Supreme Court Restores Consumer Forum Order in Bank Error Case: Sunil Kumar Maity vs. State Bank of India (2022) INSC 43

Date of the Judgment: 21 January 2022
Citation: (2022) INSC 43
Judges: Sanjiv Khanna, J., Bela M. Trivedi, J.
Can a bank be held liable for crediting funds to the wrong account due to its own error? The Supreme Court of India recently addressed this question in a case where a bank mistakenly credited a deposit to the wrong customer’s account. The court examined the extent of the bank’s responsibility in such cases, ultimately ruling in favor of the original complainant. The judgment was delivered by a two-judge bench comprising Justice Sanjiv Khanna and Justice Bela M. Trivedi, with Justice Bela M. Trivedi authoring the opinion.

Case Background

Sunil Kumar Maity had a savings account with the State Bank of India (SBI) since January 2000. Initially, his account number was 01190010167. On 24 February 2010, the account number was changed to 10140478732. On 15 September 2012, when Mr. Maity went to deposit ₹500, a bank staff member informed him that the account number had again changed and wrote 32432609504 on his passbook. He deposited the amount into the new account number. Subsequently, on 16 January 2013, Mr. Maity deposited a cheque for ₹3,00,000. When he updated his passbook on 11 December 2013, he found only ₹59 in his account. The bank informed him that the account number 32432609504 had been wrongly assigned to him. The actual account holder with that number was another customer named Sunil Maity, who had withdrawn ₹1,00,000 on 25 January 2013 and ₹2,00,000 on 28 January 2013. Mr. Sunil Kumar Maity filed a complaint with the Consumer Forum after his letters to the bank went unanswered.

Timeline

Course of Proceedings

The Consumer Forum ruled in favor of Mr. Maity on 14 May 2014. The State Consumer Disputes Redressal Commission partly allowed the bank’s appeal on 25 October 2017, modifying the order by striking off the fine of ₹100 per day, but confirming the rest of the order. The State Commission noted discrepancies in the signatures and the fact that Mr. Maity had disclosed the source of the cheque, unlike the other customer. The State Commission also highlighted that the bank was at fault for the error in assigning the account number. The State Bank of India (SBI) then filed a revision petition before the National Consumer Disputes Redressal Commission, which was allowed on 7 June 2019, dismissing the complaint and granting liberty to the complainant to approach a competent civil court. The National Commission also stated that the bank would not press the issue of limitation if the complainant approached a civil court. The National Commission passed the impugned judgment on 14 June 2019.

Legal Framework

The case was primarily considered under the Consumer Protection Act. The Supreme Court also discussed the revisional jurisdiction of the National Commission under Section 21(b) of the Consumer Protection Act, which allows interference only when the State Commission has exceeded its jurisdiction or acted illegally. The Court also touched upon Section 5 of the Limitation Act, 1963, noting that it does not apply to the institution of civil suits.
Section 21(b) of the Consumer Protection Act states:

“The National Commission shall have jurisdiction to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any State Commission if it appears to the National Commission that such State Commission has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity.”

Arguments

The appellant, Sunil Kumar Maity, argued that the bank was negligent in assigning the wrong account number to him and that the State Commission had correctly appreciated the evidence. He also contended that the National Commission had exceeded its revisional jurisdiction by calling for a report from the bank. The respondent, State Bank of India, argued that the National Commission was justified in setting aside the order of the State Commission, as the lower fora had not undertaken an in-depth appraisal of the case. The bank also submitted a report at the revisional stage, which the National Commission relied upon.

Issues Framed by the Supreme Court

The Supreme Court addressed the following issues:

✓ Whether the National Commission exceeded its revisional jurisdiction under Section 21(b) of the Consumer Protection Act.

✓ Whether the National Commission was justified in relying on a report called for from the bank at the revisional stage.

✓ Whether the State Commission and the Consumer Forum had correctly appreciated the evidence on record.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

CCI Chambers Coop. Hsg. Society Ltd. vs. Development Credit Bank Ltd. (2003) 7 SCC 233* was cited to reiterate that consumer forums should not be shut down due to the need for detailed evidence, and that summary inquiries are sufficient. The Court held that the National Commission erred in its interpretation of Section 21(b) of the Consumer Protection Act, as the State Commission had not acted illegally or with material irregularity. The Court also clarified that Section 5 of the Limitation Act, 1963 does not apply to civil suits, contrary to the National Commission’s observation.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the fact that the bank was negligent in assigning the wrong account number to the appellant. The Court emphasized that the bank should have been extra cautious, especially since the accounts of both customers were with the same branch. The Court also noted that the State Commission and the Consumer Forum had correctly appreciated the evidence on record, and their orders were based on sound reasoning. The National Commission, on the other hand, had exceeded its revisional jurisdiction by calling for a report from the bank and relying solely on it, without giving the lower fora an opportunity to deal with it. The Court also found the suppositions in the bank’s report to be contradictory, incredulous, and fanciful. The Court also noted that the National Commission failed to delve into the reasoning given by the State Commission.

The Court’s reasoning was based on the principle that consumer forums should not be shut down due to the need for detailed evidence and that summary inquiries are sufficient. The Court also emphasized that the revisional jurisdiction of the National Commission is limited and should not be used to re-appreciate the evidence already considered by the lower fora.

The Supreme Court overturned the National Commission’s order, stating:

“In the instant case, the National Commission itself had exceeded its revisional jurisdiction by calling for the report from the respondent -bank and solely relying upon such report, had come to the conclusion that the two fora below had erred in not undertaking the requisite in -depth appraisal of the case that was required.”

The Court also noted:

“The report that tries to absolve the respondent -bank of its liability is based on surmises and conjectures as it abstrusely and without evidence holds that the bank has every reason to believe that wrong account number was intentionally inserted by the appellant himself for reasons best known to the appellant or on account of negligence by the appellant by not keeping the passbook in his safe and proper custody.”

Further, the Court clarified:

“Such an observation/order passed by the National Commission is in utter ignorance of the provisions of the Limitation Act, in as much as Section 5 of the Limitation Act does not apply to the institution of civil suit in the Civil Court.”

Key Takeaways

• Banks must exercise due diligence in maintaining and assigning account numbers to avoid errors.
• Consumer forums should not be shut down due to the need for detailed evidence; summary inquiries are sufficient.
• The revisional jurisdiction of the National Commission is limited and should not be used to re-appreciate evidence.
• Additional evidence should not be introduced at the revisional stage without following the due process of law.
• Section 5 of the Limitation Act, 1963 does not apply to the institution of civil suits.

Directions

The Supreme Court set aside the order of the National Commission and restored the order of the State Commission.

Development of Law

The ratio decidendi of this case is that the National Commission exceeded its revisional jurisdiction by calling for a report from the bank and relying solely on it, and that the State Commission and the Consumer Forum had correctly appreciated the evidence. This judgment reinforces the principle that consumer forums should not be shut down due to the need for detailed evidence and that summary inquiries are sufficient. It also clarifies the limits of the revisional jurisdiction of the National Commission.

Conclusion

The Supreme Court’s judgment in Sunil Kumar Maity vs. State Bank of India underscores the importance of banks’ responsibility in maintaining accurate account records. The Court’s decision to restore the State Commission’s order highlights the limited scope of the National Commission’s revisional jurisdiction and reinforces the principle that consumer forums are designed for summary inquiries. This case serves as a significant precedent for consumer protection in the banking sector.