Pushpa Girimaji
The Tribune 7 September 2008 Spectrum
Banks are supposed to keep your money safe. But there are instances where banks fail in this duty. I am not talking of small banks or cooperative banks that go into liquidation, but of large, reliable, public sector banks that fail to prevent fraud, resulting in illegal withdrawal of money from the accounts of depositors.
Last October, for example, the police in Gurgaon had registered a case against the DLF branch of Indian Overseas Bank, following a complaint that Rs 20 lakh had been fraudulently withdrawn from the savings account of a woman customer. News reports quoting the police had said that one person had been arrested in connection with the case and investigations were on.
If one were to look at such complaints lodged with the police as well as consumer courts and the banking Ombudsmen, these cases usually fall into two categories: (a) those where money is withdrawn from the accounts of depositors by criminal elements in connivance with the employees of the bank; and (b) where the staff may not be involved at all but are careless or negligent enough to allow withdrawal of money from an account on the basis of a forged signature.
In both types of cases, the bank has to take responsibility for its action or inaction and make good the loss to the consumer. The apex court has said as much. In the case of N.Venkanna vs Andhra Bank, for example, it made it clear that banks had a duty to meticulously cross-check the signature on a cheque or a withdrawal slip. It also clarified that banks cannot escape liability by claiming that they did not have an ultraviolet ray lamp for the purpose.
Another important point that it made was that banks cannot escape liability by making out a case of contributory negligence on the part of the consumer. In this case, Rs 34,000 had been withdrawn from Venkanna’s account by someone using a forged signature on a withdrawal slip. Holding the bank guilty of negligence, the apex court had ordered a refund of the amount along with 6 per cent interest.
The rights of the affected persons in such cases got strengthened further in the case of Shankar Bhatt vs Punjab and Sind Bank, where the apex court said those who worked in banks ought to have a reasonable degree of intelligence and skill required of a person in that post. Failure to exhibit that skill constituted negligence and banks had to pay for the consequences of such negligence.
In this case, a 72-year-old senior citizen’s entire savings of Rs 15 lakh had been transferred to someone else’s account in the bank, using a forged signature on a letter, which the bank claimed was written by the depositor. The court ordered the bank to pay back the money with 12 per cent interest and also pay a compensation of Rs 50,000.
But in order to pin the responsibility on the bank and get back the money, consumers have to take some important initial steps. First and foremost, one must lodge a written complaint with the bank and get an acknowledgement for it. The depositor also needs to get hold of the cheques used by the forger. If the bank needs it for its investigations, then a photocopy must be obtained. It is also important to lodge a police complaint immediately and get a copy of that, too. In most cases of fraudulent withdrawal, the bank is not willing to accept its mistake and refund the money to the depositor, along with interest and compensation for any suffering caused.
Even when forgery is proved, they try to make out a case of “contributory negligence” against the consumer. That’s where courts come into the picture. Clients can also file their complaints before the banking Ombudsman. In fact, if you look at the cases handled by the banking Ombudsmen around the country, you will find many pertaining to such unauthorised withdrawal of money from depositors’ accounts.
In one particular case, for example, an employee of TCS had complained that the bank (the report does not mention the name of the bank) where he had his salary account had issued a cheque book to someone without his knowledge and passed cheques that were not drawn by him, resulting in withdrawal of a total amount of Rs 9,77,000 from his account. This had happened when he was out of the country on work. The Ombudsman had confirmed that there was fraudulent withdrawal of money by forging the signature of the complainant. So keep a check on your account, and if there is any discrepancy anywhere, be sure to complain and set it right.
For any query:- legalpoint@aol.in
Last October, for example, the police in Gurgaon had registered a case against the DLF branch of Indian Overseas Bank, following a complaint that Rs 20 lakh had been fraudulently withdrawn from the savings account of a woman customer. News reports quoting the police had said that one person had been arrested in connection with the case and investigations were on.
If one were to look at such complaints lodged with the police as well as consumer courts and the banking Ombudsmen, these cases usually fall into two categories: (a) those where money is withdrawn from the accounts of depositors by criminal elements in connivance with the employees of the bank; and (b) where the staff may not be involved at all but are careless or negligent enough to allow withdrawal of money from an account on the basis of a forged signature.
In both types of cases, the bank has to take responsibility for its action or inaction and make good the loss to the consumer. The apex court has said as much. In the case of N.Venkanna vs Andhra Bank, for example, it made it clear that banks had a duty to meticulously cross-check the signature on a cheque or a withdrawal slip. It also clarified that banks cannot escape liability by claiming that they did not have an ultraviolet ray lamp for the purpose.
Another important point that it made was that banks cannot escape liability by making out a case of contributory negligence on the part of the consumer. In this case, Rs 34,000 had been withdrawn from Venkanna’s account by someone using a forged signature on a withdrawal slip. Holding the bank guilty of negligence, the apex court had ordered a refund of the amount along with 6 per cent interest.
The rights of the affected persons in such cases got strengthened further in the case of Shankar Bhatt vs Punjab and Sind Bank, where the apex court said those who worked in banks ought to have a reasonable degree of intelligence and skill required of a person in that post. Failure to exhibit that skill constituted negligence and banks had to pay for the consequences of such negligence.
In this case, a 72-year-old senior citizen’s entire savings of Rs 15 lakh had been transferred to someone else’s account in the bank, using a forged signature on a letter, which the bank claimed was written by the depositor. The court ordered the bank to pay back the money with 12 per cent interest and also pay a compensation of Rs 50,000.
But in order to pin the responsibility on the bank and get back the money, consumers have to take some important initial steps. First and foremost, one must lodge a written complaint with the bank and get an acknowledgement for it. The depositor also needs to get hold of the cheques used by the forger. If the bank needs it for its investigations, then a photocopy must be obtained. It is also important to lodge a police complaint immediately and get a copy of that, too. In most cases of fraudulent withdrawal, the bank is not willing to accept its mistake and refund the money to the depositor, along with interest and compensation for any suffering caused.
Even when forgery is proved, they try to make out a case of “contributory negligence” against the consumer. That’s where courts come into the picture. Clients can also file their complaints before the banking Ombudsman. In fact, if you look at the cases handled by the banking Ombudsmen around the country, you will find many pertaining to such unauthorised withdrawal of money from depositors’ accounts.
In one particular case, for example, an employee of TCS had complained that the bank (the report does not mention the name of the bank) where he had his salary account had issued a cheque book to someone without his knowledge and passed cheques that were not drawn by him, resulting in withdrawal of a total amount of Rs 9,77,000 from his account. This had happened when he was out of the country on work. The Ombudsman had confirmed that there was fraudulent withdrawal of money by forging the signature of the complainant. So keep a check on your account, and if there is any discrepancy anywhere, be sure to complain and set it right.
For any query:- legalpoint@aol.in
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