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C.M.D., City Union Bank Ltd. & Anr. vs. R. Chandramohan

Civil Appeal · 2023 INSC 300Decided 27 Mar 2023
Civil Appeal No. 7289 of 2009
Ajay Rastogi · Bela M. Trivedi

Background

R. Chandramohan, Managing Director of "D-Cube Constructions (P) Ltd.," alleged that two demand drafts worth Rs. 8 lakhs sent by an NRI buyer for flat purchases were never credited to his company's bank account, despite being routed through the same bank. It turned out the drafts, made out to "D-Cube Construction" (without "(P) Ltd."), had instead been credited to a separate account opened in that near-identical name by a co-director, based on a no-objection letter from the company. Alleging collusion and negligence by the bank, the complainant won before both the State and National Consumer Disputes Redressal Commissions, which ordered the bank to re-credit the amount plus compensation.

Decision Breakdown

The Supreme Court held that the consumer forums were wrong to find "deficiency in service" here. It was undisputed that the drafts were made out in the name of the proprietary concern "D-Cube Construction," a different account had been properly opened in that name with a no-objection letter from the company, and the bank had followed correct procedure. Since there was no proven fault, negligence or shortcoming by the bank's employees, and the real dispute was actually an internal disagreement or possible fraud among the company's own directors, the Court held that consumer protection proceedings, being summary in nature, are not the right forum to adjudicate such contested factual disputes or allegations of fraud/tortious conduct. It set aside both commissions' orders and dismissed the original complaint.

Lesson Learnt

A consumer forum cannot award relief for "deficiency in service" merely because money went missing or a transaction went wrong: the complainant must actually prove fault or negligence by the service provider, and disputes that are really about fraud or internal disagreements between third parties must be resolved in a civil or criminal court, not a consumer commission.

Official source (sci.gov.in)View Judgment (PDF)

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