Denial Of Encashment Of Cash Certificate Amounts To Deficiency In Service ; Baramulla DCDRC Holds HDFC Bank Liable

Facts of the Case:

The Complainant obtained two cash certificates from the HDFC Bank (OP No 1 ) for an amount of Rs2,00,000/- and Rs4,35,000/- respectively. On attaining the date of maturity of one cash certificate the complainant approached the OP No 1 Bank and requested for its encashment however, he was told that there are no records of cash certificate available. With the bank The complainant constrained to enquire about the other cash certificate, However, he was again informed that no such record is available.

The complainant insisted the bank to check for the documents again and later he was told that the same cash certificates might have been made by one of the Bank employee namely Safdar Khan ( O.P. No.2).

The complainant contented that he did not approach O.P. No. 2 for depositing the amount and he has deposited the cash in the Bank. The complainant several times requested the Bank for encashment of the cash certificates , as it bears the seal and signature of the Bank, but the bank denied his requests.

The complainant's case is that OP No 1 Bank cheated him and despite having the authentic cash certificates he was denied the payment of the same and aggrieved by this , he approached the District Commission.

Contention of the Opposite Party

OP No 1 submitted the written version but did not appear to contest the case, resultantly it was proceeded Ex Parte The OP.2 despite service of notice did not appear to contest the case and he was also made Ex Parte.

OP. 1 through the written version contended that the complainant has made several transactions of Fixed Deposit but the cash certificates in question are fake and forged .the cash certificates are not in the records of the Bank or have not been issued by the OP Bank. OP.1 further stated that the complainant has not filed any complaint before the Bank regarding the said cash certificates. However, the Bank on its own has taken action and placed one employee ( O.P. No.2) under suspension who was in charge during that period and added that there is no deficiency in service on the part of the OP No 1 Bank.

Observation by the Commission:

The Commission observed that the Contention of the bank that the cash Certificates might have been issued by a suspended official does not absolve the Bank of its liability. The Bank is vicariously liable for the actions of its employees who act as agent of the Bank as there exists a Master Agent relationship.

The commission pointed out that the Bank has failed to act fairly and to investigate the matter or to honor the cash certificates issued to the complainant. The Denial of encashment of the Cash certificates amounts to deficiency in service on the part of the Bank.

The ОP Bank has responsibility to verify the authenticity of the certificates. Customers have right to rely on the certificates issued by the Bank bearing the seal and signature of the bank and the banks cannot deny liability without sufficient evidence.

The commission relied on the judgement passed by the supreme Court in the case titled PNB Vs Surendra Prasad Sinha 1992 AIR 1815 whereunder it was held that the Bank cannot deny its liability on the grounds that the certificate was not issued by the Bank if the said certificate bears the seal and signature of the Bank.

By allowing the Complaint, the Commission directed the bank to pay the matured amount of the cash certificates to the complainant along with the interest, further directed to pay an amount of Rs.50,000/- as compensation and to pay an amount of Rs20,000/- as litigation charges.

The commission instructed HDFC Bank to pay an amount of Rs10,000/- for the Consumer welfare fund Baramulla. The Commission also gave liberty to the Bank to investigate and enquire about the cash certificates and take action against the person who issued it.

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