Cheque dishonor despite sufficient balance: NCDRC orders HSBC to pay Rs. 15 lakh compensation to couple
Cheque dishonor despite sufficient balance: NCDRC orders HSBC to pay Rs. 15 lakh compensation to couple
Chides the bank for classifying them as high-risk customers
The National Consumer Disputes Redressal Commission (NCDRC) has directed HSBC Bank to pay Rs. 15 lakh to a man and his wife for causing mental agony and harassment after their cheques were dishonoured despite sufficient balance in their bank account.
The bank had frozen the account of the complainants on the ground that they failed to pay an outstanding loan amount of about Rs. 1,80,000 and claimed that their Know Your Customer (KYC) details were not updated.
In the Anil Milkhiram Goyel and Anr vs HSBC Limited case, Dr. Inder Jit Singh (presiding member) observed that there was nothing on record to show that the bank could classify the complainants as high-risk customers and requested them to update their KYC details every two years as per the guidelines of the Reserve Bank of India (RBI).
The Commission also noted that both the loan accounts stood settled and closed in 2009 and 2010.
Anil and Neelam Goyel, the complainants, alleged that in November 2015, while attempting to withdraw money from an ATM machine, the transaction was declined. On contacting the bank, the couple was informed that the transaction failed as their KYC details were not updated.
Although already having updated the KYC details in May 2015, they again visited the bank's branch in Fort, Mumbai. They were then informed about an outstanding amount in the loans linked to their savings account.
Since the loan amounts were already settled by them years ago, the complainants approached NCDRC in 2016. Alleging deficiency in service on the part of the bank, they sought compensation of Rs. 3.55 crores.
The bank in its reply admitted that the loan accounts stood settled. However, it reiterated that the account was frozen on account of KYC details. It said that although Anil had furnished KYC documents, Neelam had not. This was the reason for freezing the complainants' bank account.
In their rejoinder, the complainants claimed the bank could not suggest any unusual activity on their part by categorizing them as high-risk customers. It was not only illegal, but also insulting to them.
The Commission noted that in its 26 November 2015 communication, the bank initially admitted that the KYC details of the complainants were updated as of 30 May 2015. However, it later changed its stance, asserting that the update was only done for Anil and not for Neelam.
Thus, NCDRC found that the bank's action of freezing the joint savings account was unjustified. It adversely affected the complainants while also exposing them to potential criminal action on account of cheque dishonor.
The Commission’s order stated, "We find that the OP’s action of freezing the joint SB A/c of the complainants on the grounds of KYC of any of the complainants having not been renewed and/or non-deposit of any outstanding amount in any of the two loan accounts, which was settled much earlier, but resulted in declining of ATM transaction and subsequent dishonor of cheques despite complainants having balance in the account, was unjustified. It adversely impacted the reputation of the complainants, and exposed them to the possibility of criminal action.”
NCRDC held that the bank was negligent in its duties, amounting to a deficiency in service. It entitled the complainants to compensation for unwarranted humiliation, embarrassment and loss of reputation.
However, since the couple did not produce documents to demonstrate the quantum of loss suffered by them, the Commission declined to award the amount of compensation they claimed. It ordered the bank to pay the complainants Rs.15 lakh as compensation and Rs.1 lakh as litigation expenses.
The Commission also directed the bank to de-freeze the complainants' account and not demand any further amount towards the settled loan accounts besides making changes in its records to show the loan accounts as closed, issue the requisite 'No Dues Certificate' and reflect the CIBIL of complainants appropriately.
While the complainants were represented by advocates Pulkit Deora, Vidit Gupta, and Prachi Gupta HSBC was advised by advocates Devmani Bansal and Shresth Sethi.
