Delhi State Commission Holds Punjab National Bank Liable For Opening Bank Account Without Proper Verification

Brief Facts:

General Security & Information Services (P) Ltd. (“Complainant”) is a private limited company engaged in contractual services with government entities. It alleged that Punjab National Bank (“PNB”) allowed an individual named Deepak Fitter (“Fitter”) to open a personal account in the Complainant's name without verifying proper documents. As a result, two demand drafts totaling Rs. 18,00,000/- were encased fraudulently, which were intended for the Complainant. The Complainant also suffered reputational losses and lost some lucrative contracts as a result of PNB's negligence.

The Complainant made several requests to PNB to provide the details of the account documents. However, the requests were denied. The Complainant also filed an RTI application, which was rejected as third-party information. Subsequently, the Central Information Commission (“CIC”) directed PNB to disclose the undertaking submitted by Fitter. However, PNB failed to comply with the directions.

Feeling aggrieved, the Complainant filed a consumer complaint in the State Consumer Disputes Redressal Commission, Delhi (“State Commission”). In response, PNB argued that it followed due diligence and that Fitter, who was acting as the Complainant's authorized signatory, committed the fraud. It also stated that no deficiency occurred on its part as the account details matched those on the pay orders.

Observations of the State Commission:

The State Commission observed that the primary issue was whether PNB was liable for deficiency in service for allowing Fitter to open an account in the name of the Complainant, without verifying and carrying on the due diligence procedure. It was held that banking services are covered under the Consumer Protection Act, 2019, and these services must meet the legal standard of proper performance.

It was further observed that PNB opened the account based on Fitter's PAN card, passport and an unverified undertaking submitted by him which claimed that he was the sole proprietor of the Complainant company. The State Commission held that PNB failed to provide proper documentation to prove that it did proper verification before opening the account. It was held that proper customer verification such as the KYC process ought to have been conducted by PNB.

Therefore, the State Commission directed PNB to pay Rs. 5,00,000/- as compensation and Rs. 50,000/- as litigation costs to the Complainant.

Case Title: General Security & Information Services (P) Ltd. vs Punjab National Bank and Anr.

Case No.: Complaint Case No. 387/2012

Advocate for the Complainant: Shailendra Prasad Sahay

Advocate for the Opposite Parties: Ajay Shankar

Date of Pronouncement: 08.10.2024