More info

Screen Reader Compatibility Information

Due to the method this document is displayed on the page, screen readers may not read the
content correctly. For a better experience, please download the original document and view it in
the native application on your computer.

submitted an attested true copy. As the complainant was not carrying the photo ID he
suggested the cashier to contact the account holder and verify about the issuance of cheque.
The cashier then took out the phone number of the account holder Shri Chirag Natvarlal Sheth
from the bank record and dialed mobile number of Shri Chirag Natvarlal Sheth to seek
verification of issuance of bearer cheque. Mr. Chirag Natvarlal Sheth confirmed that he had
issued the cheque but the cashier declined to honour the cheque. Thereafter, the complainant
was taken by the cashier to the cabin of the Branch Manager. The Branch Manager again rang
up the account holder Shri Chirag Natvarlal Sheth, who confirmed having issued said bearer
cheque. Despite that the Branch Manager insisted that Mr. Chirag Natvarlal Sheth should come
to the bank. Mr. Chirag Natvarlal Sheth showed inability to visit the branch. The Branch
Manager then refused to encash the cheque. Claiming this to be deficiency in service the
complainant raised the consumer dispute by filing a complaint in the in the Consumer Forum,
South Mumbai District seeking compensation to the tune of rupees one lakh towards mental
agony and physical harassment. The complainant also sought direction to the opposite party
bank to stop such wrong practice. 3. The opposite party on being served with the notice filed the
written version claiming that subject cheque was rightly dishonoured. Respondent bank
contested the complaint. It was pleaded that because of failure of the complainant to produce
ID proof bank was justified in refusing to honour the cheque in terms of RBI guidelines as it was
a high denomination cheque. 4. The District Forum on consideration of evidence adduced by
the parties dismissed the complaint on the technical ground that the complainant not being the
account holder, is not a consumer. 5. Being aggrieved of the order of the District Forum the
complainant approached the State Commission, Maharashtra in appeal. The State Commission
instead of giving a clear finding whether or not the appellant/complainant is a consumer, went
on to decide the complaint on merits and dismissed the complaint holding that since value of the
cheque was more than Rs.50,000/-, in view of the guidelines issued by RBI, the bank was
justified in refusing to honour the bearer cheque because of suspicion. The appeal was
consequently dismissed with liberty to the appellant/complainant to pursue his remedy under
Negotiable Instruments Act. 6. Learned Shri D. Vardarajan, Advocate for the petitioner has
contended that although the State Commission has not given a clear finding as to whether or
not the complainant is a consumer, the sum and substance of the impugned order is that
according to the State Commission the complainant is a consumer. Learned counsel has taken
us through the definition of consumer and submitted that the consumer qua a service provider is
not only the person who hires or avails the services of the service provider but the beneficiary
also. It is argued that once the account holder had issued a cheque in favour of someone, he
automatically becomes the beneficiary qua said bank and therefore he is a consumer, if there is
any deficiency in service. 7. Ms. Pallavi Deepika, Advocate on the contrary has argued that the
complainant does not fall within the realm of even the beneficiary because it was a bearer
cheque and not a cheque in favour of the complainant. Thus, the complainant cannot be termed
as a consumer and the

District Forum had rightly dismissed the consumer complaint. 8. We have carefully considered
the rival contentions and perused the record. From the affidavits of Shri Chirag Natvarlal Sheth
and the complainant, it is amply proved that the bank telephonically contacted Chirag Natvarlal
Sheth twice to verify whether or not he has given bearer cheque to the complainant and the
account holder Shri Chirag Natvarlal Sheth confirmed the said fact. From the above, it is clear
that the bank officials were categorically informed by the account holder that he had issued the
cheque and given it to the complainant. Therefore, the complainant, in our view, was the
beneficiary of the cheque and as such he is covered under the definition of consumer which
includes the beneficiary of the service hired/availed. Thus, the complaint is maintained. 9.
Coming to the merits of the case, the stand of the opposite party is that the cheque in question
was not honoured because the bank officials were suspicious about the issuance of the cheque
to the complainant and the complainant had failed to furnish his photo ID. Learned counsel for
the opposite party in support of this contention has drawn our attention to the response given by
the RBI to the RTI application dated 11.5.2010 submitted by the complainant. The relevant
response of RBI is reproduced as under: -
No specific guidelines have been issued to banks with regard to bearer
cheques. However, in terms of our guidelines contained in para 2 of DBOD.
No.BP.BC.114/C.469(8.1)-
91 dated April 19, 1991 (copy enclosed) on Misuse
of banking channels for violation of fiscal laws and evasion of taxes-issued and payments of
demand drafts for Rs.50000/- and above, banks are advised that payments for Rs.50,000/- and
above should be made through banking channels and not in cash.

Further, in terms of RBI Guidelines contained in para 3 (ii) of the circular

DBOD.AML,BS.No.68/14.01.001/2009-10 dated January 12, 2010 (copy
enclosed), banks have been advised that in case of transactions
carried out by a non-account based customer, that is a walk-in customer, where the amount o
transaction is equal to or exceeds rupees fifty thousand, whether conducted as single
transaction or several transactions that appear to be connected, the customer
s identity and address should be verified.

Similarly, we have issued Master Circular DBOD. No.Leg.BC.9/09.07.006/2009-10 dated July

1, 2009 (copy available on our website www.rbi.org.in) on customer service to all scheduled
commercial banks, consolidating all the important instructions on customer service, paragraph
5.3(vii) of the circular is detailed below:

(vii) The banks should not ordinarily insist on the presence of account holder for making cash
withdrawals in
case of self or bearer cheques unless the circumstances so warrant. The banks should pay
self or bearer cheques taking usual precautions.

10. On reading of the above, it appears that as per the RBI guidelines the advisory was that
in case
of transactions carried out by a non-account based customer, that is walk-in customer,
where the amount of transaction is equal to or exceeds rupees fifty thousand, the customers
identity and address should be verified. Later part of the response to RTI application states that
the bank should not ordinarily insist on the presence of account holder for making cash
withdrawals in case of self or bearer cheques unless the circumstances so warrant. The
banks should pay self or bearer cheques taking usual precautions. From this it is evident that
Reserve Bank of India has cautioned the banks in the country to be careful while encashing the
bearer cheques if the amount exceeds Rs.50,000/- and insist on the verification of ID as also
the address. No doubt the complainant had not furnished his ID but the fact remains that
admittedly not only the cashier but also the Bank Manager separately rang up the account
holder on his mobile number who verified having issued the subject cheque and gave clearance
for encashment. The bank officials, however, declined to encash the cheque. This, in our view is
a clear deficiency in service. 11. Learned counsel for the opposite party has drawn our attention
to Ext.-B dealing with due diligence while processing cash payments particularly the following
portion: -
In the event the individual tendering the instrument is not carrying the identity,
and there is a urgency to pay, the transaction to be referred to the Branch Manager. The
Branch Manager shall maker appropriate enquiries as deemed fit & shall use his discretion to
allow the transaction. Such discretion to be used judiciously as strict one off cases, only upon
satisfactory confirmation of the
bonafides of the transactions.
12. It is submitted that as per the aforesaid instructions the bank officials because of suspicion
of identity of the complainant, were justified in refusing to honour the cheque. We do not find
merit in this contention, particularly when the bank officials verified about the issuance of bearer
cheque from the account holder on telephone. In view of the discussion above, we are of the
opinion that this is a clear case of deficiency in service on the part of the opposite party.
Revision petition is, therefore, allowed Orders of the Foras below are set aside. 13. Now, the
question arises as to what should be the compensation in this case. The complainant has not
been able to show any specific loss caused to him. This is only a case of unnecessary
harassment and humiliation, therefore, looking into the amount of cheque and the facts and
circumstances of the case, we direct the opposite party to pay a sum of Rs.10,000/- as
compensation to the complainant within 30 days from the date of this order, failing which the
petitioner shall be entitled to file execution petition. .....................J
AJIT BHARIHOKE

PRESIDING MEMBER
 ......................
ANUP K