Dishonour of cheques despite having sufficient balance: NCDRC directs HSBC to pay ₹15 lakh compensation to couple

The National Consumer Disputes Redressal Commission (NCDRC) recently directed HSBC Bank to pay ₹15 lakh to a man and his wife for mental agony and harassment caused to them after their cheques were dishonoured despite there being sufficient balance in their bank account. [Anil Milkhiram Goyel and Anr v. HSBC Limited].The bank had frozen the the account of the complainants on the ground that they had failed to pay an outstanding loan amount of about ₹1,80,000, and claiming that their Know Your Customer (KYC) details were not updated.Presiding Member Dr Inder Jit Singh observed that there was nothing on record to show that the bank could classify the complainants as high-risk customers, requesting them to update their KYC every two years as per Reserve Bank of India (RBI) guidelines.The Commission also noted that both the loan accounts stood settled and closed in 2009 and 2010..The complainants, Anil and Neelam Goyel, alleged that in November 2015, when they attempted to withdraw money from an ATM machine, the transaction was declined. On contacting the bank, they were informed that the transaction had failed since their KYC details were not updated as per norms. Although they had already updated KYC details in May 2015, they visited the bank's branch in Fort, Mumbai to do so again. There, they were informed that there was an outstanding amount in the loans linked to the savings account.However, since the loan amounts already stood settled, the complainants moved the NCDRC in 2016 alleging deficiency in service on part of the bank. They sought compensation of ₹3.55 crores..The bank in its reply admitted that the loan accounts stood settled. However, it said that the account was frozen on account of KYC details not being updated. It further said that although Anil had furnished KYC documents, Neelam had not. This, they said, was the reason for freezing the complainants' bank account..In their rejoinder, the complainants claimed that the bank could not suggest any unusual activity on their part and by categorizing them as high-risk customers, added insult to injury inflicted upon them which itself was illegal..The Commission noted that in its communication dated November 26, 2015, the bank initially admitted that the KYC details of the complainants were updated as of May 30, 2015. However, it later changed its stance, asserting that the update was only done for Anil and not for Neelam..Thus, the NCDRC found that the bank's action of freezing the joint savings account was unjustified and had adversely affected the complainants while also exposing them to potential criminal action on account of dishonour of cheque."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 cheques," the order stated..It concluded that the bank was negligent in this regard and that the acts of the bank amounted to deficiency in service entitling the complainants to compensation for unwarranted humiliation, embarrassment and loss of reputation.However, since the complainants did not produce documents to demonstrate the quantum of loss suffered by them, the Commission declined to award compensation as claimed..Accordingly, the Commission directed the bank to pay the complainants ₹15 lakh as compensation and ₹1 lakh in litigation expenses.Further, it directed the bank to de-freeze the complainants' account and also to not demand any further amount towards the settled loan accounts..The complainants were represented by Advocates Pulkit Deora, Vidit Gupta and Prachi Gupta.HSBC was represented by Advocates Devmani Bansal and Shresth Sethi..[Read Order]