LAWS(NCD)-2007-9-56

PRATIBHA PRATISTHAN Vs. MANAGER ALLAHABAD BANK

Decided On September 06, 2007
PRATIBHA PRATISTHAN Appellant
V/S
MANAGER, ALLAHABAD BANK Respondents

JUDGEMENT

(1.) IN both the aforesaid matters contents, contentions and defences are similar. Hence, both the matters are disposed of by this common judgment. The main question involved in these two complaints is: Whether a bank is liable to reimburse the Complainant(s), (Pratibha Pratisthan Trust & Trustees) in case the Complainants and their authorized representative themselves are party to the fraud committed in collusion with the employees of the banks? In our view, in case of fraud committed by the trustees and its authorized representative in connivance with the officers of the bank, the complaint filed by them, at least, under the Consumer Protection Act, 1986, is not required to be dealt with. Further, the persons who are party to the fraud are not entitled to get equitable relief from this Commission, under the Act.

(2.) IN the present case, it would be apparent that for no justifiable reason the Trustees were keeping the Original FDRs in the custody of the banks. The reason could be to facilitate the FDRs to be pledged as security for the over draft facility being availed by M/s.Vijay Mutha and Co. Secondly, Mr. Vijay Mutha and Mr.Palav were being presented by the Trustees as their authorized representatives. And, in that set of circumstances, if the authorized representative commits fraud, the Complainants have to thank themselves and the banks may not be made liable for the same. Further, if the trustees had taken reasonable care and precautions which an ordinary man is required to take and examined the affairs of the FDRs lying with the Banks they could not have failed to find out what was really happening to the FDRs and the subsequent repeated transfers of money. As that is not done, the blame could not be thrown upon the bank for the loss, if any, suffered by the Trust. The Bank officers are expected to take only reasonable care in verifying as to whether the Resolutions which are produced with the Bank by Mr.Vijay Mutha and Mr.Palav for withdrawal of the amounts, are passed by the trust or not.

(3.) IT is contended that in Writ Petition No. 1490 of 1982, the High Court of Bombay had directed the complainant Trust to invest the funds of the Trust in a Nationalised Bank on 6 monthly fixed deposit basis. In pursuance of the said direction and at the request of Opp.Party No.1 (Juhu Vile Parle Branch), the Trust kept an amount of Rs.1,32,80,423.00 in a fixed deposit (No.604193/52/FD/605) for a period of 6 months for which an FDR was issued along with covering letter dated 10.7.1995. Thereafter, the complainant Trust kept a further amount of Rs.57,73,985.00 with the said Bank as fixed deposit (No.685039/52/FD/1196) for a period of 6 months on which interest was payable quarterly. That FDR is dated 18.9.1995. It is contended that the complainant Trust had entrusted the above two original FDRs to Opp.Party No.1 (Juhu Branch) for safe custody. It also instructed the Juhu Branch to invest and issue further FDRs in respect of the quarterly interest accruing on the above fixed deposits. Vide letter dated 2.1.1996, the complainant Trust requested the Juhu Branch to renew the FDR which was maturing on 8.1.1996 for a further period of 6 months along with the interest which had become due thereon. Thereafter, a second letter dated 7.2.1996 was sent for renewal of the second FDR (for a sum of Rs.57,73,985.00) which was maturing on 8.2.1996 for a period of further 6 months along with the interest thereon. It is pointed out that in both the letters, the Bank was intimated that the FDRs belonged to a public charitable Trust and it could not be pledged by anyone for any purpose whatsoever.