelter for the respondent/ bank to absolve itself of the liability of deficiency in the card. The reason is not far to see, in as much as, the credit cards were supplied by the Bank and no one else. The respondent/ bank therefore was under an obligation to identify the fault, if any, and not shut out any investigation on that count by claiming immunity from sharing the details of the card supplier. The services of the credit cards were rendered by the Bank and therefore any deficiency alleged about them has to be appropriately attended to by the Bank.
The State Commission noted the stand of the respondent/ bank in paragraph 17 of the impugned order but a very strange plea was taken by the respondent/ bank that the complainant had not given any pre-intimation before travelling to Singapore or intended shopping and vacation tour. This argument of the respondent/ bank is only noted for being rejected as there is no such requirement demonstrated for a customer to render prior information to his or her bank that he or she is going to travel abroad.
What is revealing is that in paragraph 20 of the impugned order the State Commission comments that unless the complainants come out with a concrete case for issuance and permissible uses by the respondent/ bank with necessary documentary evidence, the opposite parties cannot be held joint and severally responsible for deficiency in service and unfair trade practice. The State Commission also expresses an opinion that was unnecessary, that the swapping incident happened abroad without any prior intimation of foreign tour and intended shopping abroad by the complainants. This finding of the State Commission cannot be sustained and as noted above, no customer is obligated to inform the bank about his or her foreign tours, nor any such rule or regulation has been shown, which may bind the customers to do so. At least there was no evidence to that effect and therefore the conclusion drawn by the State Commission cannot be sustained.
The State Commission further went on to hold that the reasons were beyond the control of the issuer branch of HSBC Bank in Mumbai in India. As noted above this finding has been arrived at without noting the impact of evidence, which are letters from the respondent/ bank indicating that there was no dispute with regard to the factum of the utilisation of the credit cards in Singapore. The credit cards with the magnetic strips were undisputedly issued by the respondent/ bank itself. The operation of the cards may have been with the collaboration of the opposite party no. 3 (Master Card Inc.), which has not chosen to respond. In these circumstances without analysing this evidence or attempting to do so, the State Commission has proceeded to dismiss the complaint, which for the reasons stated hereinabove cannot be sustained.
The issues raised in this Complaint are of wider public importance in this age of consumerism where common man is likely to face or has actually faced the same ordeals. It is therefore necessary to call upon the Bank to perform its functions in order to rectify such deficiencies when reported by customers.
The issue of quantum or otherwise any impact in relation thereto need not be gone into as the State Commission having not examined the matter in correct perspective by taking into account relevant material as observed above, the same can be dealt with after the matter is decided afresh by the State Commission, in the light of the observations made hereinabove.
Accordingly, the order dated 20.10.2016, passed by the State Commission, is set aside, the appeal is allowed and the matter is remanded back to the State Commission for decision afresh, preferably within six months from the date of receipt of the certified copy of this order, if possible.