Here is an interesting case of an attempt by a public sector bank to misuse the provisions of the Debt Recovery Tribunal to harass a customer.
In this case, a Customer of the Bank received an export order from Uganda. He insisted that the order would be taken up only against advance payment. The importer gave a cheque towards 100% advance payment for the goods ordered. The customer gave it for collection with the Bank. The Bank sent the cheque for collection and after about 3 weeks credited the proceeds to the current account of the customer.
Having beeen given to understand that the cheque has been realized, the customer executed the order using the money to pay his subcontractors.
After around 4 months the bank however decided to reverse its earlier credit stating that their correspondent Bank has now advised them that the cheque could not be realized.
Now the amount is in dispute and the Bank is claiming this as a “Debt” along with “Interest” . It has also invoked the Debt Recovery Tribunal (DRT) and sought to exercise lien on property documents which the customer had provided for another loan which has been discharged.
This incident highlights how a Bank can misuse the provisions of DRT which is meant to assist the Bank for recovery of its debts from genuine loan defaulters. In this case the bank has been grossly negligent and there has been a deficiency in service. It was engaged to do a “collection service” and not lend any loan. The relationship of the Bank in this case was that of an “Agent” and the customer was the “Principal”.
The Bank failed in the sence that it advised realization of the cheque, collected its charges and placed the proceeds at the complete disposal of the customer. The customer has now altered his position by effecting the shipment soley based on the credit advise.
Even if the information was wrong, the responsibility should fall with the Bank for failing in its duty as an “Agent”.
The Bank is not having a “Debtor”, “Creditor” relationship here when it undertook the collection obligation and discharged it in the first place.
The subsequent debit to the account creating an “Overdraft” was not therefore a valid “debt”. There was no request from the customer nor a compelling business contingency such as a “Cheque having been issued on a Bank where there was insufficient funds”. The Bank’s action in having raised an “Overdraft” to recover its own outstanding with its correspondent Bank is therefore not tenable as a “Debt” transaction.
Since customers of the banks are at a disadvantage in legal strength when fighting against an institution such as a Bank, they are being harassed with the mis-interpretation of the applicability of the DRT provisions as is evident in this case.
Further, with a reference to the DRT, the customer has suffered an irreparable damage to his credit standing and is rendered unable to raise any further business finance to develop his business. he therefore suffers consequential damages which could be much more than the actual loss that may occur directly in the transaction. DRT may not be empowered to provide damages in such a case. The customer is therefore under a double disadvantage in this transaction.
While I fully appreciate the need for DRT in cases of genuine debt defaults, in cases such as this where the Bank misuses its position as a Current account maintaining agency to simply raise a debit and enrich itself for a loss which has occured in its correspondent banking transaction is extremely unfair.Â
We therefore urge Reserve Bank of India to order a suitable enquiry in all cases refered to DRT to ensure that Banks donot refer losses arising due to Consumer disputes to DRT. This is a slur on the Consumer Protection Provisions of law and a fraud played by the Bank on the consumer.
RBI should also clarify what is the liability of the correspondent Bank in this case which first cleared the payment after a cooling off period of 21 days and later reversed the credit.
I wish public spirited legal experts in India suggest a solution in a case of this nature where the Bank can misrepresent a “Service Dispute” as a “Debt Default”. The DRT should also pull up the Bank for such misrepresentation and order a compensation for such bad faith use of DRT.
I look forward to reactions from the legal experts in India on this issue.
2 users commented in " Unfair Customer harassment by a Public Sector Bank in India "
Follow-up comment rss or Leave a TrackbackI can understand your problem. I also had faced a very serious situation due to harassment of a public sector bank. I survived the crisis because the Hon’ble High Court gave justice to me.
Unfortunately the Banks in India have been given enormous Powers in the matter of recoveries, which they misuse in most of the cases, with total disregard to the basic principals of justice. Unfortunately in most of the cases the Top management of the Bank also ignores the element of justice and joins hands with the branch of the bank and the recovery becomes there sole aim.
I am neither an Advocate nor an expert in law but I can fully understand the position in which you are placed.
However, you need not worry, the Legal system in our country is very strong, though very time consuming.
I will not suggest to go directly to the High Court, unless you discuss with couple of legal experts.
Do not put much of Hope from Reserve Bank of India,they are too busy in framing rules, guidelines, and notifications which the banks very claverely disobey by finding one way or the other. In some cases the Reserve Bank has not even submitted timely reply to the Notices of the Courts.
I really do not know the tipe of action the bank has taken in your case, however if the notice is send under Securitisation and reconstruction act 2002, then please do not waste time and fight it back.
Your case appears to be very strong and I am sure you will get success.
You should also consider putting a case against the bank for damages.
However before doing any thing, perhaps, a personal meeting or correspondence with the Higher Officers of the Bank, including the Chairman of the Bank, may solve the problems.
With best wishes…
Fraudulent withdrawal of Rs.229000/- from my saving account through Internet.
Dear sir/madam,
This is with reference to above mentioned subject.
I am having saving account No SB account no-960710100020454 with BANK OF INDIA WARORA BRANCH. I have received the call from WARORA BOI that transactions of
Rs 229000 has made from my account on 16th NOVEMBER 2009.. I approached the Branch on same day evening(17th NOVEMBER 2009) & again next day morning(18th NOVEMBER 2009) and given written complain as well as online complaints through complaint reference number 893819 regarding fraudulent withdrawal from my account . I requested BOI to reverse those all fraudulent transaction from account and credit the same in my account.BOI WARORA authorities asked me to lodge FIR with Police,I lodged FIR complaint with WARORA POLICE STATION on 19th NOVEMBER 2010 for properly Investigating the matter, I have provided them the details of all six account holders, their branch name, address. Details of the said six account holder are enclosed herewith. Initially WARORA POLICE swung into the action as this was first case under its jurisdiction, even local as well state press gave this incident good coverage ,WARORA POLICE have even arrested FOUR/FIVE of the account holders from MUMBAI and for reason best known to them this case is put in cold storage it seems, even my enquiry from them fails to solicit any satisfactory response, Always they are telling main culprit is absconding. Similarly I have repeatedly followed up with BOI, but they never shown their willingness to investigate the matter and return my amount.
Normally if any one wants to operate Internet Banking, firstly we have to give a Customer ID & Customer ID password for open the account, after that for doing any transaction we have to enter transaction password and we have to furnish the number of details as they required we have to feed all the data as called for(Grid Numbers). So far I never made any online cash transfer at any point of time.Normally, the bank will not allow any transaction more than Rs. 1,00,000/- per day, further each and every transaction will be communicated to its customer with in fraction of seconds on his mobile phone and also there will be a mail to its customer E-Mail account. In this case there is no such intimation to me.
Sir, I am regret to say that Bank of INDIA/POLICE is having all desired information like, Account number, Name and address of all the SIX account holders, video clip of ATM etc, but instead of expediting the investigating procedure and calling those account holders, they are simply giving misleading and baseless reply or passing their time Nobody from Bank want to give the information in writing that fraud has taken place & all the time they are telling that you have to wait for POLICE Inquiry.. After having all information bank has not taking matter seriously & giving a chance to the culprit to use the money & run away. OUR datas are handled by out sourced employee ( who are working at low salaries) they may misuse the data to make fast money. This indicate public hard earned money is not safe in the Bank.
Sir,After making complaints BANK is supposed to seal all six accounts but suddenly on 2nd JANUARY 2010 again through internet fraud Rs 15000/ was deposited in Mr. Vishajeet Gayakwad (A/C NO-OO3510310000097,NAYAGAON BRANCH MUMBAI) and this deposited money was allowed to withdraw from BANK due to sheer negligence of concerned bank officials,needlless to say this person was in police custody also and released on bail .
It is nightmare for me after losing the money. I am single earning member of my family of six members. I was keeping that money for my house construction at my native place DHANBAD(JHARKHAND) I need your Intervention & support to resolve the issue & get back My Hard earned Money at the earliest.
Name-DHANANJAY KUMARJHA
SBAccno-960710100020454
BOI,WARORA
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