Delhi State Consumer Commission Orders SBI To Compensate Customer For Wrongly Bounced Car Loan Cheques

The Delhi State Consumer Disputes Redressal Commission, comprising Ms. Bimla Kumari, Presiding Member, found SBI guilty of deficiency in service for dishonoring 11 EMIs via ECS and wrongly charging bounce fees, despite sufficient balance in the customer's account. The Commission set aside the District Forum's order and directed SBI to pay ₹1,50,000 for mental agony and ₹20,000 in litigation costs, with 7% interest on delayed payment. Brief Facts of the Case: Ms. Chhaya Sharma, the complainant, filed a consumer complaint against the State Bank of India (SBI) and HDFC Bank Ltd., alleging deficiency in service and unfair trade practices. Sharma maintained a savings account with SBI's Karawal Nagar branch and had availed a car loan of ₹2.6 lakh from HDFC Bank, repayable in 48 EMIs of ₹7,054 each through ECS from her SBI account. Despite maintaining sufficient balance, 11 EMIs bounced—three marked as “insufficient funds” and eight as “invalid account” .The banks levied ₹4,400 as bounce charges. The complainant stated that despite repeatedly approaching officials of the State Bank of India (SBI), no satisfactory response was received. She further contended that her account statements clearly showed sufficient balance at the time of EMI deductions, yet the installments were dishonored. The complainant filed a complaint before the counsmer commission seeking correction of erroneous bounce entries, refund of ₹4,400, and ₹10 lakh as compensation for mental agony and harassment. The District Commission dismissed the complaint, holding that the issue involved technical aspects under the RBI's ECS guidelines and finding no deficiency in service or liability on the part of the banks. Aggrieved by the dismissal, Sharma filed a first appeal before the State Commission. During this stage, her appeal was initially dismissed for default as she was not present on the date of hearing. She then approached the National Consumer Disputes Redressal Commission through a revision petition. The NCDRC allowed Sharma's revision petition , set aside the dismissal for default, and remanded the matter back to the State Commission for adjudication on merits Arguments of the Appellant: The appellant contended that the District Commission failed to properly assess the evidence and facts, despite clear proof that 11 EMIs were dishonored despite sufficient funds. She alleged deficiency in service and unfair trade practices by both banks, stating that the Commission wrongly restricted the issue to technical ECS procedures under RBI guidelines while overlooking the mental agony and financial loss caused to her. She submitted that EMIs for her HDFC car loan were authorized for deduction from her SBI account, yet 11 installments were rejected, leading to ₹4,400 in bounce charges. Despite repeated complaints, no action was taken. The appellant sought to set aside the District Commission's order, direct correction of the account records, refund the bounce charges, and award compensation and litigation costs. Arguments of Respondent No. 1 – SBI: SBI contended that the rejection of EMIs was not due to any fault on its part, asserting that the ECS mandate submitted by HDFC Bank contained an incorrect account number (283374), which led to the failed transactions. The bank stated that the ECS process is fully automated and technical, leaving no scope for manual intervention. Accordingly, SBI denied any deficiency in service or liability. Arguments of Respondent No. 2 – HDFC Bank: HDFC Bank submitted that it forwarded all EMI instructions with correct details to SBI, and the rejections were due to technical or systemic errors on SBI's part, for which HDFC could not be held responsible. The bank also argued that the bounce charges collected were in line with standard banking practices, making the complaint baseless and liable to be dismissed. Observations of the Commission The Commission noted that the appellant had a savings account with SBI and had provided an ECS mandate for automatic EMI deductions, which SBI failed to process for some installments. The records demonstrated that sufficient funds were available, yet 11 EMIs were dishonored. SBI's claim that the issue arose due to a wrong ECS mandate from HDFC Bank was found to be not credible, as other EMIs under the same mandate were successfully deducted. SBI also failed to provide any evidence to show insufficient funds in the appellant's account. The Commission concluded that dishonoring EMIs and charging erroneous bounce fees clearly constituted deficiency in service. The Commission, after examining the material on record, observed that there was a deficiency in service on the part of Respondent No. 1 for failing to honor the Appellant's EMIs through ECS, despite the ECS Mandate Form being furnished by Respondent No. 2. Decision of the Commission: In view of the observations, ...

Delhi State Consumer Commission Orders SBI To Compensate Customer For Wrongly Bounced Car Loan Cheques

Praveen Mishra

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