The court ruled that a bank's failure to update KYC in accordance with guidelines, coupled with unjustified account freezing, constitutes service deficiency warranting compensation.

1. The present Consumer Complaint (CC) has been filed by the Complainants against Opposite Party (OP) as detailed above, inter alia praying for directions to the OP to:
(i) Declare that OP is deficient in providing services as contemplated under provisions of Consumer Protection Act, 1986 concerning banking and allied services and are guilty of gross negligence and deficiency therein;
(ii) Lift and / or remove any and every form of restriction placed on the said savings account bearing No. 019 546928 006 standing in the name of complainants and to unblock the operation of the same;
(iii) Rectify its records in respect of closure of the said loan accounts bearing No. 019-546936-87 of complainant No. 1 and bearing No. 019-488923-872 of complainant No. 2;
(iv) Not to interfere with the CIBIL status of complainants and if the same has already been altered by OP then the OP should show the status of complainants at CIBIL as the ones from whom no amount is due and payable;
(v) Pay the complainants -
(a) Rs.3,50,00,000 as detailed below or such other amount as may be deemed fit and proper

(b) Rs.5,00,000 towards legal expenses or such other amount as may be deemed fit and proper.
(c) Interest @ 12% or at any rate this Hon'ble Court may deem fit and proper on Rs.3,50,00,000 from the filing of complainant till payment and / or realization.
(vi) Pending the hearing and final disposal of the present complaint this Hon'ble Commission be pleased to direct the OP to lift all restrictions upon the operation of said savings account bearing No. 019 546928 006 standing in the name of Complainants and not to hinder smooth operation thereof;
(vii) Pending the hearing and final disposal of present complaint this Hon'ble Commission be pleased to direct the OP to rectify its records in respect of closure of the said loan accounts bearing No. 019-546936-872 of complainant No. 2;
(viii) Pending the hearing and final disposal of the present complaint this Hon'ble Commission be pleased to direct the OP to update the CIBIL status of the complainants thereby showing the complainants as non - defaulters;
(ix) Ad interim in terms of prayer Clauses (vi), (vii), (viii);
(x) The cost of complaint.

2. Notice was issued to the OP. Parties filed Written Statement / Reply, Rejoinder, Evidence by way of an Affidavit and Written Arguments / Synopsis etc.

3. It is averred / stated in the Complaint that:
(i) The complainants maintain a savings bank account jointly with the OP, in respect of savings account bearing No. 019-546928-006. The said savings account was operated by complainants for over fifteen years prior to same being illegally frozen. In around 2007/2008 complainants had availed of certain loan facilities offered by OP which were linked to savings account. Complainants state they had paid the amounts shown outstanding in the said loan accounts and same were thus closed as being satisfied. OP had confirmed the aforesaid closure by recording that said loan account were closed and that all documents executed and cheques issued pertaining to the same were cancelled. OP upon satisfactory closure of loan accounts did not send any demand letter or communication to complainants and thus complainants continued to operate the said savings account without any hindrance.
(ii) On 19th November 2015, complainants tried withdrawing money from ATM operated by another bank HDFC, they could not withdraw any money and the transaction was declined. On enquiring through phone, complainants got to know that the transaction was declined as details of complainant No. 2 were not updated as required by KYC norms and as such temporary re