NCDRC Holds Canara Bank Liable For Deficiency In Service Due To Negligence In Handling Cheque Clearance

Brief Facts of the Case

The complainant has a Savings Bank Account with Canara bank at its Maharani Bagh Branch. She deposited two CTS cheques, one for Rs. 11,36,868 and the other for Rs. 94,73,900, both issued by Assotech Ltd. and drawn on Vijaya Bank. The bank credited these amounts into her account but later debited them under “Online cheque return,” citing a “connectivity failure.” The second cheque was returned with the reason “Instrument outdated/stale.” The complainant alleged that the bank failed to present the cheques for clearing within the validity period, causing a loss of Rs. 1,06,10,768 and depriving her of legal remedies against Assotech Ltd. She issued a legal notice demanding compensation, which the bank ignored, prompting her to file a complaint before the National Commission. The complainant seeks Rs. 1,06,10,768 along with 18% interest and Rs. 25,00,000 for damages.

Contentions of the Bank

The bank has denied all allegations made by the complainants, except for those it specifically admitted. The bank stated that it lodged the cheques on the same day they were deposited, which were reflected to the paying bank the following day. However, a nationwide bank strike occurred, causing the paying bank to return the cheques, which were subsequently shown to the presenting bank. The cheques were then re-submitted for clearing after the complainant's request. The bank also noted that the complainant failed to serve a notice under Section 80 of the Code of Civil Procedure and that the complaint is legally flawed due to the non-joinder of Vijaya Bank, which caused the cheque return. Additionally, the bank asserted that it cannot be held liable for losses resulting from the legal strike.

Observations by the National Commission

The National Commission observed that the bank failed to provide any explanation for not re-forwarding the cheques on June 2, which was a working day. Instead, it tried to shift the blame onto the complainant by claiming that the cheques were re-forwarded based on the complainant's instructions on June 4 and June 8, despite lacking any evidence of such instructions. The bank's claim of a “technical failure” on June 2 was also found to be unsupported by its earlier statements or affidavits. Given these circumstances, the commission found a clear deficiency in the bank's service, as the cheques were not presented in a timely manner, causing them to become stale. The commission ruled that the complainants were entitled to reasonable compensation for this deficiency. The bank argued that even if the cheques had been forwarded on June 2, they could not have been encashed due to a holiday on June 3. However, the commission rejected this argument, asserting that the bank would still be liable for not presenting the cheques on the relevant date. The bank also claimed that the drawer of the cheque, Assotech Limited, was under liquidation, making recovery impossible. The complainants countered that they were deprived of the right to initiate proceedings against the company's directors under Section 138 of the Negotiable Instruments Act due to the bank's negligence. The commission acknowledged that while the complainants' rights had been hindered, it was uncertain what the outcome of any potential legal action would have been. Thus, the commission awarded the complainants reasonable token compensation amounting to 10% of the total value of the cheques deposited, along with interest and litigation costs.

The National Commission allowed the complaint and directed the bank to pay 10% of the total amount of Rs. 1,06,10,768, along with interest at 8% per annum and litigation costs of Rs. 50,000.

Case Title: Priya Chowdhary Vs. Canara Bank

Case Number: C.C. No. 124/2019

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