THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK LTD. & ANR. versus R. CHANDRAMOHAN on 27 March 2023

1. The appellants – the Chairman and the Manager of the CityUnion Bank Limited have preferred the present appeal against theJudgment and Order dated 01.02.2007 passed by the National ConsumerDisputes Redressal Commission, Circuit Bench at Chennai (hereinafter H

referred to as the ‘National Commission’) in First Appeal No. 29 of2005 arising out of the Judgment and Order dated 23.12.2004 passed bythe State Consumer Disputes Redressal Commission, Chennai in O.P.No. 103/99.

2. The short facts giving rise to the present appeal are that therespondent - original complainant Mr. R. Chandramohan had filed thecomplaint being O.P. No. 103/99 against the appellants – originalopponents before the State Commission seeking direction against theappellants to re-credit rupees eight lakhs covering two demand drafts -one bearing No. 166570 dated 28.06.1996 for rupees five lakhs and theother bearing No. 177923 dated 18.11.1996 for rupees three lakhs in hisCurrent Account No. 3600. It was alleged in the complaint inter aliathat the respondent-complainant was the Managing Director of “D-CubeConstructions (P) Ltd.” having its registered office at Chennai. ShriR. Thulasiram and Shri R. Murali were the other directors of the saidCompany. As per the further case of the respondent, a Current Accountbearing No. 3600 was opened in the name of the said company with theappellants’- bank on 13.04.1995 and the respondent alone was permittedto operate the said account. During the end of 1996, there wasmisunderstanding between the respondent and one R. Kularaireman and,therefore, he had written a letter to the appellant no. 2 on 08.01.1997requesting it not to allow withdrawals from the said current account. Itwas further case of the respondent that one Ravindra, an NRI residingat Malaysia had purchased three flats in the respondent’s projects andhad informed the complainant that he had sent two drafts i.e., draftbearing No. 166570 dated 28.06.1996 for Rs. 5 lakhs and draft bearingno. 177923 dated 18.11.1996 for Rs. 3 lakhs, totally amounting to Rs. 8lakhs. On the reconciliation of the accounts, it was found that the saidtwo demand drafts were not credited in the said current account of thecompany opened with the appellant no. 2 - bank. Despite the informationsought by the respondent-complainant, the appellant no. 2 did not furnishany information. Subsequently, the respondent came to know throughIndian Overseas Bank that the said demand drafts were presented throughthe second appellant bank for clearing and the same were paid to theCity Union Bank, Ram Nagar Branch. The respondent therefore onceagain requested the appellant no. 2 on 03.08.1998 informing it that theamount of the said two drafts were credited in some other accounts andtherefore the same be re-credited in his current account.

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A3. Thereafter, correspondence ensued between the appellants andthe respondent and it was found that a separate account in the name of“D-Cube Construction” was opened and the said two drafts werecredited in that account, as the said demand drafts were in the name of“D-Cube Construction”. The respondent alleging collusion and negligenceon the part of the appellants filed the complaint before the StateBCommission.

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4. The State Commission allowing the said complaint with cost ofRs. 1,000/- directed the appellants-original opponents to pay therespondent-complainant a sum of Rs. Eight lakhs along with compensationof Rs. one lakh towards mental agony, loss and hardship. Being aggrievedCby the said order, the appellants had preferred the First Appeal being 29/2005, which came to be dismissed by the National Commission vide theimpugned order.

5. The learned counsel appearing for the appellants submittedthat the State Commission and the National Commission had committedDan error in not appreciating the fact that in absence of any fault,imperfection, shortcoming or inadequacy in the performance, which wasrequired to be maintained by the appellants’ bank, it could not be presumedthat there was deficiency in service as defined under Section 2(1)(g) ofthe Consumer Protection Act, 1986 (hereinafter referred to as the ‘saidEAct’) He has relied upon the decision of this Court in case of RavneetSingh Bagga vs. KLM Royal Dutch Airlines and Another[1] and incase of Branch Manager, Indigo Airlines Kolkata and Another Vs.Kalpana Rani Debbarma and Others[2] to submit that the complaintfiled by the respondent-complainant was not maintainable before theState Commission, and even otherwise the respondent had failed toFdischarge the burden of proof that there was deficiency in service onthe part of the appellants. He further submitted that the two demanddrafts in question were issued in the name of “D-Cube Construction”only, and it was on the instructions of R. Thulasiram one of the Co-directors, the amounts of the said drafts were credited in the CurrentGAccount No. 4160 opened in the name of “D-Cube Construction”.According to him, as per the letter dated 15.02.1997 addressed to theappellant-bank by the “D-Cube Constructions (P) Ltd.”, stating that thesaid Company had no objection if current account in the name of 1 (2000) 1 SCC 66H2 (2020) 9 SCC 424

“D-Cube Construction” was opened, the said account was opened byShri R. Thulasiram in his capacity as the proprietor of the proprietaryconcern. According to him, if any fraud was committed by the Co-directorof the “D-Cube Constructions (P) Ltd.”, such disputes pertains to fraudwould not fall within the jurisdiction of the State Commission or theNational Commission to decide.

6. However, learned counsel for the respondent-complainantsubmitted that when the two forums have consistently held the appellantsliable for the deficiency in service, this Court should not interfere withthe same. He further submitted that the bank would be vicariously liablefor the acts of its employees. As per the General Banking Principles andGuidelines laid down by the RBI, the account should not have beenopened with the similar name of the company of which the complainantwas the Managing Director. According to him, without the involvementof the officers of the Bank, R. Thulasiram would not have encashed thedrafts in question by opening a new current account in the name of “D-Cube Construction”. He further submitted that there was a cleardeficiency in service on the part of the appellant -bank. In this regard hehad relied upon the decision in case of Kerala State CooperativeMarketing Federation Vs. State Bank of India and Others[3] and incase of Indian Overseas Bank vs. Industrial Chain Concern[4].

7. Having regard to the submissions made by the learned counselfor the parties and to the documents on record, the question that falls forconsideration before this Court would be, whether the Commission/Forumunder the Act could have entertained the complaint involving highlydisputed questions of facts or involving allegations of tortious acts, theproceedings before the Commission/Forum being summary in nature?

8. In the instant case, it is not disputed that three drafts wereissued by an NRI from Malaysia for the purchase of three flats. Out ofthree, one draft was for the sum of Rs. 5 lakhs dated 28.06.1996 andtwo drafts were for Rs. 3 lakhs & Rs. 6 lakhs dated 18.11.1996. It isalso not disputed that the two drafts in question were issued in the nameof “D-Cube Construction” and not in the name of “D-Cube Constructions(P) Ltd.” The Current Account No. 3600 was in the name of “D-CubeConstructions (P) Ltd.”, whereas the Current Account No. 4160 wasopened on 15.02.1997 in the name of “D-Cube Construction” by Shri R.

3 (2004) 2 SCC 425

4 (1990) 1 SCC 484

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AThulasiram, as the proprietor of his proprietary concern, when he wasone of the Directors of “D-Cube Constructions (P) Ltd.” It is also notdisputed that appellant no. 2 - bank had received a letter dated 15.02.1997from the “D-Cube Constructions (P) Ltd.” giving “no objection” foropening the current account in the name of “D-Cube Construction”. It isalso not disputed that there were certain disputes going on between theBDirectors of the said company - “D-Cube Constructions (P) Ltd.”.

9. Under the circumstances, when the Current Account No. 4160was opened by R. Thulasiram as the proprietor of “D-Cube Construction”,relying upon the letter dated 15.02.1997 written on behalf of the “D-Cube Constructions (P) Ltd.”, and when the disputed two drafts inCquestion which were in the name of “D-Cube Construction”, werecredited in the account of “D-Cube Construction”, it could not be saidthat there was any willful default or imperfection or short coming so asto term it as the deficiency in service on the part of the appellant-bankwithin the meaning of Section 2(g) of the said Act. The counsel for theDappellants has rightly relied upon the decision of this Court in case ofRavneet Singh Bagga (supra) as under:

“5. Section 2(i)(o) defines “service” to mean service of anydescription which is made available to potential users and includesthe provision of facilities in connection with banking, financing,Einsurance, transport, processing, supply of electrical or other energy,board or lodging or both, entertainment, amusement or thepurveying of news or other information, but does not include therendering of any service free of charge or under a contract ofpersonal service. Section 2(i)(g) defines “deficiency” to meanany fault, imperfection, shortcoming or inadequacy in the quality,Fnature and manner of performance which is required to bemaintained by or under any law for the time being in force or hasbeen undertaken to be performed by a person in pursuance of acontract or otherwise in relation to any service”.

“6. The deficiency in service cannot be alleged without attributingGfault, imperfection, shortcoming or inadequacy in the quality, natureand manner of performance which is required to be performed bya person in pursuance of a contract or otherwise in relation to anyservice. The burden of proving the deficiency in service is uponthe person who alleges it. The complainant has, on facts, beenHfound to have not established any wilful fault, imperfection,

shortcoming or inadequacy in the service of the respondent. Thedeficiency in service has to be distinguished from the tortious actsof the respondent. In the absence of deficiency in service theaggrieved person may have a remedy under the common law tofile a suit for damages but cannot insist for grant of relief underthe Act for the alleged acts of commission and omission attributableto the respondent which otherwise do not amount to deficiency inservice. In case of bona fide disputes no wilful fault, imperfection,shortcoming or inadequacy in the quality, nature and manner ofperformance in the service can be informed (sic). If on facts it isfound that the person or authority rendering service had taken allprecautions and considered all relevant facts and circumstancesduring the transaction and that their action or the final decisionwas in good faith, it cannot be said that there had been anydeficiency in service. If the action of the respondent is found tobe in good faith, there is no deficiency of service entitling theaggrieved person to claim relief under the Act. The rendering ofdeficient service has to be considered and decided in each caseaccording to the facts of that case for which no hard and fast rulecan be laid down. Inefficiency, lack of due care, absence of bonafides, rashness, haste or omission and the like may be the factorsto ascertain the deficiency in rendering the service”

10. The ratio of the aforestated decision has also been followed incase of Branch Manager, Indigo Airlines Kolkata (supra). In OrientalInsurance Co. Ltd. vs. Munimahesh Patel[5], this Court held that theproceedings before the Commission are essentially summary in natureand the issues which involve disputed factual questions, should not beadjudicated by the Commission.

11. So far as the facts of the present case are concerned, even ifthe allegations made in the complaint are taken on their face value, thenalso it clearly emerges that there was no wilful fault, imperfection,shortcoming or inadequacy in the discharge of the duty on the part of theemployees of the appellants’ bank, which could be termed as “deficiencyin service” under Section 2(1)(g) of the said Act. As emerging from therecord, some disputes were going on amongst the Directors of theCompany and one of the Directors, if allegedly had committed fraud or AB

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Acheating, the employees of the bank could not be held liable, if they hadacted bona fide and followed the due procedure.

12. The proceedings before the Commission being summary innature, the complaints involving highly disputed questions of facts or thecases involving tortious acts or criminality like fraud or cheating, couldBnot be decided by the Forum/Commission under the said Act. The“deficiency in service”, as well settled, has to be distinguished from thecriminal acts or tortious acts. There could not be any presumption withregard to the wilful fault, imperfection, shortcoming or inadequacy in thequality, nature and manner of performance in service, as contemplatedin Section 2(1)(g) of the Act. The burden of proving the deficiency inCservice would always be upon the person alleging it.

13. In the instant case, respondent-complainant having miserablyfailed to discharge his burden to prove that there was a deficiency inservice on the part of the employees of the appellants-bank within themeaning of Section 2(1)(g) of the Act, his complaint deserved to beDdismissed, and is accordingly dismissed. The impugned orders passedby the State Commission and the National Commission are thereforequashed and set aside. The appeal stands allowed accordingly.

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Ankit Gyan(Assisted by : Bhavyata Kapoor and Aarsh Choudhary, LCRAs)

Appeal allowed.

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