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

Bank fined For Wrong Return of Cheque

Bank bounces cheque, told to pay customer Rs 10k-Times of India
BANGALORE: The KG Road branch of Vijaya Bank was ordered to pay Rs 10,000 as compensation and Rs 1,000 as litigation cost to an SB account holder for bouncing a cheque issued by the latter to another party, despite the amount being available in his account. 

The order was passed by Bangalore IV Additional District Consumer Disputes Redressal Forum, Bangalore Urban district, on April 12, based on a complaint from a senior citizen and veterinary (wildlife) consultant, Dr NK Rai, 71, against the bank. 

The case 

In his complaint, Dr Rai said he was an SB account holder with the bank since 1961 and always maintained sufficient balance, and neither did he have any liability with the bank. Dr Rai issued a cheque for Rs 4,88,000, dated May 16, 2012, to M Venkatesh, sure that his account had enough balance. 

But when Venkatesh presented the cheque from his Canara Bank account, Basaveshwara Nagar branch, the cheque was dishonoured and returned, citing "insufficient funds". A shocked Dr Rai convinced Venkatesh his account had sufficient money and asked him to present the cheque again. The cheque was dishonoured again on June 2, 2012. 

The bank failed to reply to Dr Rai's notice accusing it of deficiency of service, causing him mental agony and bringing him disrepute. Dr Rai demanded that the bank pay him a compensation of Rs 10,00,000. After the bank failed to reply, the senior citizen filed a complaint with the consumer forum. 

The defence 

The bank's defence was that the complainant was a guarantor for a loan availed by Jyothi Shetty, proprietrix, Vigneshwara Associates, T Dasarahalli. The bank pointed out that Jyothi was Dr Rai's wife and he stood guarantee for the loan. It also alleged that Jyothi had borrowed Rs 4 lakh and failed to clear it. 

"Since he is the guarantor of the loan, the liability of the principal borrower and guarantor is joint and several. As and when the bank has informed the complainant there is an outstandingamount, he has in turn informed that his wife will clear her debts and only she is responsible for the dues, though he is the guarantor for the loan... Since the complainant and his wife failed to repay the loan, the bank has exercised its lien over the funds in the account of the complaint. However, subsequently the lien noted on his account has been withdrawn and released the lien. In the meantime, the cheque issued by the complainant got bounced," the bank said, adding "there is absolutely no deficiency of service" on its part. 

The verdict 

After examining the evidence and listening to both parties, the court observed the outstandingbalance on Jyothi Shetty's loan account was only Rs 82,840. It said the statement of account proved the balance in the complainant's account on the day the cheque bounced, was Rs 4,88,296.67. The court said the bank had kept lien on the complainant's account without informing him. 

"If at all there was the balance loan in the name of the complainant's wife, the bank should have taken legal action against her, as per banking rules and regulations," the court said. 

It said the complainant has established with convincing evidence that the bank has been negligent and there has been deficiency in service on the part of the bank.
http://timesofindia.indiatimes.com/city/bangalore/Bank-bounces-cheque-told-to-pay-customer-Rs-10k/articleshow/19670987.cms

Bank Cannot Furnish Bank Statement in court Case

'Can't furnish employee's bank statement in court case'- Business Standard

Cyber law experts see it as a landmark judgement; say it will prevent misuse of bank statement of individuals

In a judgement delivered today by the Adjudicating Officer of Maharashtra, it was observed that an employer cannot get an employee or ex-employee’s bank statement and furnish it in any court case, by the Information Technology (IT) Act, 2000.

“This is a landmark judgement that will prevent misuse of an individual’s bank statement. The judgement has ruled that this amounts to Data Theft of Sensitive Personal Information under Section 43 (b) Read with Section 66 of the Information Technology (IT) Act, 2000,” said cyber law expert and advocate Prashant Mali, who argued the case.

The judgement pertained to a case where the complainant, Amit Patwardhan, was an employee of Rud India Chains and later left the company to join a rival firm, Heko Chains. Rud India claimed he took away company secrets and was getting gratification from Heko Chains to lure away customers even when he was employed by them. Rud India filed a civil suit to claim damages for this theft of trade secrets. Patwardhan came to the forum and alleged  his bank statement was filed by the company as evidence in the court case and that it was obtained by hacking into the bank system.

The bank concerned, Bank of Baroda, too said it had no knowledge about how the bank statements were obtained by the company and that the bank did not have a policy of giving out such information, without customer approval.

In response, Maharashtra Government IT secretary Rajesh Aggarwal, serving as the adjudicating officer said while the bank denied involvement, it had done nothing on its own to find how this occurred. “This speaks volumes about the apathy of the bank regarding the privacy of its customers’ sensitive data,” further pointed the adjudicating officer in the judgement delivered. However, as they are not a party to the case, the bank has not been held liable.

The Adjudicating Officer also said that here, the IT Act came into play, since the bank statement had not come from physical records of the bank, but from its electronic records. Hence, the respondents were held guilty of violating Section 43 (b) of IT Act, read with section 66. While no punishment has been imposed, the respondents have been held guilty of violating the privacy of Patwardhan.

Punishment was not imposed, as the adjudicating officer observed that perusal of the entire record before the Officer per prima facie showed the complainant was disloyal.

http://www.business-standard.com/article/current-affairs/can-t-furnish-employee-s-bank-statement-in-court-case-113041500556_1.html

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Petrol prices cut by Re 1 a litre

A litre of petrol in Delhi and Mumbai will cost Rs 66.09 and Rs 72.88, respectively

Can Advocate Issue Notice to Seize Assets Under Securitisation Act ?

‘Advocate cannot issue notice to seize assets’

Business Line Newspaper 

January 10, 2013:  

Under the Securitisation Act, it is the Chief Manager of a public sector bank and his counterparts in private sector banks who are authorised to take a decision on the need for seizing the mortgage asset and issue notice accordingly.

The Andhra Pradesh High Court, in Sampoorna Battu v. ICICI Bank, found that the advocate of the respondent bank had issued the impugned notice to the petitioner on her default in servicing a home-loan she had taken from the bank.

LATER AMENDS, NO USE

The Court, taking a strict view of the drill prescribed in the relevant law, pointed out that the subsequent countersigning of the notice on the borrower by the appropriate official of the bank did not exorcise the notice of its deficiency, and it stood vitiated despite the subsequent amends.

The Court, however, made it clear that it was for the bank to decide whether it would like to issue a fresh notice in accordance with the law.

By allowing the writ petition, what the Court did was to quash the seizure proceedings vitiated by lack of authority and thereby only gave a temporary and technical relief.

But the larger message for the banks and financial institutions is not to delegate such profound decisions to their advocates.

http://www.thehindubusinessline.com/industry-and-economy/banking/advocate-cannot-issue-notice-to-seize-assets/article4295180.ece

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

Bank Loses Cases Filed Against Customer For Loss Caused Due To Bank's Fault

Court rejects bank's plea for FIR against its customers

New Delhi, Wed Nov 14 2012, 17:44 hrs

A Punjab National Bank plea to lodge a criminal case against its two customers for allegedly taking out money from a third customer's account through an ATM card, wrongly issued to them, has been dismissed by a Delhi court.

District Judge and Additional Sessions Judge R K Gauba dismissed the PNB plea, made against Metropolitan Magistrate Ankit Singla's order, which too had dismissed it.

In its complaint, the bank had said Sobha Rani Pattnaik and her husband Sudhanshu Bhushan Pattnaik had opened a current account in its Lado Sarai branch in South Delhi on March 26.

It said the couple approached the bank on March 27 for issuance of ATM card in respect of their current account but the bank wrongly issued them the ATM of another customer M/s Shubhadra Store and "they withdrew Rs 10,68,077 from the ATM

account knowing fully well that it did not belong to them as they had only Rs 17,975 in their account."

The bank thus sought registration of the FIR against them for offences of criminal breach of trust and cheating and under other provisions of the Indian Penal Code.

The magistrate, however, had held that basic requirement for the offence of cheating is that there should be prior inducement with dishonest intention.

"In the present case from the complaint there is no fact which can be deduced that accused number 1 (Sobha Rani) and 2 (Sudhanshu) induced the complainant in any manner for delivering them the ATM card of another customer," the magistrate had said.

The magistrate had held that though there was "prima facie misappropriation" by the couple, "the essential element (for the offence of criminal breach of trust) of entrusting property was missing as the bank inadvertently gave the ATM card of another customer to proposed accused."

The sessions court upheld the magistrate's order saying, "the magistrate has declined the prayer for directions to the police to investigate the matter for the reasons that entire evidence is within the reach of the complainant and no custodial interrogation or field investigation is necessary."

The bank has, however, been allowed to lead evidence in support of its complaint under section 200 (examination of complainant) of the CrPC.