# THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK LTD. & ANR v. R. CHANDRAMOHAN

- **Citation:** [2023] 3 S.C.R. 688
- **Court:** Supreme Court of India
- **Decided:** 2023-03-27
- **Case number:** Civil Appeal No. 7289 of 2009
- **Bench:** Ajay Rastogi, Bela M. Trivedi
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-chairman-managing-director-city-union-bank-ltd-anr-v-r-chandramohan-36991
- **Pages:** 9

## Headnote

Consumer Protection Act, 1986 - s.2(1)(g) - Respondentcomplainant filed a complaint against the appellants-bank alleging
that two demand drafts of Rs.5 lakhs and Rs.3 lakhs, totalling
Rs.8 lakhs, were not credited to his company's account in the name
of "D-Cube Construction (P) Ltd." with the bank - The complainant
alleged that he had requested the bank to credit the drafts to the
said account, but the bank failed to do so - The complainant sought
direction from the State Commission to re-credit the drafts to his
account - State Consumer Disputes Redressal Commission allowing
the complaint, directed the appellant to pay the Respondentcomplainant rupees eight lakhs along with compensation of rupees
One Lakh - National Commission affirmed the State Commission's
order - On appeal, held: One current account was in the name of
"D-Cube Construction (P) Ltd." and other was in the name of "DCube Construction" - Also, appellant-bank had received a letter
from D-Cube Construction (P) Ltd. giving "no objection" for
opening the current account in the name of "D-Cube Construction"
- The two demand drafts in question were issued in the name of "DCube Construction" and the amounts of the said drafts were credited
in account of "D-Cube Construction" only - Therefore, there is no
"deficiency in service" as per s.2(1)(g) on the part of employees of
the bank, appellant acted in a bona fide manner and followed due
procedure - No room to draw presumptions u/s 2(1)(g) - Burden to
prove deficiency would be on the person alleging it - Respondentcomplainant failed to discharge his burden of prove that there was
a deficiency in service on the part of the employees of the appellantsbank - Orders passed by State Commission and National Consumer
Commission set aside.
[2023] 3 S.C.R. 688
688
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689
Consumer Protection Act, 1986 - Nature of proceedings before
the Commission - The proceedings before the Commission being
summary in nature, the complaints involving highly disputed
questions of facts or the cases involving tortious acts or criminality
could not be decided by the Forum/Commission under the Act - The
"deficiency in service", as well settled, has to be distinguished from
the criminal acts or tortious acts.
Allowing the appeal, the Court
HELD: 1. Even if the allegations made in the complaint
are taken on their face value, then also it clearly emerges that
there was no wilful fault, imperfection, shortcoming or inadequacy
in the discharge of the duty on the part of the employees of the
appellants' bank, which could be termed as "deficiency in
service" under Section 2(1)(g) of the said Act. As emerging from
the record, some disputes were going on amongst the Directors
of the Company and one of the Directors, if allegedly had
committed fraud or cheating, the employees of the bank could
not be held liable, if they had acted bona fide and followed the
due procedure. [Para 11][695-G; 696-A]
2. The proceedings before the Commission being summary
in nature, the complaints involving highly disputed questions of
facts or the cases involving tortious acts or criminality like fraud
or cheating, could not be decided by the Forum/Commission
under the said Act. The "deficiency in service", as well settled,
has to be distinguished from the criminal acts or tortious acts.
There could not be any presumption with regard to the wilful
fault, imperfection, shortcoming or inadequacy in the quality,
nature and manner of performance in service, as contemplated
in Section 2(1)(g) of the Act. The burden of proving the deficiency
in service would always be upon the person alleging it. In the
instant case, respondent-complainant having miserably failed to
discharge his burden to prove that there was a deficiency in
service on the part of the employees of the appellants-bank within
the meaning of Section 2(1)(g) of the Act, his complaint deserved
to be dismissed. [Paras 12, 13][696-B-D]
THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK
LTD. & ANR. v. R. CHANDRAMO

## Text

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SUPREME COURT REPORTS
[2023] 3 S.C.R.
THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION
BANK LTD. & ANR.
v.
R. CHANDRAMOHAN
(Civil Appeal No. 7289 of 2009)
MARCH 27, 2023
[AJAY RASTOGI AND BELA M. TRIVEDI, JJ.]
Consumer Protection Act, 1986 - s.2(1)(g) - Respondentcomplainant filed a complaint against the appellants-bank alleging
that two demand drafts of Rs.5 lakhs and Rs.3 lakhs, totalling
Rs.8 lakhs, were not credited to his company's account in the name
of "D-Cube Construction (P) Ltd." with the bank - The complainant
alleged that he had requested the bank to credit the drafts to the
said account, but the bank failed to do so - The complainant sought
direction from the State Commission to re-credit the drafts to his
account - State Consumer Disputes Redressal Commission allowing
the complaint, directed the appellant to pay the Respondentcomplainant rupees eight lakhs along with compensation of rupees
One Lakh - National Commission affirmed the State Commission's
order - On appeal, held: One current account was in the name of
"D-Cube Construction (P) Ltd." and other was in the name of "DCube Construction" - Also, appellant-bank had received a letter
from D-Cube Construction (P) Ltd. giving "no objection" for
opening the current account in the name of "D-Cube Construction"
- The two demand drafts in question were issued in the name of "DCube Construction" and the amounts of the said drafts were credited
in account of "D-Cube Construction" only - Therefore, there is no
"deficiency in service" as per s.2(1)(g) on the part of employees of
the bank, appellant acted in a bona fide manner and followed due
procedure - No room to draw presumptions u/s 2(1)(g) - Burden to
prove deficiency would be on the person alleging it - Respondentcomplainant failed to discharge his burden of prove that there was
a deficiency in service on the part of the employees of the appellantsbank - Orders passed by State Commission and National Consumer
Commission set aside.
[2023] 3 S.C.R. 688
688
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689
Consumer Protection Act, 1986 - Nature of proceedings before
the Commission - The proceedings before the Commission being
summary in nature, the complaints involving highly disputed
questions of facts or the cases involving tortious acts or criminality
could not be decided by the Forum/Commission under the Act - The
"deficiency in service", as well settled, has to be distinguished from
the criminal acts or tortious acts.
Allowing the appeal, the Court
HELD: 1. Even if the allegations made in the complaint
are taken on their face value, then also it clearly emerges that
there was no wilful fault, imperfection, shortcoming or inadequacy
in the discharge of the duty on the part of the employees of the
appellants' bank, which could be termed as "deficiency in
service" under Section 2(1)(g) of the said Act. As emerging from
the record, some disputes were going on amongst the Directors
of the Company and one of the Directors, if allegedly had
committed fraud or cheating, the employees of the bank could
not be held liable, if they had acted bona fide and followed the
due procedure. [Para 11][695-G; 696-A]
2. The proceedings before the Commission being summary
in nature, the complaints involving highly disputed questions of
facts or the cases involving tortious acts or criminality like fraud
or cheating, could not be decided by the Forum/Commission
under the said Act. The "deficiency in service", as well settled,
has to be distinguished from the criminal acts or tortious acts.
There could not be any presumption with regard to the wilful
fault, imperfection, shortcoming or inadequacy in the quality,
nature and manner of performance in service, as contemplated
in Section 2(1)(g) of the Act. The burden of proving the deficiency
in service would always be upon the person alleging it. In the
instant case, respondent-complainant having miserably failed to
discharge his burden to prove that there was a deficiency in
service on the part of the employees of the appellants-bank within
the meaning of Section 2(1)(g) of the Act, his complaint deserved
to be dismissed. [Paras 12, 13][696-B-D]
THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK
LTD. & ANR. v. R. CHANDRAMOHAN
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SUPREME COURT REPORTS
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Ravneet Singh Bagga v. KLM Royal Dutch Airlines and
Anr. (2000) 1 SCC 66 : [1999] 4 Suppl. SCR 320 -
relied on.
Branch Manager, Indigo Airlines Kolkata and Anr. v.
Kalpana Rani Debbarma and Ors. (2020) 9 SCC 424 :
[2020] 3 SCR 389; Kerala State Cooperative Marketing
Federation v. State Bank of India and Ors. (2004) 2
SCC 425 : [2004] 2 SCR 1; Indian Overseas Bank v.
Industrial Chain Concern (1990) 1 SCC 484 : [1989]
2 Suppl. SCR 27; Oriental Insurance Co. Ltd. v.
Munimahesh Patel (2006) 7 SCC 655 : [2006] 6 Suppl.
SCR 30 - referred to.
Case Law Reference
[1999] 4 Suppl. SCR 320
relied on
Para 5
[2020] 3 SCR 389
referred to
Para 5
[2004] 2 SCR 1
referred to
Para 6
[1989] 2 Suppl. SCR 27
referred to
Para 6
[2006] 6 Suppl. SCR 30
referred to
Para 10
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7289
of 2009.
From the Judgment and Order dated 01.02.2007 of the High Court
of Madras in FA No. 29 of 2005.
K. K. Mani, Ms. T. Archana, Rajeev Gupta, Vinay Rajput, Advs.
for the Appellants.
Krishan Kumar, Nitin Pal, Ms. Muskan Jain, Dheeraj Kumar,
Advs. for the Respondent.
The Judgment of the Court was delivered by
BELA M. TRIVEDI, J.
1. The appellants - the Chairman and the Manager of the City
Union Bank Limited have preferred the present appeal against the
Judgment and Order dated 01.02.2007 passed by the National Consumer
Disputes Redressal Commission, Circuit Bench at Chennai (hereinafter
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referred to as the 'National Commission') in First Appeal No. 29 of
2005 arising out of the Judgment and Order dated 23.12.2004 passed by
the State Consumer Disputes Redressal Commission, Chennai in O.P.
No. 103/99.
2. The short facts giving rise to the present appeal are that the
respondent - original complainant Mr. R. Chandramohan had filed the
complaint being O.P. No. 103/99 against the appellants - original
opponents before the State Commission seeking direction against the
appellants to re-credit rupees eight lakhs covering two demand drafts -
one bearing No. 166570 dated 28.06.1996 for rupees five lakhs and the
other bearing No. 177923 dated 18.11.1996 for rupees three lakhs in his
Current Account No. 3600. It was alleged in the complaint inter alia
that the respondent-complainant was the Managing Director of "D-Cube
Constructions (P) Ltd." having its registered office at Chennai. Shri
R. Thulasiram and Shri R. Murali were the other directors of the said
Company. As per the further case of the respondent, a Current Account
bearing No. 3600 was opened in the name of the said company with the
appellants'- bank on 13.04.1995 and the respondent alone was permitted
to operate the said account. During the end of 1996, there was
misunderstanding between the respondent and one R. Kularaireman and,
therefore, he had written a letter to the appellant no. 2 on 08.01.1997
requesting it not to allow withdrawals from the said current account. It
was further case of the respondent that one Ravindra, an NRI residing
at Malaysia had purchased three flats in the respondent's projects and
had informed the complainant that he had sent two drafts i.e., draft
bearing No. 166570 dated 28.06.1996 for Rs. 5 lakhs and draft bearing
no. 177923 dated 18.11.1996 for Rs. 3 lakhs, totally amounting to Rs. 8
lakhs. On the reconciliation of the accounts, it was found that the said
two demand drafts were not credited in the said current account of the
company opened with the appellant no. 2 - bank. Despite the information
sought by the respondent-complainant, the appellant no. 2 did not furnish
any information. Subsequently, the respondent came to know through
Indian Overseas Bank that the said demand drafts were presented through
the second appellant bank for clearing and the same were paid to the
City Union Bank, Ram Nagar Branch. The respondent therefore once
again requested the appellant no. 2 on 03.08.1998 informing it that the
amount of the said two drafts were credited in some other accounts and
therefore the same be re-credited in his current account.
THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK
LTD. & ANR. v. R. CHANDRAMOHAN [BELA M. TRIVEDI, J.]
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3. Thereafter, correspondence ensued between the appellants and
the respondent and it was found that a separate account in the name of
"D-Cube Construction" was opened and the said two drafts were
credited in that account, as the said demand drafts were in the name of
"D-Cube Construction". The respondent alleging collusion and negligence
on the part of the appellants filed the complaint before the State
Commission.
4. The State Commission allowing the said complaint with cost of
Rs. 1,000/- directed the appellants-original opponents to pay the
respondent-complainant a sum of Rs. Eight lakhs along with compensation
of Rs. one lakh towards mental agony, loss and hardship. Being aggrieved
by the said order, the appellants had preferred the First Appeal being 29/
2005, which came to be dismissed by the National Commission vide the
impugned order.
5. The learned counsel appearing for the appellants submitted
that the State Commission and the National Commission had committed
an error in not appreciating the fact that in absence of any fault,
imperfection, shortcoming or inadequacy in the performance, which was
required to be maintained by the appellants' bank, it could not be presumed
that there was deficiency in service as defined under Section 2(1)(g) of
the Consumer Protection Act, 1986 (hereinafter referred to as the 'said
Act') He has relied upon the decision of this Court in case of Ravneet
Singh Bagga vs. KLM Royal Dutch Airlines and Another1 and in
case of Branch Manager, Indigo Airlines Kolkata and Another Vs.
Kalpana Rani Debbarma and Others2 to submit that the complaint
filed by the respondent-complainant was not maintainable before the
State Commission, and even otherwise the respondent had failed to
discharge the burden of proof that there was deficiency in service on
the part of the appellants. He further submitted that the two demand
drafts in question were issued in the name of "D-Cube Construction"
only, and it was on the instructions of R. Thulasiram one of the Codirectors, the amounts of the said drafts were credited in the Current
Account No. 4160 opened in the name of "D-Cube Construction".
According to him, as per the letter dated 15.02.1997 addressed to the
appellant-bank by the "D-Cube Constructions (P) Ltd.", stating that the
said Company had no objection if current account in the name of
1 (2000) 1 SCC 66
2 (2020) 9 SCC 424
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"D-Cube Construction" was opened, the said account was opened by
Shri R. Thulasiram in his capacity as the proprietor of the proprietary
concern. According to him, if any fraud was committed by the Co-director
of the "D-Cube Constructions (P) Ltd.", such disputes pertains to fraud
would not fall within the jurisdiction of the State Commission or the
National Commission to decide.
6. However, learned counsel for the respondent-complainant
submitted that when the two forums have consistently held the appellants
liable for the deficiency in service, this Court should not interfere with
the same. He further submitted that the bank would be vicariously liable
for the acts of its employees. As per the General Banking Principles and
Guidelines laid down by the RBI, the account should not have been
opened with the similar name of the company of which the complainant
was the Managing Director. According to him, without the involvement
of the officers of the Bank, R. Thulasiram would not have encashed the
drafts in question by opening a new current account in the name of "DCube Construction". He further submitted that there was a clear
deficiency in service on the part of the appellant -bank. In this regard he
had relied upon the decision in case of Kerala State Cooperative
Marketing Federation Vs. State Bank of India and Others3 and in
case of Indian Overseas Bank vs. Industrial Chain Concern4.
7. Having regard to the submissions made by the learned counsel
for the parties and to the documents on record, the question that falls for
consideration before this Court would be, whether the Commission/Forum
under the Act could have entertained the complaint involving highly
disputed questions of facts or involving allegations of tortious acts, the
proceedings before the Commission/Forum being summary in nature?
8. In the instant case, it is not disputed that three drafts were
issued by an NRI from Malaysia for the purchase of three flats. Out of
three, one draft was for the sum of Rs. 5 lakhs dated 28.06.1996 and
two drafts were for Rs. 3 lakhs & Rs. 6 lakhs dated 18.11.1996. It is
also not disputed that the two drafts in question were issued in the name
of "D-Cube Construction" and not in the name of "D-Cube Constructions
(P) Ltd." The Current Account No. 3600 was in the name of "D-Cube
Constructions (P) Ltd.", whereas the Current Account No. 4160 was
opened on 15.02.1997 in the name of "D-Cube Construction" by Shri R.
3 (2004) 2 SCC 425
4 (1990) 1 SCC 484
THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK
LTD. & ANR. v. R. CHANDRAMOHAN [BELA M. TRIVEDI, J.]
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Thulasiram, as the proprietor of his proprietary concern, when he was
one of the Directors of "D-Cube Constructions (P) Ltd." It is also not
disputed that appellant no. 2 - bank had received a letter dated 15.02.1997
from the "D-Cube Constructions (P) Ltd." giving "no objection" for
opening the current account in the name of "D-Cube Construction". It is
also not disputed that there were certain disputes going on between the
Directors of the said company - "D-Cube Constructions (P) Ltd.".
9. Under the circumstances, when the Current Account No. 4160
was opened by R. Thulasiram as the proprietor of "D-Cube Construction",
relying upon the letter dated 15.02.1997 written on behalf of the "DCube Constructions (P) Ltd.", and when the disputed two drafts in
question which were in the name of "D-Cube Construction", were
credited in the account of "D-Cube Construction", it could not be said
that there was any willful default or imperfection or short coming so as
to term it as the deficiency in service on the part of the appellant-bank
within the meaning of Section 2(g) of the said Act. The counsel for the
appellants has rightly relied upon the decision of this Court in case of
Ravneet Singh Bagga (supra) as under:
"5. Section 2(i)(o) defines "service" to mean service of any
description which is made available to potential users and includes
the provision of facilities in connection with banking, financing,
insurance, transport, processing, supply of electrical or other energy,
board or lodging or both, entertainment, amusement or the
purveying of news or other information, but does not include the
rendering of any service free of charge or under a contract of
personal service. Section 2(i)(g) defines "deficiency" to mean
any fault, imperfection, shortcoming or inadequacy in the quality,
nature and manner of performance which is required to be
maintained by or under any law for the time being in force or has
been undertaken to be performed by a person in pursuance of a
contract or otherwise in relation to any service".
"6. The deficiency in service cannot be alleged without attributing
fault, imperfection, shortcoming or inadequacy in the quality, nature
and manner of performance which is required to be performed by
a person in pursuance of a contract or otherwise in relation to any
service. The burden of proving the deficiency in service is upon
the person who alleges it. The complainant has, on facts, been
found to have not established any wilful fault, imperfection,
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shortcoming or inadequacy in the service of the respondent. The
deficiency in service has to be distinguished from the tortious acts
of the respondent. In the absence of deficiency in service the
aggrieved person may have a remedy under the common law to
file a suit for damages but cannot insist for grant of relief under
the Act for the alleged acts of commission and omission attributable
to the respondent which otherwise do not amount to deficiency in
service. In case of bona fide disputes no wilful fault, imperfection,
shortcoming or inadequacy in the quality, nature and manner of
performance in the service can be informed (sic). If on facts it is
found that the person or authority rendering service had taken all
precautions and considered all relevant facts and circumstances
during the transaction and that their action or the final decision
was in good faith, it cannot be said that there had been any
deficiency in service. If the action of the respondent is found to
be in good faith, there is no deficiency of service entitling the
aggrieved person to claim relief under the Act. The rendering of
deficient service has to be considered and decided in each case
according to the facts of that case for which no hard and fast rule
can be laid down. Inefficiency, lack of due care, absence of bona
fides, rashness, haste or omission and the like may be the factors
to ascertain the deficiency in rendering the service"
10. The ratio of the aforestated decision has also been followed in
case of Branch Manager, Indigo Airlines Kolkata (supra). In Oriental
Insurance Co. Ltd. vs. Munimahesh Patel5, this Court held that the
proceedings before the Commission are essentially summary in nature
and the issues which involve disputed factual questions, should not be
adjudicated by the Commission.
11. So far as the facts of the present case are concerned, even if
the allegations made in the complaint are taken on their face value, then
also it clearly emerges that there was no wilful fault, imperfection,
shortcoming or inadequacy in the discharge of the duty on the part of the
employees of the appellants' bank, which could be termed as "deficiency
in service" under Section 2(1)(g) of the said Act. As emerging from the
record, some disputes were going on amongst the Directors of the
Company and one of the Directors, if allegedly had committed fraud or
5 (2006) 7 SCC 655
THE CHAIRMAN & MANAGING DIRECTOR, CITY UNION BANK
LTD. & ANR. v. R. CHANDRAMOHAN [BELA M. TRIVEDI, J.]
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[2023] 3 S.C.R.
cheating, the employees of the bank could not be held liable, if they had
acted bona fide and followed the due procedure.
12. The proceedings before the Commission being summary in
nature, the complaints involving highly disputed questions of facts or the
cases involving tortious acts or criminality like fraud or cheating, could
not be decided by the Forum/Commission under the said Act. The
"deficiency in service", as well settled, has to be distinguished from the
criminal acts or tortious acts. There could not be any presumption with
regard to the wilful fault, imperfection, shortcoming or inadequacy in the
quality, nature and manner of performance in service, as contemplated
in Section 2(1)(g) of the Act. The burden of proving the deficiency in
service would always be upon the person alleging it.
13. In the instant case, respondent-complainant having miserably
failed to discharge his burden to prove that there was a deficiency in
service on the part of the employees of the appellants-bank within the
meaning of Section 2(1)(g) of the Act, his complaint deserved to be
dismissed, and is accordingly dismissed. The impugned orders passed
by the State Commission and the National Commission are therefore
quashed and set aside. The appeal stands allowed accordingly.
Ankit Gyan
Appeal allowed.
(Assisted by : Bhavyata Kapoor and Aarsh Choudhary, LCRAs)