Pranav B Prem

The Baramulla District Consumer Disputes Redressal Commission (Jammu & Kashmir) has held HDFC Bank liable for deficiency in service for its failure to honor two cash certificates presented by a customer, despite the certificates bearing the official seal and signature of the bank. The decision was rendered by a bench comprising President Peerzada Qousar Hussain and Member Nyla Yaseen.

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The complainant, a resident of Baramulla, had approached the Commission with allegations that HDFC Bank had unjustly denied him the maturity amount of two valid cash certificates. According to the complaint, the first cash certificate was issued on 14.09.2022 for an amount of ₹2,00,000 under Account No. 50300640093231. The second was issued on 07.05.2024 for ₹4,35,000 under Account No. 50300851867303. The complainant stated that he had deposited the amounts directly at the Baramulla branch of HDFC Bank and obtained the certificates, which bore the seal and signature of the bank.

Upon the maturity of the first certificate in September 2023, the complainant approached the bank for encashment. To his shock, he was informed that the bank had no record of the said certificate. When he subsequently enquired about the second certificate, he received the same response. The complainant alleged that despite repeated visits and requests, the bank refused to investigate or resolve the matter. Instead, bank officials suggested that the certificates might have been issued by Safdar Khan (OP No. 2), an employee of the bank who was under suspension at that time. However, the complainant maintained that he had never dealt with the said employee individually and had deposited the cash at the bank counter.

The complainant also submitted affidavits from two witnesses—Bilal Ahmad Sheikh and Habibullah Sheikh—who confirmed that the complainant had deposited the amounts and received the certificates bearing official seals. Despite the clear documentation and supporting witness statements, the bank continued to deny responsibility.

Notices were issued to the opposite parties. HDFC Bank (OP No. 1) submitted a written version but failed to appear during the proceedings and was consequently set ex parte. In its written submission, the bank claimed that the cash certificates in question were fake and forged, and that they did not exist in the bank’s official records. It further alleged that the complainant had not submitted any prior complaint regarding the matter. However, it admitted that one employee—Safdar Khan—was suspended in connection with the period during which the transactions allegedly took place.

OP No. 2 also failed to appear before the Commission and was similarly proceeded ex parte.

The Commission thoroughly examined the evidence on record, including the certificates and affidavits of the witnesses. It observed that the complainant had indeed deposited ₹2,00,000 on 14.09.2022 and ₹4,35,000 on 07.05.2024, and had received certificates bearing the bank’s seal and signature. The complainant had approached the bank promptly upon maturity of the first certificate, but was unjustifiably denied encashment. The Commission noted that the bank failed to carry out any fair investigation or due diligence to verify the authenticity of the documents.

Rejecting the bank's contention that the certificates might have been issued by a suspended employee, the Commission held that such a defense does not absolve the bank of its responsibility. It stated: “The Bank is vicariously liable for the actions of its employees who act as agent of the Bank under the Master-Agent relationship.”

The Commission emphasized that a customer is entitled to rely on certificates that carry the official seal and signature of the bank, and banks cannot deny liability without cogent evidence. The bank’s failure to investigate or honor the certificates constituted a deficiency in service.

To support its reasoning, the Commission cited the Supreme Court’s ruling in Punjab National Bank v. Surendra Prasad Sinha [1992 AIR 1815], where it was held that a bank cannot deny its liability if a certificate bearing its seal and signature is produced by the customer, regardless of whether it was formally recorded in the bank’s internal documents.

Finding merit in the complainant’s claims, the Commission allowed the complaint and issued the following directions:

• HDFC Bank was directed to pay the matured amount of the two cash certificates along with applicable interest, after obtaining the original certificates from the complainant.

• The bank was ordered to pay ₹50,000 as compensation for mental agony and deficiency in service.

• An additional ₹20,000 was awarded as litigation costs.

• The bank was also directed to deposit ₹10,000 into the Consumer Welfare Fund, Baramulla.

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Furthermore, the Commission granted liberty to the bank to conduct an internal inquiry into the issuance of the certificates and take appropriate action against the concerned employee under the mandate of law. The Commission instructed that all directions be complied with within four weeks of the date on which a copy of the order is served upon the bank. The office was directed to return the original cash certificates to the complainant.

Appearance

Adv. Sheikh Irshad for the Complainant.

Nemo for OP’s.

Cause Title: Habibullah Sheikh V. Manager HDFC Bank, Branch Baramulla & Anr.

Case No: Consumer Complainant No: 58/2024 

Coram: Peerzada Qousar Hussian [President], Ms Nyla Yaseen [Member]

[Read/Download order]