REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7289 OF 2009

THE CHAIRMAN & MANAGING DIRECTOR,

CITY UNION BANK LTD. & ANR. .....APPELLANTS
VERSUS
R. CHANDRAMOHAN .....RESPONDENT

JUDGMENT
BELA M. TRIVEDI, J.

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 referred to as the ‘National Commission’) in

First Appeal No. 29 of 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

Signature Not Verified

respondent - original complainant Mr. R. Chandramohan had filed
Digitally signed by
Jayant Kumar Arora
Date: 2023.03.27
17:05:57 IST
Reason:
the complaint being O.P. No. 103/99 against the appellants –

original opponents before the State Commission seeking direction

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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 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 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 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

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 was found that the said 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 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.
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 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

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 hardship. Being aggrieved 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 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

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 Others 2

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 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,

1 (2000) 1 SCC 66
2 (2020) 9 SCC 424

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 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 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 “D-Cube Construction” was opened, the

said account was opened by 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.
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 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

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 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

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 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?

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 (P) Ltd.” The Current Account No.

3 (2004) 2 SCC 425
4 (1990) 1 SCC 484

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 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. 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 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 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 appellants has

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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, 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, 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 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 found to have not
established any wilful fault, imperfection, shortcoming or
inadequacy in the service of the respondent. The
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 to the respondent which otherwise do not
amount to deficiency in service. In case of bona fide

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 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 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 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

case of Branch Manager, Indigo Airlines Kolkata (supra). In

Oriental Insurance Co. Ltd. vs. Munimahesh Patel 5, 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.

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

5 (2006) 7 SCC 655

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 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 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 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 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 dismissed, and is accordingly dismissed. The

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 impugned orders passed by the State Commission and the

National Commission are therefore quashed and set aside. The

appeal stands allowed accordingly.

..………………………. J.
[AJAY RASTOGI]

..................................J.
[BELA M. TRIVEDI]
NEW DELHI;
27.03.2023

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