Palakkad District Commission Holds Axis Bank Liable For Presenting The Instalment Cheque Before Business Hours And Collecting Cheque Bounce Fee

Brief Facts:

The Complainant took a loan from Axis Bank (“Bank”). When attempting to repay one of the loan instalments, the Complainant was unable to deposit funds into his account on the day before the due date, as it was a holiday. He deposited the instalment amount on the due date at 7 AM before banking hours. However, the Bank dishonoured the cheque as it was submitted for clearance at midnight. Consequently, the Bank imposed a bouncing charge of Rs. 400/- on the Complainant. Subsequently, the Complainant decided to close the loan account. Upon returning the security documents, the Bank erroneously noted the sale deed number on the list.

Feeling aggrieved, the Complainant filed a consumer complaint before the District Consumer Disputes Redressal Commission, Palakkad, Kerala (“District Commission”). In response, the Bank contended that due to its automated system, the cheque was processed at midnight on the due date. Further, the Complainant was aware of how the system functioned. Regarding the document error, the Bank acknowledged the mistake but asserted it was corrected after verification.

Observations by the District Commission:

The District Commission referred to Section 65 of the Negotiable Instruments Act, which mandates cheque presentment during banking hours. Since the Bank presented the cheque before business hours, the District Commission held that this action contravened the law. The District Commission held that the Bank's automation should not override statutory obligations and that the responsibility for the early presentment lay with the Bank. Regarding the noting errors, the District Commission observed that although there was a minor delay, the error was corrected and did not materially affect the Complainant's rights or cause significant inconvenience.

Therefore, the Bank was held liable for deficiency in service for charging the cheque bounce fee due to the premature presentment. However, it found no service deficiency in the document error correction. As a result, the complaint was partially allowed and Axis Bank was directed to refund Rs. 400/-, pay Rs. 25,000/- as compensation and Rs. 10,000/- as legal costs.

Case Title: Muhammed Basheer K. vs The Managing Director, Axis Bank Ltd. and Anr.

Case No.: CC/61/2023

Advocate for the Complainant: A.K. Joseph

Advocate for the Opposite Parties: M/s Bindhu G & Aswathy R.

Date of Pronouncement: 05.11.2024