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2026 Supreme(Online)(SCDRC) 5199
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Nighat Sultana, President, Maheep Gupta, Member
S.C. Associates Engineers & Contractors – Appellant
Versus
Jammu & Kashmir Bank – Respondent
C.C.: 3145 OF 2010
For the Appellants/Petitioners: Rahul Nanda
For the Respondents: Subodh Jamwal, Sheikh Zulfikar Ahmed
A bank commits a deficiency in service by transferring the maturity proceeds of a fixed deposit to a third party without a valid, verifiable mandate from the account holder. The bank bears full liability for losses resulting from acting upon forged authorization documents.
Headnote:(A) Consumer Protection Act, 1986 and Jammu & Kashmir Consumer Protection Act, 1987 - Definition of Consumer - Exclusionary provision of 'commercial purpose' - Since the Jammu & Kashmir Consumer Protection Act, 1987 did not incorporate the amendment regarding 'commercial purpose' as found in the central Act, all disputes regarding service deficiencies remain maintainable irrespective of the purpose for which services were hired. (Para 7)
(B) Banking Law - Term Deposits - Maturity proceeds - Authority to transfer - A bank cannot transfer maturity proceeds of a deposit to a third-party account without a valid and verifiable mandate from the depositor. Where the purported authority letter is found to be forged, the bank's action constitutes a deficiency in service. (Paras 11, 12)
(C) Evidence - Forensic Expert Report - A forensic examination conducted under the aegis of the Commission, confirming a document is forged, serves as conclusive evidence in the absence of valid rebuttal. (Para 11)
Facts of the case:
Complainant held two fixed deposits matured at a specific cumulative value. The bank transferred the proceeds into the account of a third party, claiming an overdraft agreement and prior written instructions. The complainant denied authorizing such transfer or signing the alleged letters. The aggrieved party approached the commission seeking the maturity proceeds, arguing that the deposits were non-negotiable and non-transferable instruments meant solely for the account holder.
Findings of Court:
The Commission concluded that the bank failed to establish a valid mandate for the transfer. Forensic analysis confirmed the authorization letter relied upon by the bank was forged. The bank’s reliance on internal instructions without verifyable authentication from the primary account holder after maturity constituted a deficiency in service.
Issues: The main issues were whether the complaint was maintainable given the commercial nature of the service, whether the bank acted upon a valid authorization, and whether the bank committed a deficiency in service by transferring maturity proceeds to a third party.
Ratio Decidendi: A banking institution is obligated to act strictly according to the mandate of the account holder. Absent a valid, non-forged authorization, a bank acts improperly by diverting funds. Technical objections regarding the nature of the transaction cannot waive the bank's liability for unauthorized diversion of assets.
Result: Complaint allowed with directions for recovery of maturity proceeds, compensation for opportunity loss, and litigation expenses.
| Table of Content |
|---|
| 1. disputed transfer of fixed deposit proceeds to a third-party account. (Para 1 , 2) |
| 2. parties' contentions regarding authorization and document authenticity. (Para 3 , 4 , 5) |
| 3. maintainability of consumer complaint concerning commercial services and jurisdiction. (Para 6 , 7) |
| 4. bank's liability for deficiency in service due to unauthorized transfer of funds based on forged documents. (Para 8 , 9 , 10 , 11 , 12) |
| 5. calculation of compensation and interest for financial loss and litigation expenses. (Para 13) |
17/07/2026
PER: MR. MAHEEP GUPTA, MEMBER.
1. The Complainant is before us with the grievance that he had two FDRs (Detailed below) for a cumulative sum of Rs.12.25 Lakhs that would carry a cumulative maturity value of Rs.13,76,917/- which were credited by the O.P. Bank to the third-party account of O.P. 3.
The details of the F.D.R.s is as under:
| F.D.R. No. | Amount Deposited | Dt. of Deposit | Dt. of Maturity | Maturity Value |
|---|---|---|---|---|
| 113280 | 4,00,000/- | 16/06/2005 | 16/09/2007 | 4,49,605/- |
| 113281 | 8,25,000/- | 16/06/2005 | 16/09/2007 | 8,27,312/- |
| Total | 12,25,000/- | 13,76,917/- |
It is claimed by the Complainant that the fact of transfer of maturity proceeds to some other account came to his knowledge only on through letter No. 252 dated 21/05/2008 written by the bank to him in response to his letter dated 16/05/2008 requesting for payment against the maturity proceeds through a Demand Draft payable at Jammu.
The text of the letter No. 252 dated 21/05/2008 written by the bank is reproduced below:
M/s S.C. Associates
Engineers & Contractors
84, Diwan Niwas
Panjtirthi, Jammu Tawi (J & K)
Sub.: FDR 1113280 & 1113281 DT. 16.06.2005 amounting to Rs. 4.0 Lakhs & Rs. 8.25 Lakhs respectively.
Dear Sir,
Please refer your letter No. SCA/JKB/RAJ-05 dated 16.05.2008 regarding the subject cited above. In this context we hereby submit that as per your agreement with M/s Fazal Rehman Dar and Sons Construction Corporation, the amount of above mentioned FDRs were issued in favour of you by raising overdraft from the account of M/s Fazal Rehman Dar and Sons Construction Corporation.
The amount after the maturity of FDRs already stands credited to the account of M/s Fazal Rehman Dar and Sons Construction Corporation along with interest on 22.09.2007.
You are requested to contact your partner M/s Fazal Rehman Dar and Sons Construction Corporation in this regard.
Yours faithfully,
Branch Head
2. The case of the O.P. Bank on the other hand is as under:
i. That the Complainant & O.P. 3 had approached the bank for providing bank guarantee to PWD on behalf of the Complainant in lieu of the performance guarantee for the contracts awarded to complainant by PWD. That the funds for preparing the aforesaid F.D.R.s were provided by O.P. 3 through two different cheques viz., cheque No. 7348242 dt. 16/06/2005 for Rs. 4.00 Lakhs & cheque No. 7348241 dated 16/06/2005 for Rs. 8.25 Lakhs respectively issued from C.D. A/C No. 330 pertaining to O.P. 3, M/S Fazal Rehman Dar & Sons.
ii. That not only the proceeds for preparing the FDRs were debited from the A/C of O.P. 3 but the bank charges required for preparing the Bank Guarantees were also debited from the account of the O.P. 3.
iii. That the cheques were duly endorsed by the Complainant by way of duly signed endorsement on the back of the cheques under question. The text of the endorsement purportedly made by the complainant on the back side of the cheques reads as under: “Kindly issue FDR favouring M/S S.C. Associates Engineers and Contractors, Diwan Niwas Panjtirthi Jammu as security of BG. After release of BG FDR to be credited to the parent account of Sd/-“
iv. That the complainant also provided a written mandate through a letter duly signed by him dated 16/06/2005 (the very same day on which the F.D.R. was prepared) on the official letter head of his firm authorizing the bank to credit the maturity proceeds of the F.D.R.s to the A/C of O.P. 3. The text of the said letter dt. 16/06/2005 is r
