Supreme Court rules bank account holders can seek recourse under Consumer Protection Act

Supreme Court rules bank account holders can seek recourse under Consumer Protection Act

Directs the State Consumer Disputes Redressal Commission to dispose of the appeal on merits

The Supreme Court has observed that the consumer complaint in a dispute regarding premature encashment of Joint Fixed Deposit by a bank in contravention of the terms and conditions, is maintainable.

The bench comprising Justice DY Chandrachud and Justice AS Bopanna stated, "A person availing any service from a bank fall under the purview of the definition of a 'consumer'. Such a consumer can seek recourse to the remedies provided under the Consumer Protection Act (CPA), 1986."

In the present case, the complainant and his father had opened a joint FD in HDFC Bank.

An amount of Rs.75 lakhs was deposited jointly in the name of the complainant and his father for a period of 145 days. The FD amount was credited to the account of the complainant's father on the request made by the father on 31 May 2016.

In his complaint before the State Consumer Disputes Redressal Commission (SCDRC) at Lucknow, the complainant contended that upon the maturity of the FD, both the complainant and his father had jointly issued a direction to the bank for renewing it for a period of 10 days. But despite that, the amount was credited solely into the account of the father.

The SCDRC held that the dispute was primarily between the complainant and his father on the issue of the FD amount deposited. Therefore only a civil court was competent to deal with such a dispute. Hence, it dismissed the appeal as withdrawn.

Later, the complainant filed a review application stating on affidavit that he had not furnished instructions to his counsel to apply for withdrawal of the appeal. But the same was not entertained. Thereafter, he approached the Supreme Court.

The apex court noted the relevant terms and conditions relating to the joint FD, which read, "In the case of premature encashment, all signatories to the deposit must sign the encashment instruction."

The court observed, "The respondent bank does not dispute that the appellant, along with his father, opened a joint FD with the bank. A person who avails of any service from a bank will fall under the purview of the definition of a 'consumer' under the CPA."

The bench noted that the essence of the complaint was that there was a deficiency on the part of the respondent bank in proceeding to credit the proceeds of a joint FD exclusively to the account of his father.

It added, "The SCDRC ought to have determined whether the complaint related to deficiency of service as defined under CPA. It had no justification to relegate the appellant to pursue his claim before a civil court. The appellant did not, in the proceedings before the SCDRC, raise any claim against his father.

"Therefore, the SCDRC was wrong in deducing that there was a dispute between the appellant and his father. Assuming that there was a dispute between the appellant and his father, that was not the subject matter of the consumer complaint. The complaint was about deficiency of service against the bank."