Court Directs ICICI Bank to Reverse Erroneous Transaction After Petitioner’s Indemnity Bond, No Interest Awarded Due to Petitioner’s Mistake
In a notable decision, the Delhi High Court has directed ICICI Bank Ltd. to reverse a mistaken fund transfer made by M/s MK Wholesale to the wrong beneficiary. The judgment, delivered by Justice Jasmeet Singh, concluded a prolonged legal tussle between M/s MK Wholesale and ICICI Bank, alongside others.
The case revolved around an inadvertent transfer of Rs. 3,89,981 by M/s MK Wholesale to M/s V.K. Traders, instead of the intended recipient, M/s V.K. Enterprises. The error occurred on November 23, 2023. Upon realizing the mistake, M/s MK Wholesale promptly informed both the unintended recipient and its own bank, seeking a reversal of the transaction. Despite these efforts, the transaction remained uncorrected, prompting the petitioner to file a writ petition under Article 226 of the Constitution of India.
In his ruling, Justice Singh noted that the petitioner’s bank had issued an indemnity bond in favor of ICICI Bank, promising to cover any potential liabilities resulting from the reversal of the transaction. This indemnity bond was crucial in establishing the genuineness of the petitioner’s claim. Furthermore, the court observed that M/s V.K. Traders, the accidental recipient of the funds, had failed to substantiate its entitlement to the money, despite being given ample opportunity to do so.
The court, however, declined the petitioner’s request for interest on the refunded amount. Justice Singh reasoned that the mistake was attributable to the petitioner and not the respondents, thereby negating any grounds for awarding interest.
This decision underscores the importance of vigilance in financial transactions, while also highlighting the judiciary’s role in rectifying genuine mistakes. The case is significant for setting a precedent on the treatment of inadvertent banking errors and the responsibilities of both banks and customers in such scenarios.
Bottom Line :
Banking transaction - Mistaken transfer of money to wrong beneficiary - Where petitioner immediately informed banks, beneficiary failed to substantiate entitlement despite opportunity, and petitioner's bank furnished indemnity bond, High Court directed reversal/refund of wrongly transferred amount - Interest declined as mistake was attributable to petitioner.
Statutory provision(s): Article 226 of the Constitution of India, Section 151 of the CPC, 1908
M/s MK Wholesale v. ICICI Bank Ltd., (Delhi) : Law Finder Doc id # 2989275
