THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK LTD. & ANR.versusR. CHANDRAMOHAN

688                      [2023]REPORTS
               SUPREME COURT    3 S.C.R. 688                [2023] 3 S.C.R.


A       THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION
                      BANK LTD. & ANR.
                                        v.
                            R. CHANDRAMOHAN
B                        (Civil Appeal No. 7289 of 2009)
                                MARCH 27, 2023
             [AJAY RASTOGI AND BELA M. TRIVEDI, JJ.]
             Consumer Protection Act, 1986 – s.2(1)(g) – Respondent-
      complainant filed a complaint against the appellants-bank alleging
C
      that two demand drafts of Rs.5 lakhs and Rs.3 lakhs, totalling
      Rs.8 lakhs, were not credited to his company’s account in the name
      of “D-Cube Construction (P) Ltd.” with the bank – The complainant
      alleged that he had requested the bank to credit the drafts to the
      said account, but the bank failed to do so – The complainant sought
D     direction from the State Commission to re-credit the drafts to his
      account – State Consumer Disputes Redressal Commission allowing
      the complaint, directed the appellant to pay the Respondent-
      complainant rupees eight lakhs along with compensation of rupees
      One Lakh – National Commission affirmed the State Commission’s
      order – On appeal, held: One current account was in the name of
E
      “D-Cube Construction (P) Ltd.” and other was in the name of “D-
      Cube Construction” – Also, appellant-bank had received a letter
      from D-Cube Construction (P) Ltd. giving “no objection” for
      opening the current account in the name of “D-Cube Construction”
      – The two demand drafts in question were issued in the name of “D-
F     Cube Construction” and the amounts of the said drafts were credited
      in account of “D-Cube Construction” only – Therefore, there is no
      “deficiency in service” as per s.2(1)(g) on the part of employees of
      the bank, appellant acted in a bona fide manner and followed due
      procedure – No room to draw presumptions u/s 2(1)(g) – Burden to
      prove deficiency would be on the person alleging it – Respondent-
G
      complainant failed to discharge his burden of prove that there was
      a deficiency in service on the part of the employees of the appellants-
      bank – Orders passed by State Commission and National Consumer
      Commission set aside.

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                                       688
 THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK                       689
           LTD. & ANR. v. R. CHANDRAMOHAN

      Consumer Protection Act, 1986 – Nature of proceedings before       A
the Commission – The proceedings before the Commission being
summary in nature, the complaints involving highly disputed
questions of facts or the cases involving tortious acts or criminality
could not be decided by the Forum/Commission under the Act – The
“deficiency in service”, as well settled, has to be distinguished from
                                                                         B
the criminal acts or tortious acts.
      Allowing the appeal, the Court
      HELD: 1. Even if the allegations made in the complaint
are taken on their face value, then also it clearly emerges that
there was no wilful fault, imperfection, shortcoming or inadequacy       C
in the discharge of the duty on the part of the employees of the
appellants’ bank, which could be termed as “deficiency in
service” under Section 2(1)(g) of the said Act. As emerging from
the record, some disputes were going on amongst the Directors
of the Company and one of the Directors, if allegedly had
committed fraud or cheating, the employees of the bank could             D
not be held liable, if they had acted bona fide and followed the
due procedure. [Para 11][695-G; 696-A]
       2. The proceedings before the Commission being summary
in nature, the complaints involving highly disputed questions of
facts or the cases involving tortious acts or criminality like fraud     E
or cheating, could not be decided by the Forum/Commission
under the said Act. The “deficiency in service”, as well settled,
has to be distinguished from the criminal acts or tortious acts.
There could not be any presumption with regard to the wilful
fault, imperfection, shortcoming or inadequacy in the quality,           F
nature and manner of performance in service, as contemplated
in Section 2(1)(g) of the Act. The burden of proving the deficiency
in service would always be upon the person alleging it. In the
instant case, respondent-complainant having miserably failed to
discharge his burden to prove that there was a deficiency in
service on the part of the employees of the appellants-bank within       G
the meaning of Section 2(1)(g) of the Act, his complaint deserved
to be dismissed. [Paras 12, 13][696-B-D]



                                                                         H
690            SUPREME COURT REPORTS                      [2023] 3 S.C.R.


A           Ravneet Singh Bagga v. KLM Royal Dutch Airlines and
            Anr. (2000) 1 SCC 66 : [1999] 4 Suppl. SCR 320 –
            relied on.
            Branch Manager, Indigo Airlines Kolkata and Anr. v.
            Kalpana Rani Debbarma and Ors. (2020) 9 SCC 424 :
B           [2020] 3 SCR 389; Kerala State Cooperative Marketing
            Federation v. State Bank of India and Ors. (2004) 2
            SCC 425 : [2004] 2 SCR 1; Indian Overseas Bank v.
            Industrial Chain Concern (1990) 1 SCC 484 : [1989]
            2 Suppl. SCR 27; Oriental Insurance Co. Ltd. v.
            Munimahesh Patel (2006) 7 SCC 655 : [2006] 6 Suppl.
C           SCR 30 – referred to.
                            Case Law Reference
      [1999] 4 Suppl. SCR 320          relied on            Para 5
      [2020] 3 SCR 389                 referred to          Para 5
D
      [2004] 2 SCR 1                   referred to          Para 6
      [1989] 2 Suppl. SCR 27           referred to          Para 6
      [2006] 6 Suppl. SCR 30           referred to          Para 10
            CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7289
E     of 2009.
           From the Judgment and Order dated 01.02.2007 of the High Court
      of Madras in FA No. 29 of 2005.
             K. K. Mani, Ms. T. Archana, Rajeev Gupta, Vinay Rajput, Advs.
F     for the Appellants.
            Krishan Kumar, Nitin Pal, Ms. Muskan Jain, Dheeraj Kumar,
      Advs. for the Respondent.
            The Judgment of the Court was delivered by
            BELA M. TRIVEDI, J.
G
            1. The appellants – the Chairman and the Manager of the City
      Union Bank Limited have preferred the present appeal against the
      Judgment and Order dated 01.02.2007 passed by the National Consumer
      Disputes Redressal Commission, Circuit Bench at Chennai (hereinafter
H
 THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK                          691
  LTD. & ANR. v. R. CHANDRAMOHAN [BELA M. TRIVEDI, J.]

referred to as the ‘National Commission’) in First Appeal No. 29 of         A
2005 arising out of the Judgment and Order dated 23.12.2004 passed by
the State Consumer Disputes Redressal Commission, Chennai in O.P.
No. 103/99.
       2. The short facts giving rise to the present appeal are that the
respondent - original complainant Mr. R. Chandramohan had filed the         B
complaint being O.P. No. 103/99 against the appellants – original
opponents before the State Commission seeking direction against the
appellants to re-credit rupees eight lakhs covering two demand drafts -
one bearing No. 166570 dated 28.06.1996 for rupees five lakhs and the
other bearing No. 177923 dated 18.11.1996 for rupees three lakhs in his
Current Account No. 3600. It was alleged in the complaint inter alia        C
that the respondent-complainant was the Managing Director of “D-Cube
Constructions (P) Ltd.” having its registered office at Chennai. Shri
R. Thulasiram and Shri R. Murali were the other directors of the said
Company. As per the further case of the respondent, a Current Account
bearing No. 3600 was opened in the name of the said company with the        D
appellants’- bank on 13.04.1995 and the respondent alone was permitted
to operate the said account. During the end of 1996, there was
misunderstanding between the respondent and one R. Kularaireman and,
therefore, he had written a letter to the appellant no. 2 on 08.01.1997
requesting it not to allow withdrawals from the said current account. It
was further case of the respondent that one Ravindra, an NRI residing       E
at Malaysia had purchased three flats in the respondent’s projects and
had informed the complainant that he had sent two drafts i.e., draft
bearing No. 166570 dated 28.06.1996 for Rs. 5 lakhs and draft bearing
no. 177923 dated 18.11.1996 for Rs. 3 lakhs, totally amounting to Rs. 8
lakhs. On the reconciliation of the accounts, it was found that the said    F
two demand drafts were not credited in the said current account of the
company opened with the appellant no. 2 - bank. Despite the information
sought by the respondent-complainant, the appellant no. 2 did not furnish
any information. Subsequently, the respondent came to know through
Indian Overseas Bank that the said demand drafts were presented through
the second appellant bank for clearing and the same were paid to the        G
City Union Bank, Ram Nagar Branch. The respondent therefore once
again requested the appellant no. 2 on 03.08.1998 informing it that the
amount of the said two drafts were credited in some other accounts and
therefore the same be re-credited in his current account.
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692                SUPREME COURT REPORTS                       [2023] 3 S.C.R.


A            3. Thereafter, correspondence ensued between the appellants and
      the respondent and it was found that a separate account in the name of
      “D-Cube Construction” was opened and the said two drafts were
      credited in that account, as the said demand drafts were in the name of
      “D-Cube Construction”. The respondent alleging collusion and negligence
      on the part of the appellants filed the complaint before the State
B
      Commission.
             4. The State Commission allowing the said complaint with cost of
      Rs. 1,000/- directed the appellants-original opponents to pay the
      respondent-complainant a sum of Rs. Eight lakhs along with compensation
      of Rs. one lakh towards mental agony, loss and hardship. Being aggrieved
C     by the said order, the appellants had preferred the First Appeal being 29/
      2005, which came to be dismissed by the National Commission vide the
      impugned order.
             5. The learned counsel appearing for the appellants submitted
      that the State Commission and the National Commission had committed
D     an error in not appreciating the fact that in absence of any fault,
      imperfection, shortcoming or inadequacy in the performance, which was
      required to be maintained by the appellants’ bank, it could not be presumed
      that there was deficiency in service as defined under Section 2(1)(g) of
      the Consumer Protection Act, 1986 (hereinafter referred to as the ‘said
E     Act’) He has relied upon the decision of this Court in case of Ravneet
      Singh Bagga vs. KLM Royal Dutch Airlines and Another1 and in
      case of Branch Manager, Indigo Airlines Kolkata and Another Vs.
      Kalpana Rani Debbarma and Others2 to submit that the complaint
      filed by the respondent-complainant was not maintainable before the
      State Commission, and even otherwise the respondent had failed to
F     discharge the burden of proof that there was deficiency in service on
      the part of the appellants. He further submitted that the two demand
      drafts 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 Current
G     Account No. 4160 opened in the name of “D-Cube Construction”.
      According to him, as per the letter dated 15.02.1997 addressed to the
      appellant-bank by the “D-Cube Constructions (P) Ltd.”, stating that the
      said Company had no objection if current account in the name of

      1
          (2000) 1 SCC 66
      2
H         (2020) 9 SCC 424
    THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK                         693
     LTD. & ANR. v. R. CHANDRAMOHAN [BELA M. TRIVEDI, J.]

“D-Cube Construction” was opened, the said account was opened by              A
Shri R. Thulasiram in his capacity as the proprietor of the proprietary
concern. According to him, if any fraud was committed by the Co-director
of the “D-Cube Constructions (P) Ltd.”, such disputes pertains to fraud
would not fall within the jurisdiction of the State Commission or the
National Commission to decide.
                                                                              B
       6. However, learned counsel for the respondent-complainant
submitted that when the two forums have consistently held the appellants
liable for the deficiency in service, this Court should not interfere with
the same. He further submitted that the bank would be vicariously liable
for the acts of its employees. As per the General Banking Principles and
Guidelines laid down by the RBI, the account should not have been             C
opened with the similar name of the company of which the complainant
was the Managing Director. According to him, without the involvement
of the officers of the Bank, R. Thulasiram would not have encashed the
drafts in question by opening a new current account in the name of “D-
Cube Construction”. He further submitted that there was a clear               D
deficiency in service on the part of the appellant -bank. In this regard he
had relied upon the decision in case of Kerala State Cooperative
Marketing Federation Vs. State Bank of India and Others3 and in
case of Indian Overseas Bank vs. Industrial Chain Concern4.
       7. Having regard to the submissions made by the learned counsel        E
for the parties and to the documents on record, the question that falls for
consideration before this Court would be, whether the Commission/Forum
under the Act could have entertained the complaint involving highly
disputed questions of facts or involving allegations of tortious acts, the
proceedings before the Commission/Forum being summary in nature?
                                                                              F
       8. In the instant case, it is not disputed that three drafts were
issued by an NRI from Malaysia for the purchase of three flats. Out of
three, one draft was for the sum of Rs. 5 lakhs dated 28.06.1996 and
two drafts were for Rs. 3 lakhs & Rs. 6 lakhs dated 18.11.1996. It is
also not disputed that the two drafts in question were issued in the name
of “D-Cube Construction” and not in the name of “D-Cube Constructions         G
(P) Ltd.” The Current Account No. 3600 was in the name of “D-Cube
Constructions (P) Ltd.”, whereas the Current Account No. 4160 was
opened on 15.02.1997 in the name of “D-Cube Construction” by Shri R.
3
    (2004) 2 SCC 425
4
    (1990) 1 SCC 484                                                          H
694            SUPREME COURT REPORTS                            [2023] 3 S.C.R.


A     Thulasiram, as the proprietor of his proprietary concern, when he was
      one of the Directors of “D-Cube Constructions (P) Ltd.” It is also not
      disputed that appellant no. 2 - bank had received a letter dated 15.02.1997
      from the “D-Cube Constructions (P) Ltd.” giving “no objection” for
      opening the current account in the name of “D-Cube Construction”. It is
      also not disputed that there were certain disputes going on between the
B
      Directors of the said company - “D-Cube Constructions (P) Ltd.”.
             9. Under the circumstances, when the Current Account No. 4160
      was 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 in
C     question which were in the name of “D-Cube Construction”, were
      credited in the account of “D-Cube Construction”, it could not be said
      that there was any willful default or imperfection or short coming so as
      to term it as the deficiency in service on the part of the appellant-bank
      within the meaning of Section 2(g) of the said Act. The counsel for the
D     appellants has rightly relied upon the decision of this Court in case of
      Ravneet Singh Bagga (supra) as under:
            “5. Section 2(i)(o) defines “service” to mean service of any
            description which is made available to potential users and includes
            the provision of facilities in connection with banking, financing,
E           insurance, transport, processing, supply of electrical or other energy,
            board or lodging or both, entertainment, amusement or the
            purveying of news or other information, but does not include the
            rendering of any service free of charge or under a contract of
            personal service. Section 2(i)(g) defines “deficiency” to mean
            any fault, imperfection, shortcoming or inadequacy in the quality,
F           nature and manner of performance which is required to be
            maintained by or under any law for the time being in force or has
            been undertaken to be performed by a person in pursuance of a
            contract or otherwise in relation to any service”.
            “6. The deficiency in service cannot be alleged without attributing
G           fault, imperfection, shortcoming or inadequacy in the quality, nature
            and manner of performance which is required to be performed by
            a person in pursuance of a contract or otherwise in relation to any
            service. The burden of proving the deficiency in service is upon
            the person who alleges it. The complainant has, on facts, been
H           found to have not established any wilful fault, imperfection,
    THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK                            695
     LTD. & ANR. v. R. CHANDRAMOHAN [BELA M. TRIVEDI, J.]

         shortcoming or inadequacy in the service of the respondent. The         A
         deficiency in service has to be distinguished from the tortious acts
         of the respondent. In the absence of deficiency in service the
         aggrieved person may have a remedy under the common law to
         file a suit for damages but cannot insist for grant of relief under
         the Act for the alleged acts of commission and omission attributable
                                                                                 B
         to the respondent which otherwise do not amount to deficiency in
         service. In case of bona fide disputes no wilful fault, imperfection,
         shortcoming or inadequacy in the quality, nature and manner of
         performance in the service can be informed (sic). If on facts it is
         found that the person or authority rendering service had taken all
         precautions and considered all relevant facts and circumstances         C
         during the transaction and that their action or the final decision
         was in good faith, it cannot be said that there had been any
         deficiency in service. If the action of the respondent is found to
         be in good faith, there is no deficiency of service entitling the
         aggrieved person to claim relief under the Act. The rendering of
                                                                                 D
         deficient service has to be considered and decided in each case
         according to the facts of that case for which no hard and fast rule
         can be laid down. Inefficiency, lack of due care, absence of bona
         fides, rashness, haste or omission and the like may be the factors
         to ascertain the deficiency in rendering the service”
      10. The ratio of the aforestated decision has also been followed in        E
case of Branch Manager, Indigo Airlines Kolkata (supra). In Oriental
Insurance Co. Ltd. vs. Munimahesh Patel5, this Court held that the
proceedings before the Commission are essentially summary in nature
and the issues which involve disputed factual questions, should not be
adjudicated by the Commission.                                                   F
       11. So far as the facts of the present case are concerned, even if
the allegations made in the complaint are taken on their face value, then
also it clearly emerges that there was no wilful fault, imperfection,
shortcoming or inadequacy in the discharge of the duty on the part of the
employees of the appellants’ bank, which could be termed as “deficiency          G
in service” under Section 2(1)(g) of the said Act. As emerging from the
record, some disputes were going on amongst the Directors of the
Company and one of the Directors, if allegedly had committed fraud or

5
    (2006) 7 SCC 655                                                             H
696             SUPREME COURT REPORTS                              [2023] 3 S.C.R.


A     cheating, the employees of the bank could not be held liable, if they had
      acted bona fide and followed the due procedure.
             12. The proceedings before the Commission being summary in
      nature, the complaints involving highly disputed questions of facts or the
      cases involving tortious acts or criminality like fraud or cheating, could
B     not be decided by the Forum/Commission under the said Act. The
      “deficiency in service”, as well settled, has to be distinguished from the
      criminal acts or tortious acts. There could not be any presumption with
      regard to the wilful fault, imperfection, shortcoming or inadequacy in the
      quality, nature and manner of performance in service, as contemplated
      in Section 2(1)(g) of the Act. The burden of proving the deficiency in
C     service would always be upon the person alleging it.
             13. In the instant case, respondent-complainant having miserably
      failed to discharge his burden to prove that there was a deficiency in
      service on the part of the employees of the appellants-bank within the
      meaning of Section 2(1)(g) of the Act, his complaint deserved to be
D     dismissed, and is accordingly dismissed. The impugned orders passed
      by the State Commission and the National Commission are therefore
      quashed and set aside. The appeal stands allowed accordingly.

      Ankit Gyan                                                      Appeal allowed.
E     (Assisted by : Bhavyata Kapoor and Aarsh Choudhary, LCRAs)




F




G




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