Jagdish Prasad Pateriya vs Jila Sahkari Kendriya Bank Maryadit & Anr.

DR.INDER JIT SINGH, PRESIDING MEMBER

These 21 Second Appeals (SAs) have been filed challenging the common order of the State Commission Madhya Pradesh dated 28.08.2025 under which 36 First Appeals were disposed off together. Details of these 21 SAs are given in Table at Annexure-A. As these cases involve identical facts and questions of law, these have been taken up together. For the sake of convenience, the facts are taken from the SA/826/2025, which has been taken as a lead case, corresponding to FA/953/2024 before the State Commission. The Opposite Party(ies)/Respondent(s) herein preferred the Appeal FA/953/2024 before the State Commission against the order dated 22.02.2024 passed by the District Consumer Disputes Redressal Commission, Ashok Nagar in CC/293/2022, whereby the Complaint filed by the Complainant/Appellant herein have been allowed.

Brief facts of the case as stated in para 2 of order of State Commission and as emerged from other case records are that the Complainant had a Savings Bank Account with the OPs/Bank. On 02.11.2020 the Complainant deposited Rs.1,71,623/- in Term Deposit Account No. 18000084322 and an amount of Rs.1,81,710/- was to be received on maturity on 02.11.2021. Similarly, on 02.11.2020 he had deposited Rs.1,78,631/- in Term Deposit Account No. 180000846311 and an amount of Rs.1,89,126/- was to be received on the date of maturity i.e. on 02.11.2021. The Complainant deposited Rs.1,19,215/- on 17.12.2020 in Term Deposit Account No. 180000853395 and the amount of Rs.1,26,219/- was due on maturity i.e. on 17.12.2021. As alleged by the Complainant, before the date of maturity, the amounts in the FD's were transferred to the savings account of the Complainant and were withdrawn without the knowledge of the Complainant. The complainant came to know when he got the bank statement dated 16.10.2021. The original FDs for a total principal amount of Rs.5,00,000/- are with the Complainant. Hence, the Complainant filed complaint before the District Commission.

However, during the hearing on 16.03.2026, it was stated that the original FDs amounts and the dates were different and amounts stated in the State Commission's order reflect the amounts on subsequent annual maturity date(s) and these FD(s) were prematurely encashed. Accordingly, vide order dated 16.03.2026, Appellant herein undertook to prepare the complete chart of all the cases, clearly showing the original FD(s) amount, date of FD(s), annual maturity amount(s), the amount(s) credited to Saving Bank's account on pre-mature closure and the amount(s) withdrawn from such account(s). In some cases, amounts are alleged to have been withdrawn directly from the Savings Bank Account.

On the other side during hearing on 16.03.2026, Bank contended that most of the FDs were closed at the request of the account holders/complainants and amounts were actually withdrawn by them. These cases involve embezzlement and fraud and the complainants were party to such wrongful dealings in connivance with the Bank's employees. The Complainants have also been arrayed as co-accused in the cases filed by EOW/other agencies. As the Bank did not file the written version before the District Commission and no such documents are on the record viz (as to whether the FD(s) were prematurely closed on the specific written request(s) of the Complainants (b) whether the amounts were withdrawn by the complainants themselves through a cheque (s) /withdrawal form(s) signed by them (c) whether these complainants/Appellants before us are co-accused in various cases filed by EOW/ other agencies. Hence, parties were given liberty to file the documents which are already part of the record of the lower Fora.

Vide order dated 22.02.2024, the District Commission allowed the complaint filed by the Complainant and ordered that the OPs shall pay to the complainant Rs.5.00 lacs with interest on the said amount of Rs.5.00 lacs @7% per annum from 22.02.2021 till the date of payment of the amount. OPs were also directed to pay Rs.2000/- for mental agony and also a sum of RS.2000/- for litigation expenses within two months, if OPs fail to pay Rs.4,000/- within two months, then after two months the OPs will also pay interest on the said amount of Rs.4000/- @7% interest till the date of payment.

Aggrieved by the order passed by the District Commission, the OPs preferred Appeal before the State Commission. The State Commission vide its order dated 28.08.2025, allowed the Appeal preferred by the OPs setting aside the order passed by the District Commission observing that the District Commission has erred in allowing the complaint. Consequently, the impugned order cannot be sustained and hence State Commission set-aside the order of the District Commission and the complaints were dismissed. Extract of relevant paras of order of the State Commission is reproduced below:

Hence, the Complainants are before this Commission in Second Appeal.

Section 51(2) envisage Second Appeal before this Commission if the case involves substantial question of law. What constitutes substantial proceedings has been elaborated by Hon'ble Supreme Court in Hon'ble Supreme Court in Chandrabhan (deceased ) Through Legal Representatives and Others Vs. Saraswati and Others (2022) 20 SCC 199. As per Section 51(3), such substantial questions of Law have to be listed in the memorandum of Appeal. In the present case, following substantial questions of law have been listed by the Appellant in the Memorandum of Appeal (taken from lead case SA/826/2025):

Besides above substantial question of law, the Appellants have challenged the order of the State Commission on the following grounds:

In addition to the submissions under grounds of Second Appeals, the Appellants contended that the primary questions for adjudication are (a) that the State Commission erred in taking on record additional documents produced for the first time in Appeal on the purported defence of the Respondent Bank especially when the Respondent failed to raise any such defence before the District Commission and in their own investigation, the Bank had already admitted deficiency in service, ( b) whether it can ever be a rule of universal application that in all cases involving instances of fraud, forgery, embezzlement or cheating by officials/ employees of the Opposite Party (including Banks), where criminal cases have been initiated against such officials/ employees, the jurisdiction of the Consumer Forum stands absolutely ousted? It is further contended that the Respondent's own admissions of irregularities and misappropriation in appeal pleadings negated filing any additional documents. In the appeal before the State Commission, Respondent Bank admitted irregularities and unauthorized transactions committed by employees of Chanderi Branch of Respondent Bank leading to departmental enquiry and EOW complaint. The Respondent has admitted the same in para 3 of its Appeal. It is also contended that admissions of the Respondent in its Appeal before State Commission regarding illegal acts of its employees did not warrant allowing any leave to file additional documents, when they failed to raise any defence before the District Commission. It is also contended that despite the records/ documents being under the possession of the Bank, cannot be cured by additional evidence before the Appellate Court. It is further contended that the Order XLI Rule 27 cannot convert consumer appeal into an inquiry on criminal culpability. Banks' own Application under Order XLI Rule 27 states that the additional documents relate to departmental investigation against responsible employees and proceedings initiated by the EOW. In this context the Petitioner relied upon judgments in MTDC v. Dena Bank, 2016 SCC OnLine NCDRC 249, MMRDA v. Dena Bank, 2016 SCC OnLine NCDRC 254, Mumbai District Central Cooperative Bank Ltd. v. ICICI Bank Ltd., 2018 SCC OnLine NCDRC 195, PHFI v. Bank of Baroda, 2023 SCC OnLine NCDRC 863 and PHFI v. Central Bank of India, 2024 SCC OnLine NCDRC 77). It is further contended that the order of the State Commission is based on assumption that fraud/embezzlement and ensuing criminal investigation is an absolute a bar to jurisdiction of Consumer Fora. Since the case involves instances of fraud, forgery and cheating by the bank officials and EOW/police investigations are pending, Consumer Fora cannot adjudicate the matter in summary jurisdiction and must decline relief. In this context Appellant relied upon the judgment in Chairman, City Union Bank Ltd. V. R. Chandramohan, (2023) 7 SCC 775. Besides above judgments, in support of their contentions, the Appellants have relied upon the following case laws:

The Respondents have relied upon the following case laws:

We have carefully considered the orders of the State Commission, District Commission, other relevant records and the rival contentions of the parties, in the light of various judgments of the Hon'ble Supreme Court/ this Commission on this subject and are in agreement with most of the contentions of the Appellant(s) herein. The Bank herein has failed to answer three basic questions (a) whether the FDs were prematurely closed on the specific written request(s) of the Complainant(s), b) whether the amounts were withdrawn by the Complainant(s) themselves through a cheque/withdrawal form signed by them and c) whether in any of the cases, the Complainant(s)/Appellant(s) herein are co-accused in any of the cases filed by EOW/any other authority/court.

Mere pendency of criminal case(s) against the Bank officials without any evidence that the Complainant(s)/Appellant(s) herein have connived with such officials and were party to such wrong doings, is not a valid ground for proceeding not with the Consumer Complaint.

As regards contentions of Insurance Company that dispute between the parties cannot be resolved in summary proceedings, on the grounds of it involving disputed and complicated facts, Hon'ble Supreme Court in J.J. Merchant and Ors. Vs. Shrinath Chaturvedi (2002) 6SC 635 observed that "the object and purpose of enacting the Act (Consumer Protection Act) is to render simple, inexpensive and speedy remedy to the consumers with complaints against defective goods and deficient services... delay in disposal of the complaint would not be a ground for rejecting the complaint and directing the complainant to approach the Civil Court for appropriate relief in case the complaint involves complicated issues requiring recording of evidence of experts, which may delay the proceeding." Regarding contention that questions of facts cannot be decided in summary proceedings, Hon'ble court observed that "under the Act, for summary or speedy trial, exhaustive procedure in conformity with the principles of natural justice is provided... the legislature has provided alternative, efficacious, simple, inexpensive and speedy remedy to the consumers and that should not be curtailed on such ground. It would also be totally wrong assumption that because summary trial is provided, justice cannot be done when some questions of facts are required to be dealt with or decided. The Act provides sufficient safeguards." It was observed by Hon'ble Supreme Court in this case that Procedure under Section 13, 18 – 22 is adequate vis-à-vis Civil Suit to decide complaints involving complicated questions of law and fact. In the present case, what we would be looking into is whether there is a deficiency in service on the part of OPs under the provisions of Consumer Protection Act in a summary proceedings and not any disputed or complicated facts or tortious acts or criminality like fraud or cheating requiring adjudication by a Civil Court. Hence, we see no merit in these contentions of the Insurance Company.

Further, it is to be noted that in the present case, the Respondent Bank herein was proceeded ex-parte before the District Commission despite service. Hence, if the defence of the Opposite Party (Respondent Bank herein) is not on record, having not being filed within the permissible statutory period, such Opposite Party cannot in Appeal before the State Commission bring its defence on record by way of filing additional documents. Hence, we see merit in the contentions of the Appellant(s) herein that the State Commission was not justified in taking additional documents on the purported defence of the Respondent. Here commission of wrongful acts in terms of fraud/ forgery/ embezzlement by the Bank is not in dispute even from the Bank side, hence, in the absence of any contributory negligence or involvement of the Complainant(s) /Appellant(s) herein in such acts of fraud/ forgery/ embezzlement etc., the Bank is liable for deficiency in service. Despite repeated opportunities given, Bank has failed to place on record any evidence/documents indicating any involvement of the Complainant(s)/Appellant(s) in such acts in connivance with the Bank officials. Pendency of criminal proceedings or investigations against the Bank officials does not bar Consumer Commissions from taking up the Consumer Complaints alleging deficiency in service on merits.

In view of foregoing, we are of the considered view that State Commission went wrong in reversing the well-reasoned order of the District Commission. Hence, the order of the State Commission cannot be sustained and same is hereby set aside and the order of the District Commission is restored.

All the Second Appeals covered under this order are allowed in terms of the above order while restoring the order of the District Commission.

All the pending IAs in the Second Appeals, if any, stand disposed off.