Bank liable to compensate for cheque bounce despite sufficient funds, rules consumer panel

Ahmedabad: A consumer commission in Ahmedabad held that Indian Bank was liable to pay Rs 6.16 lakh — 50% of the property tax of a citizen whose cheque, issued in favour of the civic body, was wrongfully dishonoured.The bank was also directed to pay Rs 1 lakh as compensation for mental harassment and Rs 5,000 towards legal expenses incurred in responding to a legal notice issued by the civic body under Section 138 of the Negotiable Instruments Act for the cheque return.
The case involved Navrangpura resident Kalpesh Patel, whose Rs 12.42 lakh property tax was due to the Ahmedabad Municipal Corporation (AMC). He sought to avail the benefit of AMC's tax incentive/rebate scheme, under which 50% of the tax amount was waived if the tax was paid by March 31, 2025.Patel, who holds an account with Indian Bank's Vastrapur branch, issued a cheque of Rs 6.16 lakh in favour of AMC. However, the cheque was returned with the bank stating that there were insufficient funds in Patel's account. Patel also received a legal notice from AMC regarding the cheque return.Patel approached the bank and obtained statements regarding the cheque return and his account balance. The bank later stated that the cheque had been returned due to "technical reasons", and the account statement revealed that there were sufficient funds in Patel's account when the cheque was dishonoured.Patel then approached the Consumer Dispute Redressal Commission, Ahmedabad (Additional), alleging gross negligence and deficiency in service by the bank, which caused him to lose the benefit of AMC's tax rebate scheme. He urged the commission to direct the bank to compensate him for the loss of the rebate benefit, as he was ultimately compelled to pay the full tax amount after the scheme's deadline had expired.The bank did not appear before the commission to defend itself. While ordering compensation, the commission observed: "According to the acts as well as reasoning on the face of the record, the complainant has suffered due to deficiency in service on the part of the opponent bank… The complainant had to face a legal notice, mental annoyance, harassment, reputational injury, and loss of valuable time and effort."