Some Important Court Judgements On Banks

Important Recent Judgments of Various Courts - Lower Courts, High Courts, Supreme Courts, RTI, Central Information Commissioner etc. on Wage Revisions, HR Issues for Bankers

(A)  PENSION  AND  WAGE REVISION  CASES :

28. Karnataka HC Writ Petition Nos 35355 - 35361/2010(S-R) between G Channaramakrishan & Others vs. Union of India, IBA, Canara Bank & others relating to quashing of Joint Note dated 27/4/2010 and MoS in so far as it relates to condition requiring Bank employees to contribute 2.8 times of revised pay scale to become pension optees and contribution of fund additional of 56% of the management contribution to PF, has been dismissed (20th September 2012)

27. Supreme Court Judgement in case of M R Prabhakar & Others vs Canara Bank & Others on 3rd October 2012 (Civil Appeal Nos 7188-7191 of 2012) - regarding legalilty of the claim of pension in lieu of CPF who had resigned and stood relieved prior to 03.06.1993. - Case was dismissed by SC. in October 2012

26. 2nd Pension Option to Left Over Bankers Should Now Be Only A Matter of Few Days  - Karnataka HC Delivers Clear Cut Judgment    by Rajesh Goyal    (uploaded on  12/10/2012)

25.→ National Consumer Commission Fully Exposes Fallacies of  IBA and Banks For Denying  2nd Pension Option to Resignees  - by Rajesh Goyal  (uploaded on 30/08/2012)

24.  →  Appeal by Vijaya Bank against the order dated  18TH APRIL 2012  for granting pension to the resignees in the writ petition No. 24158-24160 / 2011 IN THE BANGALORE HIGH COURT ALSO DISMISSED.  (uploaded on 31st July, 2012)

23. → Karnataka High Court strikes down Vijay Bank circular denying 2nd pension option to certain categories of bankers (uploaded on 23/05/2012)

22.→ Andhra Pradesh High Court Rules that even a Compulsorily Retired Officer is eligible for 2nd Pension Option under Joint Note (uploaded on 04/04/2012)

21.→Transfer of Petitions to SC - Status after hearing on 19/01/2012 (uploaded on 22/01/2012)

20. Allahabad Bank Rapped by Bombay High Court for Stopping Pension of 87 Year Old Ex-Banker - HC Restores Pension  and Allahabad Bank pulled up for arbitrary action  (uploaded on 27/01/2012)

19. Contempt Petition filed by pensioners of LIC in Rajasthan High Court -   Failure of LIC to  Giving Pension Parity in LIC As per HC direction   (uploaded on 19/01/2012)

18.   Sheelkumar Jain vs The New India Assurance Co. Ltd. & Others - Supreme Court Judgement - 28th July, 2011 -  In this case SC allowed the appeal and directed the respondents to consider the claim of the appellant for pension in accordance with the Pension Scheme 1995, inspite of his resignation.

17. N.Pradeep Kumar, Supreme Court, Advocate now has sent Part II of his arguments about the status for entitlement to Pension Option for Employees Who retired between 29.9.1995 and 26.4.2010.  READ NOW.  (Uploaded on 21/11/2010)

16. Case Filed At High Court of Karnataka by UFOPFO - Principal Bench at Bangalore - Full text of Writ now available for every banker (Uploaded on 17/11/2010)

15. N. Pradeep Kumar, Supreme Court, Advocate gives free and frank legal opinion about the status for entitlement to Pension Option for Employees Who "Retired" between 29.9.1995 and 26.04.2010.  READ NOW - Part I of the Series of Articles for the benefit of bankers across the country. (Uploaded on 14/11/2010)

14. STATUS OF THE PIL  FILED  IN MUMBAI HIGH COURT  AND BACKGROUND OF THE CASE (updated on 14/11/2010)

13. A Landmark Decision by Central Information Commissioner -  Employee Has Right to Know where his PF funds are being invested.(uploaded on 27/10/2010)

12. PIL filed in High Court against 9th Bipartite Settlement & Joint Note  (Uploaded on 09/10/2010)

11.  Resignation is equal to Voluntary Retirement? - Decision by Madras High Court   (Uploaded on 09/10/2010)

10. Even a retrospective amendment cannot  take away the rights of an employee for retirement benefits  (Uploaded on 09/10/2010)

9. UCO Bank & Others vs Ashwani Kumar Sharma - Can banks withhold gratuity and leave  encashment in the case of compulsory retirement?  (Uploaded on 08/10/2010)

8. Orissa High Court gives stay to Parsuram Mohanty for recovery of 56% (Uploaded on 05/10/2010)

7. Court case at Jaipur (uploaded on 11/09/2010)

6 Pension Scheme must provide for the pension should be able to live at a standard equivalent to Pre-retirement level;

5. Denial of pension option to resignees of PSUs is unconstitutional? - Part I

4 DENIAL OF PENSION OPTION TO RESIGNEES OF PSBs IS UNCONSTITUTIONAL - PART II.

3 Amendments in Payment of Gratuity Act - Enhancing the gratuity limit to Rs. 10 lacs wef 24/05/2010 - Copy ofnotification

2. What happened on 10th August, 2010 at Madras High Court -  WRIT APPEAL - STAY VACATED. (uploaded on 10/08/2010) [Also updated on 11/08/2010]

1.  Supreme Court (Law cases) on revision and updation of pensions -  By Supreme Court lawyer (uploaded on 08/06/2010);

 

(B)  Issuing Relating to Payment to Bankers Who Were Compulsorily Retired :

→ Anju Mathur vs UCO Bank & Others -  High Court of Punjab and Haryana, Chandigarh - Decision on 19.10.2011

 → Arun Kumar Sood vs UCO Bank & Others -  Bank was asked to pay the gratuity amount - High Court of Himachal Pradesh - Decision on 21st October, 2010

(C)  ISSUING  RELATING TO  SUPPLY OF INFORMATION  BY RBI / OtherFinancial Institutions etc :

 → RBI should supply the bank wise and customer wise details of the losses of Rs 32,000 crores  information gathered from banks relating to Mark to Market valuation of currency derivative Deals

 →  Mr. Subhash Chandra Agrawal, vs RBI - Information commission has allowed the appellant to get certain information which RBI was reluctant to share under RTI

 → Mr Kishanlal Mittal vs NABARD - Information commission has allowed the appellant to get certain information which NABARD  was reluctant to share under RTI

(D)  Other Issues :

 →  Regulated Working Hours - Issue taken up by Union Leaders but without any results

Banks To Pay For Card Fraud

Banks asked to pay customers for card transaction fraud---FE

Banks will have to bear the cost of fraudulent card transaction through point of sales (PoS) at merchant establishments that do not have security features prescribed by the Reserve Bank of India (RBI).

In a move to curtail rising credit card frauds, the RBI said banks not complying with security requirements should compensate the loss incurred by the card holder.

“If it is found that the PoS terminals are non-compliant as mandated, the issuing bank should pay the disputed amount to the customer within seven working days, failing which a compensation of Rs 100 per day will be payable to the customer from the 8th working day,” the RBI said in a notification issued to all banks.

Various law enforcement agencies have found cards being cloned and money withdrawn in foreign countries. There have been instances of illegal card-skimming leading to theft from other bank accounts due to problems in the authentication processes in the jurisdiction where the money was withdrawn.

The RBI had, earlier this week, asked banks to stop zero per cent EMI schemes on consumer goods purchases. It also asked banks to prevent merchants from levying fee on debit card transactions.

Refusing to relax its earlier circular on upgrading the security features at PoS, the RBI notification said it will also consider invoking the penal provisions under the Payment and Settlement Systems Act, 2007 for banks that have failed to adhere to the timeline of September 30, 2013. When a fraud is committed, the issuing bank would ascertain within three working days whether the PoS terminal is compliant with Unique Key Per Terminal or Derived Unique Key Per Transaction or Terminal Line Encryption as mandated, the RBI.

“Various banks have approached us, seeking further extension of the September 30 time line for complying with the task of securing the technology infrastructure as stated in the circular dated September 22, 2011,” the RBI said.

The RBI said the timelines indicated were decided after a series of discussions with stakeholders and no further extensions would be granted.

The RBI had earlier this year asked banks to bar international usage of cards unless specifically ask by customers.

http://www.financialexpress.com/news/banks-asked-to-pay-customers-for-card-transaction-fraud/1175484

Bank Fined For Selling Auctioned Property

Court slaps fine on bank for selling auctioned land-
TOI-29th September 2013
CHENNAI: The Madras high court has imposed an exemplary cost of 1 lakh on Indian Bank for having accepted deposit money from a third party for a property which had been auctioned and sold to another person by the bank itself.

Slamming the bankers and doubting their intentions, the court also cautioned that such conduct of a nationalised bank would result in erosion of public trust on the institution. "This conduct of the bank will certainly create a fear in the minds of the public to participate in auctions conducted by banks. By this kind of deprecatory action of the bank, the confidence level of the public in nationalised banks will certainly get diluted," observed a division bench comprising Justice K Suguna and Justice M Duraiswamy.

The matter relates to a petition filed by V S Muthupandian and S Chandresan saying though they were the confirmed auction purchasers of a property mortgaged to the Thousand Lights branch of Indian Bank, the bank authorities had received deposit money from third parties and did not give them possession of the land. They charged the bank with attempting to defraud them as well as creditors.

Manickchand Balecha and Kiran Kanwar, who were guarantors and owners respectively of the property, however, told the court that the authorised officer of the bank had played fraud as they had neither availed themselves of any loan nor did they stand guarantors for any loan secured by any person.

Smelling fraud, the division bench pointed out that the Debts Recovery Appellate Tribunal (DRAT) had set aside the auction sale on the ground that Manickchand Balecha and Kiran Kanwar had never deposited the original documents of the property to the bank.

Wondering what prevented the duo from establishing their case before the Debts Recovery Tribunal (DRT) and not the DRAT, the judges blamed the bank for the chaos. "The bank is the sole cause for all these chaos and confusion."

Directing the bank to immediately return the money received from the third parties, the judges said: "In order to prevent nationalised banks from involving themselves in unhealthy practice, as in the present case, at least in future, this cost of 1 lakh is imposed on the bank, to be paid to the third party."

http://timesofindia.indiatimes.com/city/chennai/Court-slaps-fine-on-bank-for-selling-auctioned-land/articleshow/23226394.cms

Nagpur-based coal contractor booked for filing Rs 1.5 crore fake bank guarantee

YAVATMAL: Wani police on Friday booked a Nagpur-based coal contractor for filing fake bank guarantee to the tune of Rs 1.5 crore for getting the work in the Ghonsa coal field under Wani North Area sector of Western Coal Limited (WCL).

According to police sources, Sandeepsingh Tejpalsing Arora, the director of BNS Infra, bagged the work after furnishing a bank guarantee of Rs1,45,73,548 to WCL.

An enquiry conducted by senior WCL officials found that the accused allegedly forged the name of the bank manager and his signature on the fake bank guarantee.

Wani North Area Manager Pavankumar Laxmikant Mishra has lodged a complaint with the Wani police station. The police have booked Arora under sections 420, 467, 468 and 471 of the IPC.

Wani police confirmed the receipt of the complaint and said that they would arrest the accused if they find any evidence against Arora.

http://timesofindia.indiatimes.com/city/nagpur/Nagpur-based-coal-contractor-booked-for-filing-Rs-1-5-crore-fake-bank-guarantee/articleshow/23225587.cms

Bank Cannot Hold Back Property Documents

Bank cannot hold back property documentsafter housing loan is repaid: Bombay high court-Times of India 23.08.2013
MUMBAI: A bank cannot hold on to property documents after a person has paid off his housing loan, the Bombay high court ruled on Thursday.

A division bench of Justices B P Dharmadhikari and A S Chandurkar directed the State Bank of India to return title documents to Nagpur resident Surendra Nikose. The bank had refused to return the documents to Nikose, a former employee; as he had allegedly committed financial irregularities and they had filed a recovery claim against him.

"The resort to provisions (of law) for withholding title deeds especially when the relationship of banker and customer has come to an end on clearing the loan account is not legally justifiable," the judges said, adding, "Permitting a banker to extend its right of general lien even after clearance of the debt would result in negating the effects of the words 'as a security for a general balance of account'. In any event, exercise of such general lien after termination of the relationship of banker and customer does not arise at all."

A lien is a security interest over a property.

Nikose, who was sacked in 2010, had taken a loan of Rs6.56 lakh in 2001 and deposited the title documents as security. He paid off the loan and obtained a 'no due certificate' from the bank in 2012. But the bank refused to return his title documents as they had filed a case to recover Rs4.33 crore from him.

The court said the relationship of banker and customer was independent of the relationship of employer and employee. "The recovery sought to be made by the bank was as an employer who had been defrauded by its employee," the judges said.

"The bank cannot exercise such general lien as an employer against an employee, especially when the employee who had borrowed the amounts had repaid it."

http://timesofindia.indiatimes.com/city/mumbai/Bank-cannot-hold-back-property-documentsafter-housing-loan-is-repaid-Bombay-high-court/articleshow/21988076.cms

Publishing Photgraph Of Defaulters Is Illegal

Bank can publish defaulter's photo in newspapers: High Court

MUMBAI: Bombay High Court today refused to stop publication of photographs of a defaulter firm in newspapers, saying that it was in larger public interest.

The division bench of Justices V M Kanade and M S Sonak refused to grant relief to the firm D J Exim and its directors. 
 

State Bank of India, on October 10, had issued the firm a letter warning that if it did not repay loan amount, photographs of the directors would be published in national newspapers.

The company moved the High Court against this saying no rule permits banks to publish photos.

"They cannot embarrass the defaulters like this. According to the rule only name and address can be published," the firm's lawyers argued.

However SBI counsel Aspi Chinoy pointed out that the company had defaulted on repayment of Rs 53 crores.

"This is not disputed. They are admitted defaulters. We are only stating this fact to the public," he argued, and said the bank "does not resort to such stringent measures" in each and every case.

Accepting this argument, High Court observed that publishing of photographs serves the purpose of creating awareness and cautioning prospective clients. 

"In our view, there would be no impediment to publication of photos of the defaulters. There is no legal bar which expressly prohibits the bank from publishing photos.

"However, the decision to resort to such measures should be taken by a very senior level official not below the rank of General Manager of the bank. In this case, due process was followed and the decision cannot be faulted," the court said. 
 

It, however, said that SBI's earlier undertaking that it would not publish the photos pending hearing of the petition would remain in effect for three more weeks, to enable the petitioner company to appeal in the apex court.

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/bank-can-publish-defaulters-photo-in-newspapers-high-court/articleshow/26537585.cms

Publishing photographs of defaulters in newspapers illegal: Kerala High Court--

Business Line 13th August 2013

KOCHI, AUG. 13:  

The Kerala High Court has held as arbitrary and illegal the decision of the State Bank of India to publish the photographs of loan defaulters in newspapers.

Allowing writ petitions filed by two defaulters against the SBI notice, the court on Tuesday observed that the threat held out by banks to publish the photographs of defaulters in newspapers lacked legislative sanction.

Justice V. Chitambaresh said: “The practice of exhibiting a photograph of a person and shamming him in public for the sin of being in an impecunious condition cannot be encouraged in civilised societies like ours.”

The judge further observed that there was nothing immoral in their failure to repay the loans owing to a floundering business or other unavoidable reasons.

The court added that some of the borrowers might even be driven to commit suicide fearing ignominy on account of their photographs being published in newspapers. “It will remain a permanent taboo for their family,” the court observed.

The move was clearly an “affront to the right to live with dignity and honour as well as the right to privacy of the loanees”.

Such publication of photographs therefore, violates the rights guaranteed to the loanees under Article 21 of the Constitution of India, the court held.

SBI’S STAND

However, the SBI justified its stand saying the terms and conditions of the loan agreements allowed them to publish defaulters’ photographs in newspapers.

But the court pointed out that the clause in the agreement at best empowered the bank to reveal only the names of borrowers in the print media or to disclose the information and details relating to the credit facility.

Even if there was such a permissive clause, the loanees would “not (be) stopped” from challenging the action of a bank “on the ground of violation of fundamental rights of loanees”, the court said.

The court also pointed out that there was no provision in the Security Interest (Enforcement) Rules (SARFAESI) that enables banks to threaten to publish photograph of defaulters.

http://www.thehindubusinessline.com/industry-and-economy/banking/publishing-photographs-of-defaulters-in-newspapers-illegal-kerala-high-court/article5019565.ece

Joint Account: Only Signatory of Cheque to be Tried

Joint account: Only signatory of cheque to be tried, says SC--ET 3rd July 2013

NEW DELHI: The Supreme Court has held that a joint account holder cannot be prosecuted in a cheque bounce case unless the cheque has been signed by each and every person of such account.

The apex court said only the person, who issues a cheque from a joint account, can be made accused in proceedings under section 138 of Negotiable Instruments (NI) Act for dishonour of the cheque.

"We also hold that under section 138 of the NI Act, in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account holder," a bench of justices P Sathasivam and J S Kehar said.

"This court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act," the bench further said.

The verdict gave relief to a woman who had challenged the summons issued to her for the dishonour of cheque issued by her husband from their joint account. The Bombay High Court had refused to quash the summons issued by the trial court to her along with her husband.

The apex court had, in its judgement, said "considering the language used in Section 138 and taking note of background agreement pursuant to which a cheque is issued by more than one person, we are of the view that it is only the 'drawer' of the cheque who can be made liable for the penal action under the provisions of the N.I. Act. It is a settled law that strict interpretation is required to be given to penal statutes." 

"The proceedings filed under Section 138 cannot be used as an arm-twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Section 138. The culpability attached to dishonour of a cheque can, in no case "except in case of Section 141 of the NI Act", be extended to those on whose behalf the cheque is issued," it said. 

http://economictimes.indiatimes.com/news/politics-and-nation/joint-account-only-signatory-of-cheque-to-be-tried-says-sc/articleshow/20880312.cms

Supreme Court Directs Three Banks To Pay Rs.400 Crore To BCCI

Supreme Court orders banks to deposit Rs.400 Crores in BCCI-Nimbus case---15th April 2013

Three banks have been directed to deposit a sum totaling Rs.400 crores, in a case filed by the BCCI to encash the Bank Guarantees from Nimbus, a media release stated on Monday.

The BCCI had entered into Media Rights License Agreement with M/s. Nimbus Communications Ltd. for the period from 1st April 2010 to 31st March 2014. 

Under the agreement, Nimbus Communications Ltd. had submitted to the BCCI unconditional Bank Guarantees from Punjab National Bank, Indian Bank and Union Bank of India. The Bank Guarantees had been given to secure payment of dues by the Nimbus Communications Ltd. to the BCCI. 

BCCI terminated the MRA with Nimbus Communications Ltd. and sought to encash the Bank Guarantees which were in the possession of BCCI. However, the banks refused to pay the monies to the tune of Rs. 1600 crores under the unconditional Bank Guarantees. 

BCCI was compelled to file summary suits against the 3 Nationalised Banks i.e. Punjab National Bank, Indian Bank and Union Bank of India in the Hon'ble Bombay High Court. 

The Hon'ble Bombay High Court granted the 3 Banks leave to defend the suits on a condition that the banks deposit a sum totaling Rs.400 crores with the Prothonotary and Master of the Hon'ble Bombay High Court, who would then redeposit the sums with the respective banks.

Aggrieved by this Order, the BCCI filed a SLP before the Hon'ble Supreme Court of India.

Earlier Nimbus Communications Ltd. was directed by the Hon'ble Bombay High Court to secure the dues of BCCI by the way of Bank Guarantee. The Order has not been complied by them and the Company faces contempt proceedings. 

The Hon'ble Supreme Court of India took up the SLP filed by the BCCI today and heard all the parties. A final order has been passed directing the 3 banks to deposit within 15 days the sum of Rs.400 crores with the Prothonotary and Master of Hon'ble Bombay High Court, who would then remit the money to the bank account of BCCI. 

The BCCI has undertaken that if the suit fails, the said sum would be returned along with interest.

http://sports.ndtv.com/cricket/news/206365-supreme-court-orders-banks-to-deposit-rs400-crores-in-bcci-nimbus-case