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2026 (4) TMI 992
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....y the National Consumer Disputes Redressal Commission, New Delhi (briefly 'the Commission' hereinafter) allowing Consumer Complaint No. 123 of 2019 (Kavita Chowdhary Vs. Canara Bank) and Consumer Complaint No. 124 of 2019 (Priya Chowdhary Vs. Canara Bank). 3. It may be mentioned that vide the impugned judgment and order dated 24.09.2024, the Commission has allowed the aforesaid two complaints by directing the appellant bank to pay 10 percent of the total cheque amount alongwith interest at the rate of 8 percent per annum from the date of filing of the complaints within two months, further imposing litigation cost of Rs. 50,000.00 in favour of each of the complainants. The Commission has clarified that any delay in making the payment by the appellant bank would result in enhanced interest at the rate of 10 percent per annum till the date of final realisation. 4. For the sake of easy reference, we may refer to the facts of the first appeal i.e. Civil Appeal No. 2587/2025 (Canara Bank Vs. Kavita Chowdhary). This appeal arises out of Consumer Complaint No. 123 of 2019 (Kavita Chowdhary Vs. Canara Bank). 5. Respondent Kavita Chowdhary had filed Consumer Complaint No. 123 of 201....
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....2018, cheque No. 43682 for Rs. 11,36,868.00 was credited into the account of the respondent. Once again, the said amount was debited from the account of the respondent on that day itself with the description 'online cheque return' after deducting a certain amount as collection charges. This cheque was returned to the respondent alongwith a return memo dated 11.06.2018 citing the reason 'instrument out dated/stale'. 12. On both the occasions, collection charges at the rate of Rs. 177.00 were debited by the appellant from the account of the respondent. 13. According to the respondent, appellant had failed to present the cheques for clearing or collection to the drawee bank within the validity period causing the cheques to expire. Because of such negligence leading to deficiency in service, respondent had incurred a loss amounting to Rs. 1,06,10,768.00. This also deprived the respondent from availing the legal remedies against the drawer of the cheques, Assotech Limited, including the remedy under Section 138 of the Negotiable Instruments Act, 1881 as Assotech Limited was undergoing corporate insolvency resolution process but continued to remain liable for criminal liability und....
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....nt and to hold that appellant bank was not liable for any deficiency in service qua the complainant. 17. Respondent filed rejoinder to the reply of the appellant. Respondent pointed out that cheques were presented for clearing on 29.05.2018. After the cheques were returned, on instructions, one cheque for the amount of Rs. 94,73,900.00 was sent for clearing only on 04.06.2018 whereas the other cheque was presented for clearing on 08.06.2018. Appellant was fully aware of the fact that the cheques were due for expiration but still neglected to send the two cheques for clearance in proper time. 18. The complaint was adjudicated by the Commission. Vide the impugned judgment and order dated 24.09.2024, the Commission allowed the complaint by holding that there was deficiency in service on the part of the appellant and directing the appellant bank to pay 10 percent of the total amount of Rs. 1,06,10,768.00 to the complainant alongwith interest at the rate of 8 percent per annum from the date of filing of the complaint within two months. In addition, litigation costs of Rs. 50,000.00 in favour of the complainant (respondent herein) was also awarded. Commission clarified that any del....
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.... to show that the appellant did not take the requisite steps within 'reasonable time' because of which actual loss was caused to her for which she was entitled to compensation from the appellant. 21.3. Learned counsel submits that it is evident from the record that the cheques were re-presented for clearing on 02.06.2018. Therefore, the view taken by the Commission that those should have been forwarded on the very same date, is beyond the mandate of law and established banking practice. Appellant cannot be fastened with any liability in the absence of any lapse or wrongdoing. 21.4. Learned counsel has also referred to and relied upon the RBI Master Circular dated 04.11.2011 which says that cheques presented beyond validity period are liable to be rejected. 21.5. Regarding the quantum of compensation, learned counsel has placed reliance on Section 73 of the Indian Contract Act, 1872 to contend that the compensation awarded is much beyond reasonable compensation. The impugned judgment and order do not discuss any parameters or precedent for arriving at the awarded amount determined as reasonable compensation. In these circumstances, it is submitted that Commission has awarde....
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.... 24 hours without having recourse to the payee. 22.4. Moreover, physical presentation of cheques for clearing has been done away with. Now the cheques are presented digitally. Since the appellant had already captured the relevant data from the cheques on 29.05.2018 and had uploaded the same on its computer, it only needed to punch a few keys on its computer to re-present it. 22.5. Since the company Assotech Limited which had issued the two cheques in favour of the respondent is under liquidation, proceedings under Section 138 of the Negotiable Instruments Act, 1881 were the only remedy available to the respondent for realisation of the cheque amount. But the respondent has been deprived of the said remedy due to the negligent conduct of the appellant. 22.6. In these circumstances, the Commission has rightly held that there was deficiency of service on the part of the appellant for which respondent had suffered loss of the cheque amount. Therefore, Commission has rightly awarded compensation against the appellant to be paid to the respondent. He submits that there is no merit in the two appeals. As such, the appeals should be dismissed. 23. Submissions made by learned co....
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....ven if the cheques were scanned and sent to paying Bank by OP on 02.06.2016, the same could have been presented to the Paying Bank only on 04.06.2018 as 03.06.2018 was Sunday. The validity of the cheque was only till 02.06.2018 by which date, the said cheque could not have been honoured by the Payer Bank. Thus even then the cheques on being scanned and sent on 02.06.2018, would have returned as stale. 24.2. After extracting the material statements as above, Commission posed a question to itself as to whether the clearing report was received by the appellant in the late hours of 01.06.2018 and if that is so, why the cheques were not submitted again on 02.06.2018 which was a working day? Commission found that there was no satisfactory explanation for this, further noting that a fresh affidavit was filed by the manager of the appellant Ms. Supriya Dogra on 04.04.2024 in purported compliance of the order of the Commission dated 07.02.2023 notwithstanding the fact that already an affidavit was filed. On a careful reading of the entire written statement and the affidavits filed, Commission noted that there was no explanation by the appellant as to why the cheques were not re-forwarded....
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....t as already noted earlier, this contention is palpably beyond the pleadings and no reference to such technical failure whatsoever was made even in the affidavit dated 04.04.2024 along with which this particular document had been filed. 24.3. On the aforesaid basis, Commission concluded that there was manifest deficiency in service on the part of the appellant in dealing with the cheques delivered by the complainant which could not be encashed as the same had become stale by the date on which those were passed on to the payee bank. 25. After holding that there was deficiency of service on the part of the appellant, Commission went on to hold that respondent would be entitled to a reasonable compensation on account of such deficiency in service. 25.1. According to the Commission, had the cheques been endorsed to the payee bank on 02.06.2018, the payee bank would have become liable to compensate the complainant instead of the appellant but the fact that the cheques were not endorsed at all to the payee bank on 02.06.2018 rendered the appellant liable for the consequences. Dealing with the contention of the appellant that the drawer of the bank i.e. M/s. Assotech Limited was ....
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....truncated cheque and a cheque in the electronic form. We may mention herein that 'bill of exchange' is a defined expression. It is defined in Section 5 which says that a 'bill of exchange' is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. 29.1. As per Section 7, the maker of a 'bill of exchange' or cheque is called the 'drawer'; and the person thereby directed to pay is called the 'drawee'. 30. Section 25 says that when the day on which a 'promissory note' or 'bill of exchange' is at maturity is a public holiday, the instrument shall be deemed to be due on the next preceding business day. As per the Explanation, the expression 'public holiday' would include a Sunday. A 'promissory note' is again a defined expression in terms of Section 4 which means an instrument in writing (not being a bank-note or a currency note) containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. 31. Liability of....
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....e had to the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case. 35. As per Section 85(1), where a cheque payable to order purports to be endorsed by or on behalf of the payee, the drawee is discharged by payment in due course. Be it stated that as per Section 15, when the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, or signs for the same purpose, a stamped paper intended to be completed as a negotiable instrument, he is said to endorse the same and is called the 'endorser'. We may also mention that in terms of Section 14, when a 'promissory note', 'bill of exchange' or cheque is transferred to any person, so as to constitute the person the holder thereof, the instrument is said to be negotiated. 36. Reasonable time is provided for in Section 105 which says that in determining what is a reasonable time for presentment for acceptance or payment, for giving notice of dishonour and for noting, regard shall be had to the nature of the instrument and the usual course of dealing with respect to ....
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....equacy 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. 42. While administering the Consumer Protection Act, 1986 over the years, many shortcomings came to be noticed. Therefore, a new Consumer Protection Act, 2019 came to be enacted incorporating, inter alia, many innovative features while addressing the shortcomings of the previous enactment. 43. Again, confining to the definitions of 'service' and 'deficiency', we find that in Section 2(42), 'service' has been defined to mean service of any description which is made available to potential users and includes, but is not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information but does not include the rendering of any service free of charge or under a contract of personal service. 43.1. From a compariso....
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....ompensation for failure to discharge obligation resembling those created by contract. It says, when an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default as if such person had contracted to discharge it and had broken his contract. 45.2. The Explanation to Section 73 clarifies that in estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account. 46. The scope and ambit of the definition of 'service' as defined under the Consumer Protection Act, 1986 was examined by this Court in Lucknow Development Authority Vs. M.K. Gupta (1994) 1 SCC 243. After extracting the definition, it was observed that the definition is in three parts; the main part is followed by inclusive clause and ends by exclusionary clause. This Court opined that the main clause is itself very wide. It applies to any service made available to potential users. The words 'any' and 'potential' are significant. Both are of w....
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....lding that there was deficiency in service provided by the Maharashtra State Financial Corporation to the complainant on account of their failure to release the balance loan amount? After adverting to the definition of 'service' in the Consumer Protection Act, 1986, this Court held as follows: 18. The use of the words "any" and "potential" in the context these have been used in clause (o) indicates that the width of the clause is very wide and extends to any or all actual or potential users. The legislature has expanded the meaning of the word further by extending it to every such facilities as are available to a consumer in connection with banking, financing, etc. Undoubtedly, when the bank or financial institutions advance loans, they do render "service" within the meaning of the clause. In that behalf, there is no dispute. 47.1. This Court held that the width of the words 'any' and 'potential' were very wide and the definition of 'service' extends to all or any actual or potential users. The legislature has expanded the meaning of the word 'service' by extending it to every such facility as are available to a consumer in connection with banking, financing etc. 47.....
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....compensation has to be fair, reasonable and commensurate to the loss or injury. This Court held thus: 13. The sine qua non for entitlement of compensation is proof of loss or injury suffered by the consumer due to the negligence of the opposite party. Once the said conditions are satisfied, the Consumer Forum would have to decide the quantum of compensation to which the consumer is entitled. There cannot be any dispute that the computation of compensation has to be fair, reasonable and commensurate to the loss or injury. There is a duty cast on the Consumer Forum to take into account all relevant factors for arriving at the compensation to be paid. 49.1. Referring to an earlier decision of this Court in Charan Singh Vs. Healing Touch Hospital (2000) 7 SCC 668, this Court observed that calculation of damages depends on the facts and circumstances of each case; no hard and fast rule can be laid down for universal application; while awarding compensation, a consumer forum has to take into account all relevant factors and assess compensation on the basis of accepted legal principles on moderation. The compensation has to be reasonable, fair and proper in the facts and circu....
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....h a court may take cognizance, two other requirements should be fulfilled. This Court explained thus: 16. The presentation of the cheque and dishonour thereof within the period of its validity or a period of six months is just one of the three requirements that constitutes "cause of action" within the meaning of Sections 138 and 142(b) of the Act, an expression that is more commonly used in civil law than in penal statutes. For a dishonour to culminate into the commission of an offence of which a court may take cognizance, there are two other requirements, namely, (a) service of a notice upon the drawer of the cheque to make payment of the amount covered by the cheque, and (b) failure of the drawer to make any such payment within the stipulated period of 15 days of the receipt of such a notice. It is only when the said two conditions are superadded to the dishonour of the cheque that the holder/payee of the cheque acquires the right to institute proceedings for prosecution under Section 138 of the Act, which right remains legally enforceable for a period of 30 days counted from the date on which the cause of action accrued to him............. **** **** **** **** ....
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....naging Director cannot be proceeded against. We are unable to accept the plea that Section 138 of the NI Act proceedings are primarily compensatory in nature and that the punitive element is incorporated only at enforcing the compensatory proceedings. The criminal liability and the fines are built on the principle of not honouring a negotiable instrument, which affects trade. This is apart from the principle of financial liability per se. To say that under a scheme which may be approved, a part amount will be recovered or if there is no scheme a person may stand in a queue to recover debt would absolve the consequences under Section 138 of the NI Act, is unacceptable. 52. Explaining the position from a different perspective, a two-Judge Bench of this Court in Vishnoo Mittal Vs. M/s Shakti Trading Company (2025) 9 SCC 417, observed that a return of cheque dishonoured simpliciter does not create an offence under Section 138 of the NI Act. The 'cause of action' would arise only when the demand notice is served and payment is not made pursuant to such demand notice within the stipulated fifteen day period. In other words, the 'cause of action' arises only when the amount remains unp....
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....k were on strike on 30.05.2018 and 31.05.2018. Commission noted from the affidavit filed on behalf of the appellant on 13.03.2023 wherein in paragraph 5, it was stated that the cheques were returned on the evening of 01.06.2018 which clearly contradicted what was stated in the return memos dated 30.05.2018. Commission opined that even if for arguments sake, this contradiction was overlooked and it was taken that the cheques were returned on the evening of 01.06.2018, then also there is no explanation provided by the appellant as to why no specific reason was provided for this return. It may be mentioned that the validity of the cheques was only till the working hours of 02.06.2018 which was a working day (03.06.2018 being a holiday on account of Sunday). Appellant failed to provide any satisfactory explanation as to why the cheques could not be re-presented before the bank of the drawer again on 02.06.2018 which was a working day. However, if we accept the return memos (and there is no reason why we should not), the cheques were returned on 30.05.2018. In that event, there were two full working days for the appellant to resubmit the two cheques i.e. on 01.06.2018 and 02.06.2018. Co....
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....lable to a consumer in connection with banking. Insofar as 'deficiency' is concerned, while the scope of the expression is also very wide, there is no single decisive test to determine the extent of fault, imperfection etc. It all depends on the facts of a particular case. 58. Insofar as the present case is concerned, we have already noted that there is no explanation at all, not to speak of any reasonable explanation, as to why the two cheques of the respondent were not represented by the appellant before the drawer's bank on 01.06.2018 and 02.06.2018, knowing fully well that the validity of the two cheques was only till 02.06.2018. 59. A bank receiving cheques for collection acts as an agent of the customer and is under an obligation to exercise due diligence in presenting the instruments within the prescribed validity period. Failure to do so resulting in the instrument becoming stale, in the absence of any reasonable explanation, would result in negligence in the discharge of banking duties which would constitute deficiency in rendering service within the meaning of the consumer protection law. 60. Moreover, the finding recorded by the Commission that there was deficie....
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.... factors into consideration and assess the compensation on the basis of accepted legal principles on moderation. The compensation has to be reasonable, fair and proper in the given facts and circumstances of a case by applying the established judicial standards. 66. The aforesaid decision was referred to with approval by a three-Judge Bench of this Court in Shakuntla Devi. However, the Bench held that the sine qua non for entitlement of compensation is proof of loss or injury suffered by the consumer due to negligence of the service provider. The computation of compensation has to be fair, reasonable and commensurate to the loss or injury. 67. In MSR Leathers, a three-Judge Bench of this Court categorically held that three distinct conditions must be satisfied before the dishonour of a cheque can constitute an offence. The first condition is that the cheque ought to have been presented to the bank within the validity period. Secondly, the payee or the holder in due course of the cheque ought to make a demand for payment of the cheque amount by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding ret....