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Raj Kumar Makkad (Adv P & H High Court Chandigarh)     12 December 2009

SC held bank liable to compensate for payment without verifi

The Supreme Court has held that banks are liable to compensate a customer whose money is wrongly paid to another person without verifying the original signature of the account-holder as it amounted to deficiency of service. A bench of Justices D K Jain and T S Thakur said the bank was guilty of honouring the cheque presented by the fraudster by releasing an amount over and above the amount in the account even though the customer Gurnam Singh had no overdraft facility.

“On a query by the Court how in the absence of any overdraft facility being enjoyed by the complainant, a cheque for the amount which was in excess of the balance amount in the account of the complainant could be honoured, learned counsel is unable to furnish any satisfactory explanation. “In our opinion, this fact, highlighted by the State (Consumer) Commission, by itself is a glaring example of negligence/deficiency in the service ofthe bank,” the bench said.

The bench made the remarks while dismissing the appeal of public sector Vijaya Bank which had challenged the concurrent findings of district consumer forum, Chandigarh, State Consumer Commission and the National Consumer Commission which had held the bank guility of deficiency in service for releasing an amount of over Rs 3.5 lakh to a fraudster who had presented stolen cheques of Gurnam Singh.

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 6 Replies

N.K.Assumi (Advocate)     12 December 2009

Raj, thank you for the important information. I think our Supreme Court did the right thing.


SC has given good verdict. Now a days innocent customers are facing such problems with bankers.

Adinath@Avinash Patil (advocate)     13 December 2009



I request Raj Kumar makkad, if possible to provide with the citation, The judgement needs appreceation.

shrikant chede (law officer)     01 January 2010

amazing judjement

sunil pagare (lawyer)     03 January 2010

Thanks for providing this good Judgement

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