A Chhattisgarh consumer commission has held Bank of Baroda liable for clearing a fraudulent cheque of ₹7.9 lakh. The bank must now pay the amount along with compensation and legal costs.
- Bank of Baroda cleared a ₹7.90 lakh cheque without proper signature verification.
- Handwriting experts confirmed the signature was forged.
- The Commission ordered the bank to pay the amount plus ₹60,000 in compensation and costs.
- The bank failed to prove that SMS alerts were sent to the customer.
In a significant ruling, the Raipur District Consumer Disputes Redressal Commission in Chhattisgarh has directed Bank of Baroda to reimburse a company after it cleared a disputed cheque involving a forged signature. The commission ruled that the bank exhibited a clear deficiency in service and engaged in unfair trade practices by failing to exercise due diligence during the verification process.
The Core of the Dispute
The case was brought forward by Super Ispat (Raipur) Pvt Ltd, which maintained a current account at the bank's Raipur branch. The company's director alleged that on August 19, 2014, a cheque—which the director maintained was still in the company's possession—was used to illegally withdraw ₹7.90 lakh through the bank's Bhandara branch. The cheque was fraudulently issued in the name of one Manish K. Thakkar.
Banks cannot hide behind the shield of SMS alerts if they fail to prove that such alerts were actually dispatched to the customer.
Why This Matters
BozokMedia analysis shows that this judgment sets a vital precedent for consumer protection in the banking sector. The commission relied heavily on a handwriting expert's report, which definitively stated that the signature on the cheque did not belong to the complainant. Crucially, the commission noted that if the cheque had been legitimately issued, the original document would not have remained in the possession of the company. This logical inconsistency highlighted the bank's failure to follow standard operating procedures.
Historical Context of Banking Liability
Historically, banks have often attempted to mitigate liability by citing 'contributory negligence,' arguing that customers should have monitored their accounts via SMS alerts. However, in this instance, the commission rejected this defense because the bank failed to produce any documentary evidence proving that the SMS alerts were actually sent. This underscores a growing judicial trend of holding financial institutions strictly accountable for their internal verification failures.
| Issue | Bank's Defense | Commission's Finding |
|---|---|---|
| Cheque Possession | Complainant issued the cheque | Original cheque was with the complainant |
| SMS Alerts | Alerts were sent to the customer | No evidence of SMS delivery provided |
| Signature Validity | Transaction was legitimate | Confirmed forged by handwriting expert |
Frequently Asked Questions
1. What was the total amount the bank was ordered to pay?
The bank was ordered to pay the original ₹7.90 lakh, plus ₹50,000 in compensation and ₹10,000 in litigation costs.
2. How did the handwriting expert influence the verdict?
The expert's report was the cornerstone of the decision, as it proved the signature was not the account holder's, thereby establishing fraud.
