State Bank Of India vs Jamnagar Jilla

This revision petition has been filed under section 21(b) of the Act 1986 in challenge to the Order dated 06.07.2010 of the State Commission in appeal no. 805 of 2006 arising out of the Order dated 29.05.2006 of the District Commission in complaint no.193 of 2005.

We have perused the record and have heard the learned counsel for the opposite party bank (the petitioner herein).

Learned proxy counsel is present for the complainant society (the respondent herein), its learned counsel is not available to argue on its behalf.

Briefly, the society, under the control of the state government, maintained its savings bank account with the bank. The account was being operated under the joint signatures of the District Development Officer and the Deputy District Continuous Education Officer. In the years 2000, 2001 and 2002 one senior clerk of the society, who was maintaining its books of accounts and the cheque-books, withdrew a total amount of Rs. 13,72,629/- in cash through 16 cheques by forging the signatures of the two joint authorised signatories. A criminal complaint was lodged by the society with the police against the concerned senior clerk. Thereafter, after consultations with the legal department and with the government advocate(s), the instant consumer complaint was filed before the District Commission on 04.05.2005.

The District Commission vide its Order dated 29.05.2006 allowed the complaint. It ordered that the total amount of Rs. 13,72,629/- of the said 16 cheques be paid by the bank to the society with interest at the rate of 6% per annum from the date of filing of the consumer complaint till the date of realization. It also awarded a sum of Rs. 5,000/- towards cost of litigation.

The bank appealed before the State Commission. The State Commission vide its impugned Order dated 06.07.2010 dismissed the appeal.

Both the District Commission and the State Commission arrived at findings that the signatures on the concerned 16 cheques were forged. As such this revision has been preferred apropos concurrent findings of facts by the forum of original jurisdiction and the forum of appellate jurisdiction.

The learned counsel for the bank submits that the last (i.e. the 16 th ) cheque with forged signatures was encashed on 07.02.2002 but the complaint was filed on 04.05.2005 after a period of about 03 years and 03 months. The submission is that the consumer complaint was barred by limitation.

We however see that the District Commission has specifically condoned the delay (“- - - At the time of filing the complaint, an application was made to condone the delay, the said application and all the record was taken into consideration and this forum has condone the delay and the complaint was registered (admitted). - - -”)

We may also note here that the limitation period prescribed under sub-section (1) of section 24A of the Act 1986 is two years from the date on which the cause of action arose. However sub-section (2) allows for condoning the delay, for sufficient cause. In the instant case a criminal complaint was first filed against the concerned senior clerk, then the legal department and the government advocate(s) were consulted regarding filing of the consumer complaint, the pecuniary loss suffered by the society had not been made good by the bank. It appears that sufficient cause to condone the delay was readily forthcoming, and as such the delay was not found fatal to the case. We see no strong reason to take a different view of the matter relating to this aspect.

Learned counsel for the bank further submits that statements made under section 161 of the Cr. P.C. were also inter alia considered by the District Commission, though they ought to have been kept out of consideration being inadmissible in evidence.

In the present context we do not find any need to enter into the arena of admissibility or inadmissibility of statements under section 161 of the Cr.P.C. Suffice is to say that even if the statements made under section 161 are disregarded, there is sufficient material available on record, including inter alia the 16 cheques with forged signatures and the specimen signatures of the authorised signatories given with the bank, the affidavits of bank officials and also the clear and categorical report of handwriting expert, to enable the District Commission to have arrived at its findings that “- - - In this case the perusal of the cheques and the specimen signature difference was found at a glance and in the opinion of the Hand-Writing Expert the difference is found in the specimen signature.- - -”

Learned counsel draws attention to the definition of ‘deficiency’ as contained in section 2(1) (g) of the Act 1986 (“deficiency” means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service;) and argues that due diligence had been exercised by the officials of the bank and as such there was no ‘deficiency’ on its part within the meaning of “deficiency” as contained in section 2(1)(g).

We do not agree with this argument. The material on record and the reasoned appraisal made by the District Commission clearly show that the signatures on all the 16 cheques were demonstrably forged and obviously the due diligence on the part of the bank officials was manifestly lacking. It is also relevant that the District Commission while critiquing the affidavits of the bank officials had inter alia observed that in their affidavits the bank officials have tried to evade their responsibility and shift it to others (“- - -while going through all this documents and the affidavit of Bank Manager Shri Prataprai Shantilal Vora it appears that all the Officials had made affidavits different from the statement made by them attempted to cast own responsibility on others - - -”). And it also bears significance that the account was being operated under the joint signatures of two government officers and as such not one but two signatures were forged on the each of the 16 cheques.

In its petition, the bank has inter alia also taken a ground that the District Commission ought not to have decided the matter in view of the pendency of criminal proceedings against the concerned senior clerk.

This is a totally untenable ground. Criminal investigation and prosecution for punishment in respect of the criminal offence and proceedings before the consumer protection fora for remedy of the loss and injury in respect of the civil wrong were in different domains, nothing precluded the entertaining of the consumer complaint even while criminal proceedings might be independently and separately going on against the concerned senior clerk, nothing proscribed the consumer protection fora from remedying the ‘deficiency in service’ under the Act 1986. The two proceedings are neither incompatible nor mutually exclusive. The concept relating to proof of guilt beyond all reasonable doubt in criminal proceedings or the concept of giving benefit of doubt to the accused in criminal trials, is almost alien to proceedings of civil nature where the preponderance of probability, balancing the scales of equity, bonafides or malafides of party’s conduct and a conscionable evaluation of circumstances in order to strike an even balance of justice are some of the prime considerations which weigh and matter.

Learned counsel also draws attention towards some judgments of this Commission: (1) 1995 CPJ 83 NC United Commercial Bank vs. Mahendra Popat Lal Vora; 2014 SCC Onlone NCDRC 193 Oriental Bank of Commerce vs. Shankar Chawal Udyog; (2013) 3 CPJ 5223 (NC) United Commercial Bank vs. S.D. Wadhawa; (2006) 3 CPJ 218 Prempreet Textiles vs. Bank of Baroda; and (2009) 4 CPJ 220 (NC) Tara Lal Chand vs. Oriental Bank of Commerce.

We have perused the judgments and find that these have been passed on entirely distinguishable facts and as such are not relevant to the instant case. Here it is admittedly a proved fact that signatures of both the authorised signatories on each of the concerned 16 cheques were forged and not genuine. The cheques were paid in cash yet. It is manifestly evident that the requisite due diligence and duty had not been exercised by the officials of the bank to properly and carefully compare the (forged) signatures on the concerned 16 cheques with the specimen signatures of the two authorised signatories available with it. The cheques were allowed to be encashed in a perfunctory and mechanical manner.

This is a clear and simple case in which a ‘consumer’ i.e. the society has been put to pecuniary loss due to ‘deficiency’ on the part of the bank. It is amply established from the facts and evidence that the each of the concerned 16 cheques had forged signatures of both the joint authorised signatories. They were paid (in cash), without diligently and dutifully comparing the (forged) signatures with the specimen signatures available with the bank. The handwriting expert has given a clear and categorical report that the signatures do not match. There is no equivocation about it. The bank officials have filed affidavits before the District Commission inter alia attempting to evade responsibility and apportion it to the others. It is not even the bank’s case that the signatures in fact were not forged. There is nothing on record to show that the bank ever instituted any inquiry or took any departmental or other kind of action against its officials for negligently encashing cheques bearing forged signatures (of not one but two authorised signatories) or inculcated and imbibed any systemic improvement for future. The need to purge itself from such fatal functional failures has been blissfully ignored and let go. It does not lie in the mouth of the bank and sounds audacious to argue that its officials were exercising the requisite due diligence and duty.

We find that the District Commission has aptly appraised the facts and the evidence in the correct perspective to arrive at its findings of ‘deficiency in service’.

We also find that the State Commission has rightly dismissed the appeal. It has succinctly captured the essence of the case in paras 2 and 3 of its Order:

It appears from the facts of the appeal that the appellant State Bank of Saurastra had without verifying the signatures paid the amount of Rs. 13,72,629/- of the cheques of respondent Jamnagar Jilla Saksharta Samiti. The Forum had issued the Order to refund the amount with interest @6% p.a.

In our opinion, it is the responsibility of the bank’s Officials to verify the signatures of the account holder when any cheques is presented. If the bank’s Official is making payment without verifying the signature it amounts to deficiency in banking services. The Order of the Forum is proper and reasonable hence there is no need to interfere in it.

We would also want to add here that the cheques with forged signatures were encashed in the years 2000, 2001 and 2002, we are now in 2022. Rather than dutifully and promptly making good the pecuniary loss and remedying the injury caused to its consumer, the bank first ignored the requests of the society. Then it chose to contest the matter before the District Commission.  After an unfavourable decision from the District Commission, it chose to appeal before the State Commission. Even when the State Commission dismissed its appeal, and concurrent findings of facts had been returned by the two fora, it preferred to invoke the revisional jurisdiction of this Commission to look into jurisdictional errors and material irregularities, where too its case fails miserably as there existed none. The whole process of litigation has taken almost two decades. Using its institutional machinery in mechanically agitating the matter and ignoring and soft-pedalling the responsibility and accountability of its own officials with complete disregard to the loss and injury caused to its consumer is disconcertingly evident in the whole matter.

We have no hesitation in dismissing the revision petition and imposing a cost of Rs. 10,000/- on the bank which shall be deposited in the ‘Consumer Legal Aid Account’ of the District Commission within four weeks. The award made by the District Commission as upheld by the State Commission shall also be made good within four weeks, failing which the District Commission shall undertake execution, for ‘ enforcement ’ and for ‘ penalty ’, as per the law.

We may make it explicit that nothing comes in the way of the bank to take departmental or other action or to recover the money from its concerned officials as per its rules and in accordance with the law. Similarly nothing comes in the way of the bank to bring action as per the law against the concerned senior clerk of the society who had encashed the said 16 cheques by forging the signatures of the authorised signatories. The afore steps if taken are independent and separate of the bank’s obligation to dutifully and promptly remedy and level up the loss and injury caused to its consumer (the society) due to the out-and-out ‘deficiency in service’ on its part.

The Registry is requested to send a copy each of this Order to the parties in the petition and to their learned counsel as well as to the District Commission immediately. The stenographer is also requested to upload this Order on the website of this Commission immediately.