Bank fraud claim failed where unauthorized transfer, FERA breach, and forgery were not proved; suit was dismissed.

A recovery action based on alleged bank fraud failed because the plaintiffs did not prove unauthorized transfer, statutory breach, or entitlement to monetary relief. The suit was held maintainable and within limitation; the deficit court fee was treated as curable under Section 149 CPC. On the merits, the plaintiffs failed to show that plaintiff no. 2 had ceased to be an NRI without notice to the bank, or that the cheque instructions were fabricated, forged, or affected by signature mismatch. The alleged FERA violation was also not established, as the transaction was treated as an Indian rupee transfer. The suit was dismissed.

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Issues: (i) whether the suit was within limitation and could be maintained despite the deficit in court fee; (ii) whether the plaintiff no. 2 had ceased to be an NRI and the alleged change in status was intimated to the bank; (iii) whether the transfer of Rs. 2 crores from the NRE account was unauthorized, including the effect of the pleadings before the consumer forum and the plea of blank cheque/signature mismatch; (iv) whether the transfer was hit by the Foreign Exchange Regulation Act, 1973 and whether any recovery or interest was payable.

Issue (i): Whether the suit was within limitation and could be maintained despite the deficit in court fee?

Analysis: The suit was founded on the transfer alleged to have taken place on 23.04.1990 and was instituted on 22.04.1993, within three years of the cause of action. The deficit in court fee was cured subsequently, and the defect was treated as curable. Section 149 of the Civil Procedure Code, 1908 was applied to hold that payment of deficit court fee could be permitted and would not defeat the suit.

Conclusion: The suit was held to be within limitation and maintainable.

Issue (ii): Whether the plaintiff no. 2 had ceased to be an NRI and the alleged change in status was intimated to the bank?

Analysis: No reliable material was produced to prove that plaintiff no. 2 changed her status on 17.04.1990 or that such change was communicated to the bank. The account opening documents placed an obligation on the account holders to intimate any return to India or change in residence. The continued issuance of cheques from the same account, including a later transaction signed in the same style, was treated as inconsistent with the plea that she had ceased to be a joint signatory.

Conclusion: The issue was decided against the plaintiffs.

Issue (iii): Whether the transfer of Rs. 2 crores from the NRE account was unauthorized, including the effect of the pleadings before the consumer forum and the plea of blank cheque/signature mismatch?

Analysis: The plaintiffs failed to discharge the burden of proving that the instructions on the cheque were not given by plaintiff no. 2 or that the bank fabricated them. The court also found that the plaintiffs had taken inconsistent stands in different proceedings and had not pleaded the signature-mismatch case with necessary foundational facts in the plaint. Applying the ordinary civil standard, the court held that the plaintiffs had not established fraud, forgery, or unauthorized encashment, and the surrounding conduct and documents supported the bank's version more than the plaintiffs' case.

Conclusion: The issue was decided against the plaintiffs.

Issue (iv): Whether the transfer was hit by the Foreign Exchange Regulation Act, 1973 and whether any recovery or interest was payable?

Analysis: The plaintiffs did not lead cogent evidence to show any contravention of Section 8 of the Foreign Exchange Regulation Act, 1973. The transaction was treated as an Indian rupee transfer, and no material was shown to establish applicability of FERA against the bank. Since the plaintiffs failed on the core liability issues, no amount or interest could be awarded.

Conclusion: The issue was decided against the plaintiffs.

Final Conclusion: The plaintiffs failed to prove unauthorized transfer, statutory violation, or entitlement to any monetary relief, and the suit was dismissed.

Ratio Decidendi: In a civil action for recovery based on alleged bank fraud, the claimant must establish the foundational facts by the preponderance of probabilities and cannot obtain relief on evidence that travels beyond the pleadings or on unproved allegations of forgery or statutory breach.

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