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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
A.P. Sahi, President
Public Health Foundation of India – Complainant
versus
Bank of Maharashtra – Opp. Party
Consumer Case No.1055 of 2016
Decided on 26.6.2024
Consumer Protection Act, 1986 – Section 21(1)(a)(i) [Consumer Protection Act, 2019 – Section 58(1)(a)(i)] – Banking Services – Refund – The fact of the deficiency relating to the opening of the account and also the fake migration of the deposits made by the complainant through that account could have been prevented by taking appropriate steps and applying the checks regarding KYC norms, when the said current account was allowed to be opened and transacted – The Bank has nowhere disputed the receipt of Rs.27 crores by them from the complainant, consequently the Bank was clearly deficient in not verifying the customer identity and information from the complainants or by adopting measures that were required to be observed by the them, hence the Bank is clearly liable for the acts and omissions of its employees directly as well as vicariously – The misappropriation and embezzlement is only a consequence of this deficient functioning of the Bank and the defense taken by it is unacceptable – besides, vicarious liability for the act of the employees of an organization is made out – Thus, the complaint is allowed to the extent of refund. [Paras 20 to 40].
Result: Complaint allowed.
ORDER
The present complaint alleges deficiency against opposite party no.1 Bank of Maharashtra having been negligent and deficient in taking care of the handling a sum of Rs.27 crores entrusted to the opposite party bank in the shape of fixed deposits due to non-observance of the KYC norms by the opposite party bank resulting in siphoning of the entire funds through a fake current account. The contention of the complainant is that the amount was transferred by the complainant from its accounts directly to the bank for investing into fixed deposits that was confirmed by the bank. The remittances were made to the Inter Branch Fund Transfer Account of opposite party no.1 and instructions were issued by the complainant for deposit of the same in fixed deposits. Later on, it was found that a fake account was opened in the name of the complainant by some fraudsters and it is allegedly involving the officials of opposite party no.1, hence criminal proceedings have also been initiated that are pending but the present complaint has been filed praying for refund of Rs.27 crores invested by the complainant together with maturity amount of the fixed deposit receipts and further award of 18% interest on the entire amount together with a compensation of Rs.5 crores and costs of Rs.50 lacs for the litigation expenses.
2. It is alleged that the complainant being a society and non-profit organization registered under the Societies Registration Act with the exemption under the Income Tax Act, was established in the year 2006 and was later on also granted a corpus fund from the Government as well to the tune of Rs.65 crores. A sum of Rs.69.22 crores was also contributed by the Bill and Melinda Gates Foundation, U.S.A. as well as from other sources. The complainant holds funds as a trustee for the projects undertaken by it and for carrying out its activities which are charitable in nature and the donations as well as interest on the corpus funds are utilized for the purpose for which the society has been established. In order to secure the donations and their effective utilization, the funds are invested for which several financial institutions banks make efforts and accordingly, in furtherance of the policy of investing surplus funds by way of term deposits, a decision was taken to invest a sum of Rs.27 crores with the OP no.1 bank.
3. It is alleged that one Mr. Devendra Suresh Bhogale, representing himself to be the manager of OP-1, approached the complainant soliciting fixed deposits for the investments, the remittance was made on 20.09.2013 of a sum of Rs.5 crores from the City Bank Account, Connaught Place, New Delhi of the complainant to the Non-Customer Inter Branch Fund Transfer Account no. 20071000009 through RTGS with a clear instruction for investment in fixed deposits in favour of the complainant. The second remittance of Rs.6 crores was made on 26.09.2013 through the same method of RTGS. The third remittance was made on 30.10.2013 for a sum of Rs.4 crores through NEFT to a current account no. 60146702654 with the opposite party no.1 with a specific instruction to invest the same in a fixed deposit. A sum of Rs.12 crores was remitted in the same current account by NEFT for the same purpose. This current account was later on found to be a fake account opened in the name of the complainant by fraudsters and of course, sanctioned by OP-1 officials.
4. The complainant had no clue about this fake transaction through the current account as they were paid interest through a bank demand draft dated 28.04.2014 for Rs.1785206/-. One of the fixed deposits of Rs.4 crores had matured and therefore, it was renewed on 30.04.2014 for a further period of one year. The complainant was given to believe through the said Mr. Devendra Suresh Bhogale about the confirmation and existence of the said fixed deposits to the tune of Rs.27 crores.
5. It appears that there were several such transactions which came to the knowledge of the Economic Offences Wing of
Bank – The misappropriation and embezzlement is only a consequence of this deficient functioning of the Bank and the defence taken by it is unacceptable.
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