NCDRC Orders Compensation Against Canara Bank for Negligence in Cheque Clearance

By Legal Wires 5 Minutes Read

In a significant judgment, the National Consumer Disputes Redressal Commission (NCDRC), led by Justice Sudip Ahluwalia, found Canara Bank liable for deficiency in service due to its failure to present two cheques for clearing within the stipulated time frame, resulting in their becoming stale. This decision came after the complainant, Priya Chowdhary, alleged that the bank’s actions deprived her of her legal remedies against the drawer of the cheques, Assotech Ltd. The case highlights the responsibility of banks to ensure the timely processing of financial instruments and the consumer’s right to seek compensation in instances of service deficiency.

Brief Facts of the Case:

• The complainant, Priya Chowdhary, held 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.
• Although the bank initially credited these amounts, they later debited them, citing a “connectivity failure” for one cheque and labeling the other as “Instrument outdated/stale.”
• The complainant argued that the bank’s failure to present the cheques for clearing within the validity period resulted in a loss of Rs. 1,06,10,768 and deprived her of legal recourse against Assotech Ltd.
• After issuing a legal notice to the bank demanding compensation, which went unanswered, she filed a complaint before the National Commission seeking Rs. 1,06,10,768 with 18% interest and Rs. 25,00,000 for damages.

Contentions of the Bank:

• The bank denied most allegations but admitted to presenting the cheques on the same day of deposit, reflecting them to the paying bank the next day.
• A nationwide bank strike caused the cheques to be returned, and they were resubmitted for clearing after the complainant’s request.
• The bank argued that the complaint was not maintainable, citing the absence of a notice under Section 80 of the Code of Civil Procedure and the non-joinder of Vijaya Bank as a necessary party.
• The bank further maintained that it could not be held accountable for losses arising from the legal strike.

Observations by the National Commission:

• The National Commission noted that the bank failed to explain why the cheques were not represented on June 2, a working day, and attempted to shift responsibility to the complainant without providing evidence.
• The claim of a “technical failure” on June 2 was unsubstantiated in the bank’s prior statements or affidavits.
• The commission determined a clear deficiency in service by the bank, as it did not present the cheques promptly, causing them to become stale.
• The commission dismissed the bank’s argument that the cheques would have remained uncashed due to the holiday on June 3, affirming that timely presentation was still the bank’s responsibility.
• Despite the bank’s claim that Assotech Ltd. was under liquidation, the commission recognized that the complainant was deprived of the opportunity to initiate proceedings under Section 138 of the Negotiable Instruments Act due to the bank’s lapse.
• The commission awarded the complainant 10% of the total cheque value as token compensation, along with 8% interest per annum and litigation costs.

Final Decision:

• The National Commission directed Canara 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.
• The commission upheld the complainant’s right to reasonable compensation for the bank’s failure to perform its duties.

Click to read: Priya Chowdhary Vs. Canara Bank,  C.C. No. 124/2019

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