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MAHARASHTRA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, NEW BOMBAY
Hon’ble Mr. Justice G.G. Loney, President;
Mr. M.G. Gavai, Member; Mrs. Ellen Dharkar, Member
FILMALAYA PVT. LTD.—Complainant
versus
CORPORATION BANK & ORS.—Respondents
Complaint No. 41/90—Decided on 15.2.1991
NEGLIGENCE IN BANKING SERVICE - BANK'S LIABILITY FOR LOSS CAUSED BY FRAUDULENT ACTS OF EMPLOYEE - DEFICIENCY IN SERVICE - COMPENSATION.
Fact of the Case:
Filmalaya Pvt. Ltd. had two accounts with Corporation Bank. Pradeep Roy, an employee of Filmalaya, misappropriated funds from both accounts through forged cheques, unauthorized withdrawals, and short deposits. The bank acknowledged the forged cheques and offered to settle the claim for Rs. 30,700, but denied liability for the rest of the loss.
Finding of the Court:
The court found that the bank was negligent in its service, as it failed to detect the fraud and prevent the loss. The court held that the bank was liable for the loss caused by the fraudulent acts of its employee, as the fraud was committed in the course of the bank's business.
Issues: 1. Whether the complainant suffered a financial loss due to misappropriation and fraud as alleged in the complaint? 2. Whether the loss was a result of negligence in the service of the Corporation Bank? 3. Whether the complainant is entitled to claim compensation for the loss and interest?
Ratio Decidendi: The court relied on the principle of vicarious liability, which holds an employer liable for the loss caused to a customer through the wrongful acts of an employee or agent. The court found that the bank's employees were negligent in their duties, which led to the fraud and misappropriation. The court also considered the bank's insurance policy, which covered losses due to fraud and misappropriation, and held that the bank could claim reimbursement from the insurance company.
Final Decision: The court allowed the complaint and directed the bank to pay Rs. 2,42,034.50 to the complainant within two months, with interest at 18% per annum if the amount was not paid within the specified time. The court also awarded costs of Rs. 5,000 to the complainant.
G.G. Loney, President — This is a rare complaint by a depositor alleging negligence in Banking service. The complainant is therefore claiming compensation from the Corporation Bank on account of Financial Loss suffered by Filmalaya Pvt. Ltd. as a result of defective banking services in relation to his two accounts.
2. It is necessary to state the facts of this Complaint. Filmalaya (P) Ltd. is a famous studio at Andheri (W), Bombay. Since last 30 years the studio is hired by various producers for shooting films. Opposite Party, the Corporation Bank (for short Bank) had estabalished a small counter next to the Filmalaya studio at Ceasar Road, Bombay. Filmalaya Pvt. Ltd. opened Account No. 16 on 1.12.1979 and another Account No. 162 on 20.12.1985 with the Bank counter. According to complainant Account No. 16 was meant for hiring business of the studio while Account No. 162 was operated for payment of telephone, electricity bills and incidental maintenance of the studio. Pradeep Roy was the cashier in the employment of complainant and was handling day to day bank work of depositing cheques, cash and also used to withdraw cash from the Bank. However, the cheques were being signed by complainant. During the period from 18.8.1986 to 23.8.1987 an amount of Rs. 2,42,021.50 was found to have been misappropriated from both Accounts No. 16 and 162. The complainant alleged that misappropriation is a result of gross negligence and glaring dereliction of duties by the Bank Officials. It is further alleges that the Bank officials were a party to the misappropriation alongwith their cashier Pradeep Roy. The incident was reported to Police Station, D.N. Nagar, Bombay on 23.8.1987. The Police after the investigation filed the chargesheet in criminal Court against Pradeep Roy. He was convicted on his own admission for committing the offences of forgery and misappropriation. According to complainant, the Bank official Shri V.R. Shanbag, who was Sub-Manager at the counter of the Bank at the relevant time was immediately transferred out of Bombay in order to protect him.
3 The complainant has incorporated in the complaint the statement showing the details of amounts involved which resulted in his loss. According to complainant the fraud was committed with the common intention by his Accountant Mr. Pradeep Roy and Mr. V.R. Shanbag, the Bank Employee. The fraud and misappropriation is divided into three methods as under:—
(i) Rs. 39.060.00 were misappropriated as a result of Forged cheques passed by the Bank officials.
(i) Rs. 13,765.00 were misappropriated in relation to cheques drawn on Account No. 16 but passed by Bank officials making withdrawal from Account No. 162.
(iii) Rs. 1,89,209.50 was misappropriated from the Cash sent for deposit in both accounts but the full amounts were not entirely deposited.
The complainant has given the full details of cash amount sent for deposit, dates and the short- fall commencing from 18.8.1986 to 4.10.1986 amounting to Rs. 1.89,209.50. Thus the complainant submitted that the aforesaid amount could not have been misappropriated by Pradeep Roy without the connivance of Bank officials and hence, according to him, due to the negligence on the part of Bank Administration, he was put to loss which amounts to deficiency in the service of the Bank. The complainant took up the matter with Bank officials but he could not get any redress. However, the Bank owned the liability of Rs. 30,700/- only vide their letter dated 26.4.89. Complainant approached this Commission through this complaint to claim the compensation on account of the loss suffered by him as a result of negligent service of the Bank.
4. In answer to the allegations contained in the complaint, the Bank filed written objection. The main objections are noted below: —
The Bank submitted that,
(i) The complainant twisted the facts and is trying to pass on the loss suffered by him on account of fraudulent acts of his employee, on the Bank.
(ii) That th
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