NCDRC Orders HSBC To Pay ₹15 Lakh Compensation For Dishonored Cheques

The NCDRC(National Consumer Disputes Redressal Commission) has recently directed HSBC (Hongkong and Shanghai Banking Corporation) Bank to pay a sum of ₹15 lakh to a married couple.

The compensation is intended to address the mental distress and harassment suffered by the couple as a result of their cheques being dishonored, despite having ample funds in their bank account.

The bank had frozen their account due to an alleged outstanding loan and claimed their KYC details were not updated.

The presiding member, Dr. Inder Jit Singh, noted that there was no evidence to support the bank’s classification of the complainants as high-risk customers or the requirement to update their KYC every two years, as per RBI guidelines.

The NCDRC also took note of the fact that both loan accounts were settled and closed in 2009 and 2010.

According to the complaint filed by Anil and Neelam Goyel, in November 2015, they encountered a declined transaction when attempting to withdraw money from an ATM. Upon contacting the bank, they were informed that the transaction failed due to their KYC details not being updated according to the norms.

Despite having updated their KYC details in May 2015, they visited the bank’s branch in Fort, Mumbai to update them again. It was during this visit that they were informed about an outstanding amount linked to their savings account loans.

However, as the loan amounts had already been settled, the complainants approached the NCDRC in 2016, alleging deficiency in service on the part of the bank. They sought compensation amounting to ₹3.55 crores.

In its response, the bank acknowledged that the loan accounts were settled but justified the freezing of the account by stating that Neelam had not provided the necessary KYC documents. They claimed that this was the reason for taking action against the complainants’ bank account.

In their counterargument, the complainants contended that the bank failed to provide any evidence of unusual activity on their part. They argued that by categorizing them as high-risk customers, the bank added insult to the injury they had already suffered, which they believed was illegal.

The NCDRC noted that in the bank’s communication dated November 26, 2015, it initially admitted that the KYC details of the complainants were updated as of May 30, 2015. However, the bank later changed its stance, asserting that only Anil’s KYC details were updated and not Neelam’s.

Based on this information, the NCDRC concluded that the bank’s decision to freeze the joint savings account was unwarranted. It found that this action had caused harm to the complainants and exposed them to potential legal consequences due to the dishonor of cheques.

The order stated, “We find that OP’s action of freezing the joint SB A/c of complainants on the grounds of KYC of any of the complainant having not been renewed and/or non-deposit of any outstanding amount in any of the two loan accounts, which have since been settled much earlier, which resulted in declining of ATM transaction and subsequent dishonour of cheques despite complainants having balance in the said joint SB A/c, was unjustified and had adversely impacted the reputation of the complainants, and had exposed the complainants to the possibility of criminal action on account of dishonour of cheque.”

The NCDRC concluded that the bank’s actions constituted a deficiency in service, leading to unwarranted humiliation, embarrassment, and damage to the complainants’ reputation. However, since the complainants did not provide documentation to quantify their losses, the Commission declined to grant the requested compensation.

As a result, the NCDRC ordered the bank to pay ₹15 lakh as compensation and ₹1 lakh for litigation expenses to the complainants. The bank was also instructed to unfreeze the complainants’ account and refrain from demanding any additional payments related to the settled loan accounts.