IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.43 OF 2009 (Arising out of S.L.P. (C) No.21204 of 2007)

Branch Manager, Federal Bank Ltd.        ...Appellant(s)

Versus

N.S. Sabastian               ...Respondent(s)

O  R  D  E  R

Leave granted.

This appeal is directed against order dated 10th April, 2007 passed by the

National  Consumer  Disputes  Redressal  Commission  (for  short  “the  National

Commission”) whereby it dismissed the appeal preferred by the appellant against the

order dated 3.4.2002 of the Kerala State Consumer Disputes Redressal Commission

(for short “the State Commission”) for award of interest @18% to the complainant-

respondent on an amount of Rs.9.85 lakhs.

A  perusal  of  the  record  shows  that  while  he  was  working  as  clerk  at

Chengannur  branch  of  Federal  Bank  Limited  (for  short  “the  bank”),  the

complainant-respondent introduced one Mr. M.P. Anil Kumar who opened savings

bank account in that branch with account no.12291.   On 3.4.2000, the respondent

presented a chqeque drawn in his favour by Anil Kumar for a sum of Rs. 9.85 lakhs

before Kunchithanni branch of the bank for collection and crediting the same in his

account.  It is worth mentioning that on the date of issue of cheque, Anil Kumar had

less than Rs.150/- in his account.  The cheque was  sent for collection  to Chengannur

branch of

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the bank through M/s. Professional Couriers but the same was lost in transit.  The

respondent complained to the Manager of Kunchithanni branch of the bank about

non-credit of Rs.9.85 lakhs in his account and then filed a petition before the Banking

Ombudsman for the State of Kerala.  The Manager of the Kunchithanni branch of

the bank, vide his letter dated 5th June, 2000, informed the respondent that the cheque

was  lost  in  transit  and  advised  him to  get  a  duplicate  cheque  in  lieu  of  the  lost

instrument.  Thereafter, the Banking Ombudsman issued communication dated 10th

July, 2000 to the respondent that there was no deficiency of service on the part of the

bank  and  that  he  may take  necessary  steps  to  obtain  duplicate  cheque  from the

drawer by invoking Section 45A of the Negotiable Instruments Act or approach a

court/appropriate forum for recovery of the money. However,  instead of taking steps

for obtaining duplicate cheque from the drawer, namely, Anil Kumar, the respondent

filed a complaint before the State Commission claiming Rs.9.85 lakhs with interest

@18% per annum.  The bank contested the complaint by asserting that there was no

deficiency of service because it had asked the complainant to obtain duplicate cheque

which he failed to do.  The bank also questioned the bonafides of the complainant-

respondent by alleging that on the date of issue of cheque, the drawer had a negligible

amount of Rs.112/- in his account.

The  State  Commission  declined  the  respondent’s  prayer  for  award  of

Rs.9.85 lakhs but directed the bank to pay interest @18% per annum on the cheque

amount  from the  date  of  its  issue,  i.e.,  03.04.2000  till  the  date  of  payment.   The

National Commission dismissed the appeal preferred by the appellant and confirmed

the order of the State Commission.  Hence this appeal by special leave.

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Learned counsel for the appellant invited our attention to the zerox copy of

the statement of account of Anil Kumar to show that between 28th March, 1998 and

29th September, 2000 he did not deposit any amount in the bank; that outstanding

balance as on 28th March 1998 was Rs.148/-  and as on 29th September, 1998 total

balance  amount  was  Rs.87/-  to  his  credit,  and argued that  the  State  Commission

committed  grave  illegality  in  awarding  interest  to  the  complainant-respondent  by

presuming deficiency of service on the part of the appellant and ignoring the stark

reality that on the date of presentation of the cheque and five months thereafter, there

was  no  possibility  of  its  encashment.  He  pointed  out  that  in  spite  of  the

communications  of  the  bank  and  letter  dated  10th July,  2000  of  the  Banking

Ombudsman, the respondent did not take steps to obtain duplicate cheque from the

drawer apparently because he knew that the drawer did not have the requisite money

for encashment of the cheque and argued the award of interest on Rs.9.85 lakhs, by

the  State  Commission  which  has  been  confirmed  by  the  National  Commission  is

legally unsustainable.  As against this, learned counsel for the respondent supported

the impugned orders and argued that the State Commission has not committed any

error  by  awarding  interest  in  lieu  of  the  loss  suffered  by  his  client  due  to  the

appellant’s failure to credit the cheque amount in his account.

We have  considered the  respective  submissions.   In  our  view the  State

Commission  was  not  at  all  justified  in  awarding  interest  to  the  respondent.

Undisputedly the drawer, namely, Anil  Kumar did not deposit  any amount in the

bank between 28th March, 1998 and the date on which the cheque is said to have been

issued in favour of the respondent.  Therefore, it was impossible for the respondent to

get the amount credited in his account.  If the cheque had not been lost in transit, the

same would have been dishonoured due to

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insufficiency of funds.  On its part, the bank had advised the respondent to obtain

duplicate cheque from the drawer.  Banking Ombudsman gave similar advise to the

respondent by pointing out that he can get duplicate cheque by resorting to Section

45A of the Negotiable Instruments Act.  However, the respondent did not take any

steps whatsoever for obtaining duplicate cheque from Anil Kumar.  The reason for

this is not far to see.  Anil Kumar had sum less than Rs.200/- in his account at the

relevant time.  The appellant was aware of this and, therefore, he did not resort to

Section 45A of the Negotiable Instruments Act.  Not only this, he did not take any

action for recovery of Rs.9.85 lakhs from Anil Kumar either by filing a complaint

before appropriate forum or by filing a suit before the competent civil court.  

This being the position, the direction given by the State Commission for

payment of interest to the respondent is liable to be set aside.  Consequently, the order

of the National Commission is also liable to be set aside.

Accordingly, the appeal is allowed, impugned orders are set aside and the

complaint filed before the State Commission is dismissed.

No costs.

......................J.       [B.N. AGRAWAL]

......................J.       [G.S. SINGHVI]

New Delhi, January 07, 2009.