Bankers Can Refuse Payment of Cancelled Draft

Dishonouring a cancelled draft is no crime

S. MURLIDHARAN  (From Hindu Business Line )

December 27, 2012:  

A payee cannot haul a bank under Section 138 of the Negotiable Instruments Act for not honouring a demand draft that is cancelled by the person who got the draft made before being presented to it, held the Delhi High Court in State Bank of Patiala v. Nascent Educational and Development Society. A demand draft, unlike a cheque, is issued by a bank for consideration already received and hence cannot possibly be dishonoured on the ground of lack of funds; but a bank cannot be compelled to honour the draft in the face of a cancellation instruction by the person who got it issued from the bank. The payee, therefore, has no recourse to the bank including proceeding against it under Section 138 of the Act for criminal liability in such circumstances. However, he can proceed against the debtor under the civil laws.

http://www.thehindubusinessline.com/industry-and-economy/banking/dishonouring-a-cancelled-draft-is-no-crime/article4245592.ece

Employer’s gratuity offer must be on a par with Gratuity Act’s

S. MURLIDHARAN

December 28, 2012:  

Section 4(5) of the Payment of Gratuity Act allows an employer to offer an employee a gratuity scheme better than the one enshrined in the Act.

An employer can’t in its scheme deny interest on gratuity, already assured by the Act, the Supreme Court ruled in Y.K. Singla v. Punjab National Bank.

The appellant was proceeded against for entering into a criminal conspiracy in granting loan in his capacity as a bank employee. His gratuity was withheld pending completion of the proceedings.

The gratuity he received on acquittal was without interest. The bank contended that according to its scheme, no interest was payable while the proceedings were on. The Supreme Court ordered payment of interest from the date of his retirement in 1996 till the payment of gratuity in 2010.

(The author is a New Delhi-based chartered accountant.)

http://www.thehindubusinessline.com/industry-and-economy/banking/employers-gratuity-offer-must-be-on-a-par-with-gratuity-acts/article4249445.ece

Bank Fined For Freezing Account Without Information

Consumer court tells bank to pay compensation

TNN | Dec 10, 2012, 03.43 AM IST ( Times of India )


LUCKNOW: The district consumer disputes redressal forum has directed a bank to compensate a man for freezing his account and not allowing him to withdraw money for a year. The bank did not give any reason to the man for freezing his account. The bank was asked to pay Rs 33,000 as compensation to the complainant.

The complainant had deposited the compensation received by him out of an agricultural land in his savings account with the Oriental Bank of Commerce. From February 2009, the bank seized the account No 10072151004289 without giving any information and no amount was permitted to be withdrawn from his account. Though the complainant visited the branch several times to know why his account had been seized, he was never given the reason.

The complainant sent a notice to the bank. Later, he also filed a writ petition in the high court, and the court ordered that the bank manager should tell the complainant why had his bank account been seized, and that the complainant should be allowed to withdraw from his account. However, after the bank did not comply with the order, a criminal contempt was filed, and the order said that "the bank account of the complainant be immediately made operative and for the loss occasioned he should move the appropriate forum". The complainant had about Rs 2.57 lakh in his account, yet he couldn't use the money as the account was blocked for a year -- between February 2009 and February 2010. Though the bank accepted that the account of the complainant was seized, it did not give the reason to the consumer forum. The bank allowed the complainant to operate his account only when he filed the criminal contempt.

http://timesofindia.indiatimes.com/city/lucknow/Consumer-court-tells-bank-to-pay-compensation/articleshow/17550892.cms