NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI
REVISION PETITION NO. 2897 OF 2016

(Against the Order dated 01/04/2016 in Appeal No. 1033/2015 of the State Commission
Maharashtra)
1. PRAKASH CHIMANLAL SHETH
R/AT 1103-SULSA APARTMENT, 254-RIDGE ROAD
MUMBAI-400006
MAHARASHTRA ...........Petitioner(s)
Versus
1. HDFC BANK LTD.
THROUGH ITS BRANCH MANAGER, GR FLOOR,
KHIRA BHAVAN, 535-S.V.P. ROAD, SANDHURST
BRIDGE, SUKH SAGAR, CHOWPATTY,
MUMBAI-400007
MAHARAHSTRA ...........Respondent(s)

BEFORE:
HON'BLE MR. JUSTICE AJIT BHARIHOKE, PRESIDING MEMBER
HON'BLE MR. ANUP K THAKUR, MEMBER

For the Petitioner : Mr. D. Vardarajan, Advocate

For the Respondent : Ms. Pallavi Deepika, Advocate

Dated : 15 Mar 2017

ORDER
This revision is directed against the order of the Maharashtra State Consumer Disputes
Redressal Commission, Mumbai (in short, the State Commission) dated 1.4.2014 in first
appeal No.A/15/1033.

2. Briefly stated facts relevant for the disposal of the revision petition are that the petitioner
filed the consumer complaint before the concerned District Forum alleging that the complainant
was in need of Rs.3 lakhs to be deposited in the hospital for the treatment of his ailing mother.
The complainant, therefore, requested his nephew Chirag Natvarlal Sheth for money. Chirag
Natvarlal Sheth issued a bearer cheque in favour of the complainant drawn on his saving
account No.12011000039411 with the opposite party bank. As a matter of caution Chirag
Natvarlal Sheth also signed at the back of the cheque. The complainant presented the cheque
for encashment on 7.5.2010 at about 12.00 pm. The cashier Mr. Deshu at the cash counter
asked him to come back at 4.00 pm because of insufficiency of funds. The complainant again
visited the bank at 3.40 pm. The cashier asked him to put his signatures at the back of the
cheque which he did. The cashier thereafter asked him to produce his photo ID in original and
submitted an attested true copy. As the complainant was not carrying the photo ID he suggested
the cashier to contact the account holder and verify about the issuance of cheque. The cashier
then took out the phone number of the account holder Shri Chirag Natvarlal Sheth from the
bank record and dialed mobile number of Shri Chirag Natvarlal Sheth to seek verification of
issuance of bearer cheque. Mr. Chirag Natvarlal Sheth confirmed that he had issued the cheque
but the cashier declined to honour the cheque. Thereafter, the complainant was taken by the
cashier to the cabin of the Branch Manager. The Branch Manager again rang up the account
holder Shri Chirag Natvarlal Sheth, who confirmed having issued said bearer cheque. Despite
that the Branch Manager insisted that Mr. Chirag Natvarlal Sheth should come to the bank. Mr.
Chirag Natvarlal Sheth showed inability to visit the branch. The Branch Manager then refused
to encash the cheque. Claiming this to be deficiency in service the complainant raised the
consumer dispute by filing a complaint in the in the Consumer Forum, South Mumbai District
seeking compensation to the tune of rupees one lakh towards mental agony and physical
harassment. The complainant also sought direction to the opposite party bank to stop such
wrong practice.

3. The opposite party on being served with the notice filed the written version claiming that
subject cheque was rightly dishonoured. Respondent bank contested the complaint. It was
pleaded that because of failure of the complainant to produce ID proof bank was justified in
refusing to honour the cheque in terms of RBI guidelines as it was a high denomination cheque.

4. The District Forum on consideration of evidence adduced by the parties dismissed the
complaint on the technical ground that the complainant not being the account holder, is not a
consumer.

5. Being aggrieved of the order of the District Forum the complainant approached the State
Commission, Maharashtra in appeal. The State Commission instead of giving a clear finding
whether or not the appellant/complainant is a consumer, went on to decide the complaint on
merits and dismissed the complaint holding that since value of the cheque was more than
Rs.50,000/-, in view of the guidelines issued by RBI, the bank was justified in refusing to
honour the bearer cheque because of suspicion. The appeal was consequently dismissed with
liberty to the appellant/complainant to pursue his remedy under Negotiable Instruments Act.

6. Learned Shri D. Vardarajan, Advocate for the petitioner has contended that although the
State Commission has not given a clear finding as to whether or not the complainant is a
consumer, the sum and substance of the impugned order is that according to the State
Commission the complainant is a consumer. Learned counsel has taken us through the
definition of consumer and submitted that the consumer qua a service provider is not only the
person who hires or avails the services of the service provider but the beneficiary also. It is
argued that once the account holder had issued a cheque in favour of someone, he automatically
becomes the beneficiary qua said bank and therefore he is a consumer, if there is any deficiency
in service.

7. Ms. Pallavi Deepika, Advocate on the contrary has argued that the complainant does not
fall within the realm of even the beneficiary because it was a bearer cheque and not a cheque in
favour of the complainant. Thus, the complainant cannot be termed as a consumer and the
District Forum had rightly dismissed the consumer complaint.

8. We have carefully considered the rival contentions and perused the record. From the
affidavits of Shri Chirag Natvarlal Sheth and the complainant, it is amply proved that the bank
telephonically contacted Chirag Natvarlal Sheth twice to verify whether or not he has given
bearer cheque to the complainant and the account holder Shri Chirag Natvarlal Sheth confirmed
the said fact. From the above, it is clear that the bank officials were categorically informed by
the account holder that he had issued the cheque and given it to the complainant. Therefore, the
complainant, in our view, was the beneficiary of the cheque and as such he is covered under the
definition of consumer which includes the beneficiary of the service hired/availed. Thus, the
complaint is maintained.

9. Coming to the merits of the case, the stand of the opposite party is that the cheque in
question was not honoured because the bank officials were suspicious about the issuance of the
cheque to the complainant and the complainant had failed to furnish his photo ID. Learned
counsel for the opposite party in support of this contention has drawn our attention to the
response given by the RBI to the RTI application dated 11.5.2010 submitted by the
complainant. The relevant response of RBI is reproduced as under: -

No specific guidelines have been issued to banks with regard to bearer

cheques. However, in terms of our guidelines contained in para 2 of DBOD.
No.BP.BC.114/C.469(8.1)-91 dated April 19, 1991 (copy enclosed) on Misuse
of banking channels for violation of fiscal laws and evasion of taxes-issued and
payments of demand drafts for Rs.50000/- and above, banks are advised that
payments for Rs.50,000/- and above should be made through banking channels
and not in cash.

Further, in terms of RBI Guidelines contained in para 3 (ii) of the circular

DBOD.AML,BS.No.68/14.01.001/2009-10 dated January 12, 2010 (copy
enclosed), banks have been advised that in case of transactions carried out by a
non-account based customer, that is a walk-in customer, where the amount of
transaction is equal to or exceeds rupees fifty thousand, whether conducted as
single transaction or several transactions that appear to be connected, the
customers identity and address should be verified.

Similarly, we have issued Master Circular DBOD.

No.Leg.BC.9/09.07.006/2009-10 dated July 1, 2009 (copy available on our
website www.rbi.org.in) on customer service to all scheduled commercial banks,
consolidating all the important instructions on customer service, paragraph
5.3(vii) of the circular is detailed below:

(vii) The banks should not ordinarily insist on the presence of account holder for
making cash withdrawals in case of self or bearer cheques unless the
circumstances so warrant. The banks should pay self or bearer cheques
taking usual precautions.
10. On reading of the above, it appears that as per the RBI guidelines the advisory was that
in case of transactions carried out by a non-account based customer, that is walk-in customer,
where the amount of transaction is equal to or exceeds rupees fifty thousand, the customers
identity and address should be verified. Later part of the response to RTI application states that
the bank should not ordinarily insist on the presence of account holder for making cash
withdrawals in case of self or bearer cheques unless the circumstances so warrant. The
banks should pay self or bearer cheques taking usual precautions. From this it is evident that
Reserve Bank of India has cautioned the banks in the country to be careful while encashing the
bearer cheques if the amount exceeds Rs.50,000/- and insist on the verification of ID as also the
address. No doubt the complainant had not furnished his ID but the fact remains that admittedly
not only the cashier but also the Bank Manager separately rang up the account holder on his
mobile number who verified having issued the subject cheque and gave clearance for
encashment. The bank officials, however, declined to encash the cheque. This, in our view is a
clear deficiency in service.

11. Learned counsel for the opposite party has drawn our attention to Ext.-B dealing with due
diligence while processing cash payments particularly the following portion: -

In the event the individual tendering the instrument is not carrying the identity,
and there is a urgency to pay, the transaction to be referred to the Branch
Manager. The Branch Manager shall maker appropriate enquiries as deemed fit
& shall use his discretion to allow the transaction. Such discretion to be used
judiciously as strict one off cases, only upon satisfactory confirmation of the
bonafides of the transactions.

12. It is submitted that as per the aforesaid instructions the bank officials because of
suspicion of identity of the complainant, were justified in refusing to honour the cheque. We do
not find merit in this contention, particularly when the bank officials verified about the issuance
of bearer cheque from the account holder on telephone. In view of the discussion above, we are
of the opinion that this is a clear case of deficiency in service on the part of the opposite party.
Revision petition is, therefore, allowed Orders of the Foras below are set aside.

13. Now, the question arises as to what should be the compensation in this case. The
complainant has not been able to show any specific loss caused to him. This is only a case of
unnecessary harassment and humiliation, therefore, looking into the amount of cheque and the
facts and circumstances of the case, we direct the opposite party to pay a sum of Rs.10,000/- as
compensation to the complainant within 30 days from the date of this order, failing which the
petitioner shall be entitled to file execution petition.
.....................J
AJIT BHARIHOKE
PRESIDING MEMBER
......................
ANUP K THAKUR
MEMBER