NCDRC: Forfeiture of Provident Fund contribution by Dena Bank after dismissal not a consumer dispute

The National Consumer Disputes Redressal Commission (NCDRC) has ruled that a bank's decision to forfeit its contribution to an employee's provident fund following dismissal from service does not give rise to a consumer dispute. The bench, comprising AVM J. Rajendra (Retd.) and Justice Saroj Yadav, allowed a revision petition filed by Dena Bank, setting aside a Chhattisgarh State Consumer Commission order that had directed the bank to refund ₹7.41 lakh with interest.

A Dismissal and a Forfeiture

Prakash Rao, an employee of Dena Bank, was dismissed from service on July 18, 2009, after disciplinary proceedings found him guilty of financial irregularities. At the time, the bank had contributed ₹7,41,706.87 to his provident fund. Following his dismissal, the bank forfeited this amount, citing a liability of ₹86.13 lakh recoverable from Rao.

Aggrieved, Rao filed a consumer complaint before the District Consumer Forum, seeking refund of the forfeited amount with interest, along with compensation. The District Forum dismissed the complaint in January 2018, holding that the matter did not involve a consumer dispute. Rao appealed to the Chhattisgarh State Consumer Commission, which partially allowed his appeal in May 2018, directing the bank to pay ₹7,41,706.87 with 9% annual interest from the date of dismissal, along with ₹20,000 for mental agony and ₹5,000 as litigation costs.

Dena Bank challenged this order before the NCDRC.

Bank’s Argument: A Matter of Service Conditions

Counsel for Dena Bank argued that the forfeiture was carried out in accordance with the terms of Rao’s employment and banking regulations. The bank had issued a show-cause notice and conducted an inquiry before deciding to forfeit the amount. Since the forfeiture arose from the employer-employee relationship, it fell outside the purview of consumer law.

NCDRC’s Analysis: No Consumer-Service Provider Relationship

The NCDRC examined the nature of the dispute. It noted that the forfeiture was directly linked to Rao’s dismissal and the disciplinary proceedings against him. The commission observed:

“It is, therefore, clear that there is no consumer-service provider relationship between the parties as regards such forfeiture.”

The bench emphasized that the action taken by the bank was a consequence of the employer-employee relationship. Rao’s remedy, if any, lay before a civil court or appropriate tribunal, not a consumer forum.

Key Observations

The NCDRC underscored that the forfeiture was part of a broader recovery process stemming from financial misappropriation charges. It stated:

“Clearly, the action taken by OP Bank is as per relationship between the parties wherein the Complainant was serving in the OP Bank from which he was dismissed vide order dated 18.07.2009.”

The commission also clarified that the dispute did not involve any deficiency in service or unfair trade practice, which are essential for a consumer complaint.

The Final Decision

The NCDRC allowed the revision petition, set aside the State Commission’s order, and dismissed Rao’s consumer complaint. However, it granted Rao the liberty to approach an appropriate forum for redressal of his grievances. The bench also directed that any amount deposited by the bank before the District Forum be released to the bank upon application.

This ruling reaffirms the settled position that disputes arising from disciplinary actions and employer-employee relationships cannot be adjudicated under consumer law, even if they involve financial benefits like provident fund contributions.