Supreme Court Upholds Consumer Rights in Banking Negligence Case, Canara Bank Found Liable for Deficiency in Service Over Cheque Presentment Delays
In a landmark judgment, the Supreme Court of India has upheld a decision by the National Consumer Disputes Redressal Commission (NCDRC) against Canara Bank, finding it liable for negligence in its banking services. The case, titled Canara Bank v. Kavita Chowdhary, revolved around the bank's failure to present cheques for payment within the prescribed validity period, thereby causing financial loss to the complainant, Kavita Chowdhary.
The court, comprising Justices B.V. Nagarathna and Ujjal Bhuyan, dismissed the bank's appeals against the NCDRC's order which had directed Canara Bank to compensate the complainant. The bank was ordered to pay a reduced compensation of 6 percent of the cheque amount along with interest, revised from the earlier 10 percent, for failing to re-present two cheques totaling over Rs. 1.06 crore within their validity, resulting in them becoming stale.
The judgment emphasized that banks, when receiving cheques for collection, act as agents of their customers and are duty-bound to exercise due diligence. The failure to re-present the cheques, which became stale, was deemed a significant deficiency in service as per the Consumer Protection Acts of 1986 and 2019.
The court also pointed out that the bank's arguments, citing a strike as the reason for delay, did not hold as it failed to present the cheques on the subsequent working days. The ruling reiterated that the procedural lapse deprived the complainant of pursuing legal remedies against the cheque issuer under Section 138 of the Negotiable Instruments Act, thus constituting service negligence.
The judgment serves as a crucial reminder to banking institutions regarding their responsibilities towards customers and the repercussions of negligence in banking operations.
Bottom Line:
Banking - Deficiency in service - Failure to re-present cheques within their validity period due to negligence amounts to deficiency in service under the consumer protection law.
Statutory provision(s): Consumer Protection Act, 1986, Consumer Protection Act, 2019, Negotiable Instruments Act, 1881, Indian Contract Act, 1872
Canara Bank v. Kavita Chowdhary, (SC) : Law Finder Doc id # 2883277
