Delhi State Consumer Commission Sets Aside District Forum Order, Remands Bank Fraud Case For Adjudication On Merits

Brief facts of the Case:

The appellant, Naushad Ahmed, held a savings account with Corporation Bank (now Union Bank of India). In 2012, a person named Mehtab obtained two cancelled cheques (No. 398666 and 398667) from him. A few days later, the appellant discovered that an amount of ₹4,80,000/- had been withdrawn from his account by an individual named Ajit Singh.

The appellant alleged that the bank had released the amount to a stranger without proper identity verification and due diligence, resulting in the fraud. He lodged a complaint with the Welcome Colony Police Station, which was registered as FIR No. 342/2012.

Claiming negligence and violation of banking safety guidelines on the part of the bank, the appellant filed a complaint under the Consumer Protection Act, 1986 before the District Consumer Forum, New Delhi. However, in 2019, the forum dismissed the complaint on the ground that the case involved complex facts and evidence, which required detailed investigation and cross-examination of witnesses, something not possible within the summary jurisdiction of the forum.

Dissatisfied with this order, the appellant approached the Delhi State Consumer Disputes Redressal Commission, asserting that the District Forum had misjudged both the law and the facts and had dismissed the complaint without considering its merits.

Contentions of the Appellant:

The appellant contended that the bank had failed to comply with the RBI guidelines and circulars and had not reported the fraud to the concerned authorities, which demonstrates clear negligence and possible collusion on the part of the bank.
He argued that the cheque was a “self cheque”, yet the bank released the amount to an unknown person without verifying their identity.
The appellant further submitted that the consumer forum possesses the same powers as a civil court under Section 13(4) of the Consumer Protection Act, 1986, and therefore should have adjudicated the matter based on the detailed evidence presented.
He also emphasized that the forum had kept the complaint pending for seven years and ultimately directed him to approach a civil court without considering the merits, which was unjustified and improper.

Contentions of the Respondent:

The bank submitted that the appellant had negligently handed over the cheque to a stranger and had not clarified whether the cheque was blank or filled.
According to the bank, its vigilance branch's investigation did not find any fraudulent activity, and the original cheque had already been handed over to the police.
The bank argued that the district forum rightly observed that the case required detailed evidence and cross-examination of witnesses, which is beyond the summary jurisdiction of the consumer forum.
Additionally, the bank claimed that the appellant was attempting to gain undue advantage by fabricating a false narrative regarding the cheque and the transaction.

Observation of the Commission:

The Commission observed that the complaint had been filed in 2012, but the District Forum dismissed it only in 2019, stating that the matter was complicated, even though evidence and arguments from both sides had already been completed.

The Commission noted that the Consumer Forum has the same powers as a Civil Court—including summoning witnesses, recording evidence, and appointing commissions—and therefore, the Forum should have adjudicated the matter itself rather than dismissing it.

Citing the Supreme Court decision in Amar Jwala Paper Mills (India) v. State Bank of India (1998), the Commission held that once the evidence is on record, it is the Forum that should dispose of the matter, and the complainant should not be sent to a civil court years later.

The Commission concluded that the District Forum had misjudged its jurisdiction and wrongly dismissed the complaint.

Accordingly, the Commission set aside the District Forum's order dated 13.09.2019 and remanded the matter back to the District Forum for a hearing on merits, directing that since the matter had been pending since 2012, it should be disposed of at the earliest.

The appeal was allowed, and the Commission ordered that both parties shall bear their own expenses.

Case Title: NAUSHAD AHMED VS. CORPORATION BANK & ORS

Case No: FA-545/2019

Click Here To Read/Download The Order