Summary
The managing director of a private company complained before the State Consumer Commission that two demand drafts for Rs. 8 lakhs drawn in the name of D-Cube Construction had been credited by the bank not to the company's account but to a new account of that name opened by a co-director as proprietor on the company's no-objection letter. The State Commission ordered the bank to pay Rs. 8 lakhs with Rs. 1 lakh compensation and the National Commission affirmed. The Supreme Court set both orders aside: where the drafts were in the name of the proprietary concern and credited to the account of that name opened on the company's no-objection letter, there was no wilful fault amounting to deficiency in service; the burden of proving deficiency lies on the complainant; and complaints involving highly disputed facts or allegations of fraud cannot be decided in the summary consumer jurisdiction.
Issues
- Whether a bank's crediting of demand drafts drawn in the name of a proprietary concern to an account of that name opened by a company director on the company's no-objection letter amounts to deficiency in service under Section 2(1)(g) of the Consumer Protection Act, 1986.
- Whether a consumer forum can adjudicate a complaint involving highly disputed questions of fact or allegations of fraud or other tortious acts.
Provisions considered
- Section 2(1)(g), Consumer Protection Act, 1986Deficiency means a fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance required by law or contract; it cannot be presumed, must be distinguished from tortious or criminal acts, and the burden of proving it lies on the complainant, who failed to discharge it. (¶¶ 9, 11, 12, 13)
- Section 2(1)(o), Consumer Protection Act, 1986Banking is a service under the Act, but a bank acting bona fide and following due procedure cannot be held liable for an alleged fraud committed by a director of the customer company. (¶¶ 9, 11)
Held
- The two drafts were issued in the name of D-Cube Construction, not D-Cube Constructions (P) Ltd., and were credited to an account in that name opened by a director as proprietor on the strength of the company's letter of no objection dated 15.02.1997; following Ravneet Singh Bagga, in the absence of wilful fault, imperfection, shortcoming or inadequacy in performance, and where the bank acted in good faith after taking precautions, there is no deficiency in service. (¶¶ 8, 9, 11)
- Proceedings before consumer fora are summary in nature; complaints involving highly disputed questions of fact or tortious acts or criminality such as fraud or cheating cannot be decided by the forum, which must distinguish deficiency in service from such acts, and the burden of proving deficiency always rests on the complainant. (¶¶ 7, 10, 12, 13)
Result
Appeal allowed; orders of the State Consumer Disputes Redressal Commission dated 23.12.2004 and the National Commission dated 01.02.2007 directing the bank to pay Rs. 8 lakhs with Rs. 1 lakh compensation quashed; complaint dismissed.