Anoop Kumar Mendiratta, Member

Present appeal preferred on behalf of the appellant/OP-1 M/s Axis Bank assails Order dated 11.12.2023 passed by learned Telengana State Consumer Disputes Redressal Commission, Hyderabad in CC No. 194/2019, whereby the complaint was allowed and appellant along with Respondent No. 2 (opposite parties) have been jointly and severally held liable to pay Rs.20 lakhs to the complainant with prevailing bank rate of interest as on the date of presentation of cheque on 19.11.2018 till realization. Also compensation of Rs.1 lakh has been awarded along with costs of Rs.25,000/-. Appellant along with respondent No. 2 and Respondent No. 1 are hereinafter referred to as opposite parties and complainant respectively, as appearing in the complaint.

2. In brief, as per the case of the complainant, he was having an account with OP-1 (Axis Bank) and had deposited a cheque dated 21.08.2018 for sum of Rs.20 lakhs on 19.11.2018 in the drop box of the Bank. The said cheque was issued by M/s Volio Technologies Ltd. in discharge of their liability and validity of cheque was upto three months.

OP-1 sent a courier on 30.11.2018 which was received by the complainant on 04.12.2018, wherein the cheque return memo was enclosed with endorsement "cheque/instrument outdated". On inquiry from the bank, complainant was informed that they had sent the cheque for clearance immediately and the same was returned on 30.11.2018. When the complainant failed to get a reasonable response for non-encashment of the cheque despite being deposited within the validity period, legal notice dated 07.01.2019 was issued. Complainant, claims to have suffered loss of Rs.20 lakhs on account of failure of OP-1 (Bank) to present cheque for encashment in time.

3. It is further the case of complainant that the complaint lodged with Ombudsman did not find any favourable result and was closed observing that there is no deficiency in service on the part of the bank. In the aforesaid background, a complaint was preferred before the learned State Commission which has been allowed vide Order dated 11.12.2023, as noticed above.

4. OP-1/bank in the written version admitted that complainant is an account holder and had dropped a cheque in the drop box on 19.11.2018. However, it was claimed that since the cheque was dropped by the complainant in between 01:30 & 01:40 pm, on 19.11.2018, the cheque was taken out of the drop box after 03:00 pm on 19.11.2018, and lodged for clearance on 20.11.2018 at Axis Bank Kothapet Branch in the next day's zone for uploading to NPCI on 20.11.2018. It was further clarified that as per process adopted by the bank, the cheques deposited in the drop box are taken out at three intervals i.e. 10:35 am, 3:45 pm and 6:10 pm. OP-1 further submitted that truncated image of the subject cheque along with other cheques were supposed to be segregated by NPCI in the next day's zone i.e. on 21.11.2018 to various banks during late hours of 20.11.2018. Further, since the cheque was valid for a period of 3 months from the date of issue till 20.11.2018 and subject cheque could not have reached the payee bank i.e. SBI on 20.11.2018 for settlement, the same had lapsed. It was further claimed that the bank had acted as per the guidelines and was not at fault. It is also the case of OP-1 that as per CTS guidelines, it is the responsibility of the presenting bank (CTS representative) not to present stale cheques in clearance unless the cheque passes the date of settlement of CTS. Cheque in the instant case is stated to have been booked by OP-1 promptly on 20.11.2018 (date of scanning) but the settlement date of CTS is 21.11.2018 (i.e. a day after presentation of cheque by the collecting banker to the paying banker through CTS).

5. OP-1 further clarified that 'settlement' involves the finalization of payment so that the presenting bank takes possession of the transferred funds. However, 'clearing' is all steps involved in transferring the funds ownership from one party to another except for final step, which is 'settlement'. It was further stated that CTS member of the bank (representative of all the participating branches of Axis Bank at the place) is the one who regulates the clearance and settlement system and is not expected to claim money towards cheque turning stale as on the date of settlement. As such, under the background of casted obligation and duty, the CTS member returned the cheque on 20.11.2018 before processing it through CTS with the reason "cheque is stale/not processed'. Any deficiency on the part of opposite party/bank was accordingly denied.

6. In the aforesaid background, learned State Commission posed the following issues for consideration:-

                   i. Whether there is any deficiency in service on the part of the opposite parties?

                   ii. Whether the complainant is entitled for the reliefs claimed in the complaint?

                   iii. If yes, to what relief?

Learned State Commission held OPs liable for deficiency in service since the cheque dropped by the complainant on 19.11.2018 had not been forwarded on the same date but on 20.11.2018 with a delay of one day in settling of cheque. In view of above, complainant was held entitled to the cheque amount with interest alongwith compensation of Rs.1 lakh for mental agony, inconvenience and hardship.

7. Learned counsel for the appellant/OP reiterates the stand as taken in the written version. He emphasizes that as per procedural guidelines for Cheque Truncated System (CTS), it is the responsibility of the presenting bank to check that instrument is not stale/post-dated. Further, a notification issued by RBI on 04.11.2011 is relied, whereby it was notified that the banks should not make payment of cheques/drafts/pay-orders/bankers cheques bearing that date or any subsequent date if they are presented beyond the period of three months from the date of said instrument. It is pointed out that validity of the cheque dated 21.08.2018 presented on 19.11.2018 in the drop box was till 20.11.2018. Learned counsel further submits that as customers of the bank can drop their cheques in drop box for collection which are taken up at specified intervals, the cheques deposited in the drop box in the concerned branch were taken out at three intervals i.e. 10:35 am, 3:45 pm and 6:10 pm with cut-off time for clearance set as 11:30 am on daily basis. Further as per the review of cheque collection policy of the appellant bank, the cheques deposited at the branch counters and collecting box within the branch before the specified cut off time were to be presented for clearance on the same day, and the cheques deposited after the cut off time and for collection boxes outside the branch premises including ATMS and cheque deposit kiosks were presented in the next clearing cycle. He further contends that as a policy the bank would give credit to the customer account on the same day on which the final clearing settlement takes place or at the most the next working day of their presentation and clearing. Learned counsel for the appellant/OP emphasizes that learned State Commission erred in laying emphasis in the RBI guidelines on the word "same day" but ignored the words "before the specified cut off time". The cheque deposited by the complainant with the bank on 19.11.2018 between 1:30 & 1:40 pm is stated to have been taken out at 3:45 pm on 19.11.2018 and lodged for uploading to National Payments Corporation of India (NPCI) on 20.11.2018. Further since the truncated image of the subject cheque along with other cheques was further supposed to be segregated by NPCI in the next day's zone on 21.11.2018, after the validity period of cheque on 20.11.2018 and would have reached payee bank (SBI) on 21.11.2018, on which date the cheque would have been stale, the branch of the appellant bank following RBI guidelines for CTS, returned the cheque to the complainant with the remarks "cheque is stale/not processed". In view of procedure and guidelines followed by the Bank any deficiency in service is denied.

8. Learned counsel for the OP also challenges the compensation awarded by the learned State Commission as windfall and bounty for the complainant on the expense of Bank. He submits that complainant could have recovered the cheque amount from M/s Volio Technologies Ltd. and had also issued a legal notice dated 18.12.2022 in this regard. Reliance is further placed upon S.P. Chengalvaraya Naidu v. Jagannath (Dead) by LR's and Ors., (1994) 1 SCC 1; Dalip Singh v. State of U.P., (2010) 2 SCC 114; Batliboi Environmental Engineers Ltd. v. Hindustan Petroleum Corpn. Ltd., (2024) 2 SCC 375 and Kailash Nath Associates v. DDA, (2015) 4 SCC 136.

9. On the other hand, complainant supports the Order passed by the learned State Commission and submits that since the cheque had been deposited on 19.11.2018 much before the expiry of period of validity on 20.11.2018, the delay in presenting the cheque for clearance on 19.11.2018 is apparent. He emphasizes that bank could not have delayed settling of cheques deposited in drop box without informing the customers of cut-off time and contends that OPs have been rightly held liable for 'deficiency in service' by the learned State Commission. Written submissions were also filed on record.

10. At the outset, reasons recorded by the learned State Commission in para 11 to 14 may be reproduced for reference:-

                   "11). Now coming to the next point, it is a fact borne by record that the cheque was dropped by the complainant on 19.11.2018. It is the contention of the opposite party that the complainant had cleverly not mentioned the time of cheque drop; but infact the complainant had dropped the cheque in between 1.30 to 1.40 and the cut-off time for the clearance is 11.30 a.m. which is clearly mentioned on the drop box and since the cheque was dropped beyond 11.30 a.m. the same was sent for clearance on 20.11.2018. Having said that at para no. 7 of the written version, the opposite party again states that "As per process, cheque deposited in drop Box are taken out at three intervals i.e. 10.35 (a.m.) and at 3.45 (p.m.), 6.10 (p.m.). As such, the subject cheque was taken out of the Drop Box after 3.00 p.m. of 19.11.2018 and the same was lodged in the clearing on 20.11.2018 at Axis Bank Kothapet Branch in the next day's Zone for uploading to the NPCI on 20.11.2018." It is further stated that as per the RBI guidelines it is the presenting bank's responsibility not to present the stale cheques in clearing, in view of such responsibility the CTS Member had returned the cheque with an endorsement "Instrument is outdated/stale. ''

                   12) Now the only issue is that, what is the cut-off time fixed by the opposite party bank for clearance of the cheques. Before discussing the point, we would like to give a small explanation of CTS clearance adopted by the bank. CTS means Cheque Truncation System. In order to avoid physical movement of cheques and for fast and cheap realization of funds to the customers, the RBI had introduced this system in which, the presenting bank captures the date (on the MICR bank) and the images of the cheque based on the prescribed standards and specifications and affixes digital signature and sends the image to the clearing house. The purpose of introducing this system is to save time that is involved in the physical movement of the cheques.

                   Now coming back to the point of cut-off time. As per the RBI guidelines issued for the cheque collection policy, the local cheques are to be presented for clearing on the same day. For the sake of convenience the relevant portion of the guidelines is being reproduced hereunder:

                   All CTS complaint cheques and other negotiable instruments which are payable under a grid system will be presented through the clearing system prevailing at the respective centres. Cheques deposited at branch counters and in collection boxes within the branch premises before the specified cut-of time will be presented for clearing on the same day. Cheques deposited after the cut-off time and in collection boxes outside the branch premises including off-site ATM will be presented in the next clearing cycle. The Bank will give credit to the customer account on the same day in which the clearing settlement takes place. Withdrawal of amounts so credited would be permitted as per the cheque return schedule of the clearing house.

                   The above guidelines make it clear that each branch has its own cutoff time. As discussed supra the opposite party at one point says that the cut-off time is 11.30 a.m. and at one point says that the cheques are removed at 3 intervals. In view of such ambiguity, the burden is on the opposite party to prove what is the actual cut-off time of the opposite party no.1 branch, but no such evidence is coming forth from the opposite parties; that apart as per the "Review of Cheque Collection Policy'' of Axis Bank as provided on their website, for the local cheques, it is stated as under:

                   "All cheques and other negotiable instruments payable locally would be presented through the clearing system prevailing at the center. Cheques deposited at branch counters and in collection boxes within the branch premises before the specified cut-off time will be presented for clearing on the same day........."

                   And under the sub-hearing timing for acceptance, it is stated as under:-

                   "Cheques would be accepted during the business hours of the branch across the counter as well as the drop boxes...."

                   In view of such policy guidelines pertaining to Axis Bank, it is for the opposite party to prove the same, but the opposite party had not proved as to what is the cut-off time, for the cheques dropped in the box in their branch and the fact remains that the complainant had dropped the cheque on 19.11.2018 and the opposite party no.1 instead of sending it on same day had sent it on 20.11.2018 i.e. with a delay of one day, due to such negligent act of the opposite parties, the complainant had to suffer the loss; that apart the complainant had deposited the cheque on 19.11.2018 and after a lapse of around 15 days i.e. 4.12.2018 the complainant was informed about the return of cheque. All these acts of opposite parties amount to deficiency of service. As such, the opposite party is liable to make good the loss suffered by the complainant.

                   13) Point Nos.ii & iii: Based on the above discussion, we are of the view that due to the delay on the part of the opposite party in not presenting the cheque on 19.11.2018, the complainant had to suffer not only monetary loss but had also faced hardship; that apart the complainant was compelled to file a complaint due to the acts of the opposite party which might have certainly cause him inconvenience and hardship by wasting his time and energy and running around the Court. Hence we feel that the complainant is not only entitled for the cheque amount with interest, but he is to be compensated suitably. All the points are answered in favour of the complainant.

                   14) In the result, the complaint is allowed in part directing the opposite parties jointly and severally:

                   i. to pay the cheque amount of Rs.20,00,000/- (Rupees Twenty Lakhs) to the complainant with prevailing bank rate of interest, as on the date of presentation of cheque i.e. 19.11.2018 till realization;

                   ii. to pay a compensation of Rupees One lakh for the mental agony, inconvenience and hardship caused to the complainant; and

                   iii. to pay Rs. 25,000/- towards costs.

                   iv. Time for compliance is one month from the date of receipt of this order. "

11. We have given considered thought to the contentions raised and perused the record carefully.

Admittedly, the service under Section 2(o) of the Consumer Protection Act, 1986 widens the ambit of the section and extends it to 'any service'. The shortcoming in service by the bank is alleged by the complainant in performing of its duty for timely clearance and settlement of the cheque to ensure the encashment within the validity period. It is well settled that in case the complainant suffers a loss because of inaction and negligence on the part of the bank, the same constitutes deficiency in service. Consequently, the loss arising out of such deficiency by the bank is compensable under the provisions of Consumer Protection Act.

12. As per the complainant, loss was suffered on account of failure of OP-1 to take necessary steps for clearance and settlement of the cheque, despite being deposited with the bank, a day before the expiry of validity period of the cheque on 20.11.2018.

However, as per OP-1, the cheque could not be presented on the same day as it was deposited during 1:30-1:40 pm by the complainant in the drop box and following the internal guidelines of the bank, the cheques taken out at 3:45 p.m. on same day were taken up for clearance on the subsequent day by the service branch. Further, the cheque could not be presented for settlement on 20.11.2018 since the validity period of the cheque would expire at 00:00 hours and the same would have been stale for purpose of settlement by payee bank (SBI) on 21.11.2018.

In the aforesaid background, it needs to be assessed whether the explanation offered by the bank is a mere eyewash and disguised attempt to escape the liability overlooking the duties and responsibilities of a banker or constitutes a valid ground to take up the cheque for clearance on 20.11.2018 in terms of the guidelines prescribing cut-off time for taking up the cheques for settlement.

13. Learned State Commission vide impugned Order, after noticing the cheque truncation system (CTS) adopted by the bank, has referred to RBI guidelines issued for the cheque collection policy as reproduced in para 10 above. The same provide that cheques deposited at branch counters and in collection boxes within the branch premises before the specified cut-off time will be presented for clearing on the same day. Further, the cheques deposited after the cut-off time and in collection boxes outside the branch premises including off-site ATM will be presented in the next clearing cycle.

Learned State Commission held 'deficiency in service' by the bank, on the ground that the burden to prove as to the actual cut-off time of the OP-1 Branch is not forthcoming since the cheques are removed at three intervals during a day i.e. 10:35 a.m., 3:45 p.m. and 6:10 p.m. However, the evidence led on behalf of OP-1 and 2 by way of affidavit of Suresh Kumar on record clearly reflects that the OP Bank in all its branches has displayed a board stating that clearing cheques are accepted through drop box upto 10:30 a.m. It has also been pointed out that the complainant conveniently failed to reflect the timing at which the cheque was dropped in the drop box which was only around 1:30-1:40 p.m. on 19.11.2018. In view of categorical evidence led on behalf of OP-1, we A are unable to concur with the finding of the learned State Commission that Axis Bank has not proved the cut-off time for the cheques dropped in the drop box in their branch. The evidence led on behalf of the bank in this regard has not been controverted by way of any rebuttal evidence, and, as such, the steps taken for clearance by the bank/OP-1 on the subsequent day i.e. 20.11.2018, cannot be faulted. It further needs to be kept in perspective that any bank consisting of more than one branch has a common service branch from where the cheques are digitally uploaded to NPCI on the same day. Further, NPCI digitally receives those truncated images from service branches of all banks and segregates them bank-wise and uploads them to the service branches of the respective bank on the next day for debiting to the owner's account. As such, the cheque presented on behalf of the complainant on 19.11.2018 which was taken up after the cut-off time for clearance on subsequent day by OP-1 would have lapsed on being taken up with the payee bank on 21.11.2018 on presentation.

We are of the considered view that in the facts and circumstances, the steps taken for clearance of cheque on 20.11.2018 does not constitute 'deficiency in service' on the part of Axis Bank. Further, merely because the cheque had been returned on 04.12.2018 along with the Cheque Return Memo cannot be ground for attributing deficiency of service and compensation, though the banks are expected to act with promptitude for forwarding the Cheque Return Memos in case the cheque is stale for presentation. This would enable the customers to take timely steps for revalidation of cheques or other legal recourse as available in law. .

For the foregoing reasons, Order passed by the learned State Commission is set aside. Appeal is accordingly allowed. No order as to costs. Pending applications, if any, also stand disposed of. A copy of this Order be provided to both the parties by the Registry.