Pranav B Prem

The Delhi State Consumer Disputes Redressal Commission, comprising Ms. Bimla Kumari (Presiding Member), has held the State Bank of India (SBI) liable for deficiency in service for dishonoring eleven Equated Monthly Installments (EMIs) through the Electronic Clearing System (ECS), despite sufficient balance in the customer’s account. The Commission set aside the order of the District Consumer Forum and directed SBI to pay ₹1,50,000 as compensation for mental agony and harassment, and ₹20,000 towards litigation costs. It further ordered that failure to comply within three months would attract 7% interest per annum on the total amount until realization.

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Background

The complaint was filed by Ms. Chhaya Sharma, a savings account holder of SBI’s Karawal Nagar Branch, who had obtained 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 adequate funds, eleven EMIs were dishonored — three for “insufficient funds” and eight for “invalid account.” The banks levied a total of ₹4,400 as bounce charges.The complainant repeatedly approached SBI officials for rectification, asserting that her account statements reflected sufficient balance at the time of each EMI debit, but no corrective action was taken. Consequently, she filed a complaint before the District Consumer Commission, seeking refund of the wrongful charges and compensation of ₹10 lakh for mental agony and harassment.

The District Forum, however, dismissed the complaint, holding that the issue involved technical matters under the RBI’s ECS guidelines and that no deficiency in service could be attributed to either bank. Aggrieved, the complainant filed a first appeal before the State Commission. Although the appeal was initially dismissed for default, the National Consumer Disputes Redressal Commission (NCDRC) later allowed a revision petition, set aside the dismissal, and remanded the matter back to the State Commission for adjudication on merits.

Appellant’s Submissions

The appellant argued that the District Commission failed to appreciate that all eleven EMIs were dishonored despite sufficient funds being available. She contended that SBI’s refusal to process valid ECS transactions and its failure to refund the bounce charges constituted deficiency in service and unfair trade practice. It was further submitted that the District Forum erred in treating the issue as merely technical, without recognizing the financial and emotional hardship caused to the appellant due to SBI’s negligence. The appellant sought correction of erroneous account entries, refund of ₹4,400 in bounce charges, and appropriate compensation for harassment and mental distress.

Respondents’ Submissions

SBI, appearing as Respondent No. 1, contended that the ECS rejections were not due to any fault on its part. The bank claimed that HDFC Bank had provided an incorrect account number (283374) in the ECS mandate, which caused the transactions to fail. SBI maintained that the ECS process is fully automated, leaving no scope for human intervention, and denied any deficiency in service. HDFC Bank, appearing as Respondent No. 2, submitted that it had correctly forwarded all ECS instructions to SBI, and the rejections occurred due to technical or systemic errors within SBI’s systems. It further stated that bounce charges were levied in accordance with banking practice and denied any wrongdoing.

Findings Of The Commission

Upon review of the records, the Commission noted that the complainant had consistently maintained sufficient balance in her SBI account at the time of EMI deductions. It held that SBI’s claim regarding an incorrect ECS mandate could not be accepted because other EMIs under the same mandate were successfully processed. The Commission observed:  “The records clearly establish that despite sufficient balance, eleven EMIs were dishonored. The explanation offered by Respondent No. 1 is not credible, particularly when other EMIs were duly cleared under the same mandate.”

It further held that SBI failed to produce any evidence showing insufficiency of funds or any technical error attributable to HDFC Bank. Dishonoring valid ECS payments and charging bounce fees, therefore, amounted to deficiency in service on SBI’s part. The Bench also noted that the District Forum erred in treating the issue as a technical matter, observing that the wrongful dishonor of EMIs and levy of bounce charges caused unnecessary mental agony, harassment, and reputational harm to the appellant.

Setting aside the District Forum’s order, the State Commission held SBI liable for deficiency in service and directed:

• Payment of ₹1,50,000 to the appellant for mental agony and harassment;

• Payment of ₹20,000 as litigation costs; and

• Compliance within three months, failing which the amount shall attract interest at 7% per annum from the date of the order until payment.

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The complaint against HDFC Bank was dismissed, as no deficiency in service was established on its part. The appeal was accordingly allowed, and the order of the District Commission was set aside.

Cause Title: Chayya Sharma V. Branch Manager State Bank of India At: Karawal Nager, Delhi & Anr. 

Case No: First Appeal No. 106/2011

Coram: Ms. Bimla Kumari (Presiding Member)