If Banks Dont Honour Dds...

The case: In this case, a bank issued five demand drafts of the value of Rs 1,45,838, Rs 32,950, Rs 1,22,232, Rs 2,06,052 and Rs 17,362. Four of the five drafts could not be encashed by the paying bank on presentations as the requisite funds had not been made available to the paying bank by the issuing bank as per their arrangement.

The paying bank, however, admitted that they could not pay the fifth demand draft of Rs 17,362 due to an oversight by its officials. The Punjab State Consumer Disputes Redressal Commission, where the complaint was filed, granted the consumer a monetary compensation to be paid by both the banks in equal share and held both issuing and paying banks jointly and severally liable for deficiency in service.

Both banks went in appeal to the NCDRC. After hearing them, the Commission came to the conclusion that as the paying bank had admitted that one draft had not been honoured due to its oversight, the relief of Rs 3,000 given by the State Commission to the consumer had been fully justified.

Issuing bank: As for the other four drafts, the NCDRC observed that it had been the obligation of the issuing bank to make available sufficient funds to cover the full amounts in the demand drafts presented. It further said that there was a clear deficiency in service on the part of the issuing bank in issuing demand drafts of various amounts on different dates without ensuring the arrangements of remittance of the amounts to the paying bank where these drafts were to be presented for payments.

The NCDRC dismissed the appeal of the issuing bank and partly allowed the appeal by the paying bank. The NCDRC held that there will be no liability of the paying bank in respect of four demand drafts. They, however, upheld the grant of compensation of Rs 3,000 for the fifth demand draft of Rs 17,362 awarded by the State Commission against the paying bank.

Compensation: For the remaining four drafts, the issuing bank had been directed by the State Commission to pay a compensation of Rs 5,000 for each. This award of Rs 20,000 (Rs 5,000 per draft) the NCDRC upheld only against the issuing bank. Also, the consumer would be entitled to interest at the maximum rate which the paying bank was charging from its loans in any scheme on the delayed payment of four drafts. This interest would be payable only by the issuing bank. The appeal of the paying bank was allowed to this extent. The NCDRC held that the parties shall bear their own costs.