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STATE BANK OF INDIA v. JAMNAGAR JILLA

National Consumer Disputes Redressal Commission

Mar 23, 2022

Judgment

Subsequent
References

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Case Summary — NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

Factual and Procedural Background

This revision petition (Revision Petition No. 3992 of 2010) was filed under section 21(b) of the Consumer Protection Act, 1986 by the State Bank of India (petitioner) challenging the Order dated 06.07.2010 of the State Commission in Appeal No. 805 of 2006, which arose from the Order dated 29.05.2006 of the District Commission in Complaint No. 193 of 2005.

The underlying factual matrix in the opinion is as follows: a society under the control of the state government maintained a savings bank account with the bank, operated under joint signatures of two government officers (the District Development Officer and the Deputy District Continuous Education Officer). During 2000–2002, a senior clerk of the society, who maintained books and cheque-books, encashed a total of Rs. 13,72,629/- in cash through 16 cheques by forging the signatures of both joint authorised signatories. A criminal complaint was lodged against the clerk. Subsequently, a consumer complaint was filed by the society before the District Commission on 04.05.2005.

The District Commission, by its Order dated 29.05.2006, allowed the complaint and ordered the bank to pay Rs. 13,72,629/- to the society with interest at 6% per annum from the date of filing of the consumer complaint until realization, and awarded Rs. 5,000/- as litigation costs. The bank appealed to the State Commission, which dismissed the appeal by its Order dated 06.07.2010. The bank then invoked revisional jurisdiction before this Commission.

Legal Issues Presented

Whether the consumer complaint was barred by limitation, given that the last cheque was encashed on 07.02.2002 and the complaint was filed on 04.05.2005.
Whether statements recorded under section 161 Cr.P.C. could be relied upon by the District Commission in reaching its findings.
Whether there was 'deficiency in service' by the bank within the meaning of section 2(1)(g) of the Consumer Protection Act, 1986, on account of alleged failure to exercise due diligence in verifying signatures on the cheques.
Whether the pendency of criminal proceedings against the senior clerk precluded the consumer forum from adjudicating the civil claim for pecuniary loss.
Whether the precedents cited by the bank were applicable to justify interference with the concurrent findings of fact recorded by the District and State Commissions.

Arguments of the Parties

Appellant's Arguments (State Bank of India)

The bank contended that the consumer complaint was time-barred because the last (16th) forged cheque was encashed on 07.02.2002 while the complaint was filed on 04.05.2005 (approximately 3 years and 3 months later), and the limitation under section 24A(1) of the Act is two years.
The bank argued that statements made under section 161 Cr.P.C., which were considered by the District Commission, were inadmissible and ought not to have been relied upon.
The bank maintained that its officials had exercised due diligence in verifying signatures and therefore there was no 'deficiency' as defined in section 2(1)(g) of the Act.
The bank submitted that the District Commission should not have decided the civil matter while criminal proceedings against the senior clerk were pending.
The bank drew attention to several judgments of this Commission (listed in the opinion) in support of its position, urging their application to the present facts.

Respondent's Arguments (Jamnagar Jilla / the Society)

The opinion does not contain a detailed account of the respondent's legal arguments. A proxy counsel appeared for the complainant society but the society's learned counsel was not available to argue.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
1995 CPJ 83 — NC United Commercial Bank vs. Mahendra Popat Lal Vora	The opinion cites this judgment as one of several judgments drawn to the Court's attention by the bank; the specific rule or principle relied upon is not specified in the text of the opinion.	The Court perused the judgment and found it was on distinguishable facts and therefore not relevant to the instant case.
2014 SCC OnLine NCDRC 193 — Oriental Bank of Commerce vs. Shankar Chawal Udyog	The opinion cites this judgment as relied upon by the bank; the opinion does not state the specific legal principle invoked from this precedent.	The Court held that the judgment was on entirely distinguishable facts and not relevant to the present matter.
(2013) 3 CPJ 5223 — (NC) United Commercial Bank vs. S.D. Wadhawa	The opinion lists this decision as cited by the bank; the text does not specify the rule or principle cited from it.	The Court found the precedent factually distinguishable and therefore not applicable.
(2006) 3 CPJ 218 — Prempreet Textiles vs. Bank of Baroda	The opinion records that the bank referred to this judgment; no specific rule or principle from the judgment is articulated in the opinion.	The Court considered it but concluded it was based on distinguishable facts and not relevant to the present case.
(2009) 4 CPJ 220 — (NC) Tara Lal Chand vs. Oriental Bank of Commerce	The opinion notes the bank cited this decision; the opinion does not extract or describe a particular principle from it.	The Court observed that the judgment was factually distinguishable and therefore not applicable to the instant controversy.

Court's Reasoning and Analysis

The Court examined each principal contention raised by the bank and applied the record and legal provisions cited in the opinion as follows:

On limitation: The Court acknowledged that section 24A(1) prescribes a two-year limitation from the date the cause of action arose, but noted that sub-section (2) permits condonation of delay for sufficient cause. The District Commission had specifically condoned the delay in filing the complaint after an application to condone delay was considered. The Court found that sufficient cause existed here because a criminal complaint had been lodged first and consultations with legal department and government advocates followed, and the bank had not remedied the pecuniary loss. The Court saw no reason to take a different view on condonation of delay.
On admissibility of section 161 Cr.P.C. statements: The Court stated there was no need to decide admissibility or inadmissibility of s.161 statements because, even if those statements were disregarded, there remained sufficient material on record—namely, the 16 disputed cheques, specimen signatures held by the bank, affidavits of bank officials, and a clear report from a handwriting expert—to sustain the District Commission's finding that the signatures were forged.
On 'deficiency in service' and due diligence (section 2(1)(g)): The Court cited the statutory definition and rejected the bank's contention that it exercised due diligence. The Court relied on the documentary and expert evidence and the District Commission's critical appraisal of the bank officials' affidavits (which, the District Commission found, attempted to shift responsibility). The Court emphasized that both joint authorised signatories' signatures were forged on each cheque and that the bank failed to compare the signatures diligently, allowing encashment in a "perfunctory and mechanical manner." Therefore, the Court concluded there was deficiency in service.
On pendency of criminal proceedings: The Court rejected the bank's argument that the consumer forum should not have decided the matter because criminal proceedings were pending. The Court explained that criminal prosecution and civil proceedings in consumer fora are in different domains, not mutually exclusive or incompatible. The standards of proof and objectives differ—criminal proceedings require proof beyond reasonable doubt, whereas consumer (civil) proceedings entertain preponderance of probabilities and equitable considerations—so the consumer forum was entitled to adjudicate the claim for pecuniary loss.
On precedents cited by the bank: The Court reviewed the judgments referred to by the bank but found each to be on distinguishable facts and therefore not helpful to alter the result in the present case.
On the overall appraisal: The Court found that both the District and State Commissions had correctly and consistently appraised the facts and evidence, culminating in concurrent findings of forged signatures and deficiency in service by the bank. The State Commission's reasoning (quoted in the opinion) emphasized that bank officials are responsible for verifying signatures and that failure to do so constitutes deficiency in banking service.
The Court also commented on the bank's prolonged conduct: rather than promptly making good the pecuniary loss, the bank initially ignored requests, then litigated through multiple forums over nearly two decades; the Court criticized this approach and found it to reflect disregard for the society's loss.

Holding and Implications

HOLDING: The revision petition filed by the State Bank of India is dismissed.

Implications and direct consequences as stated in the opinion:

The bank is ordered to pay the amount awarded by the District Commission (Rs. 13,72,629/-) with interest at 6% per annum from the date of filing of the consumer complaint until realization, and the Rs. 5,000/- awarded as litigation costs, as previously ordered and upheld by the State Commission. This award shall be made good within four weeks.
The bank is directed to deposit a cost of Rs. 10,000/- into the 'Consumer Legal Aid Account' of the District Commission within four weeks.
If the bank fails to make the award and deposit the cost within four weeks, the District Commission is directed to undertake execution for enforcement and penalty in accordance with law.
The Court made explicit that nothing in its order prevents the bank from taking departmental action against its officials or seeking recovery from them, nor prevents legal action against the senior clerk who forged the cheques; those are independent steps and do not relieve the bank of its obligation to remedy the consumer's loss.

The opinion does not purport to set out any novel legal precedent; rather, it upholds concurrent factual findings of forgery and deficiency in service and enforces the remedial directions previously given by the District Commission and affirmed by the State Commission.

This summary has been prepared strictly from the text of the provided opinion. No facts, arguments, or conclusions have been added beyond what is expressly stated in the opinion.

Show all summary ...

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

REVISION PETITION NO. 3992 OF 2010

(Against the Order dated 06/07/2010 in Appeal No. 805/2006 of the State Commission Gujarat)

1. STATE BANK OF INDIA

Through it Branch Manager, Lal Bungalw Branch Jamnagar - 361001

Gujarat ...........Petitioner(s) Versus

1. JAMNAGAR JILLA

Through its Chief Administrator, At Jilla Panchayat, Third Floor

Jamnagar - 361001

Gujarat ...........Respondent(s)

BEFORE:

HON'BLE MR. DINESH SINGH,PRESIDING MEMBER HON'BLE MR. JUSTICE KARUNA NAND BAJPAYEE,MEMBER For the Petitioner : : Mr. A.V. Rangam, Advocate with Mr. Buddy A. Ranghanadhan, Advocate

Ms. Avani Bagaria, Advocate

Ms. Nandini Tomar, Advocate

For the Respondent : Ms. Prerana Mohapatra, proxy counsel Dated : 23 Mar 2022

ORDER

1. 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.

2. 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.

3. 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.

4. 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.

5. 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.- - -"

6. 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.

7. 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.

8. 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.

9. 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.

10. 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'.

11. 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:

2. 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.

3. 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.

12. 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.

13. 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.

14. 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.

......................

DINESH SINGH

PRESIDING MEMBER

......................J

KARUNA NAND BAJPAYEE

MEMBER