Bengaluru (Aryavarth): In a significant consumer dispute, the National Consumer Disputes Redressal Commission in New Delhi recently ruled in favor of the complainants, Anil Milkhiram Goyel and Anr., against the Hongkong and Shanghai Banking Corporation Limited, refereed to as OP in the judgement . The Consumer Case No. 507 of 2016 centered around allegations of deficient services, negligence, and unjust freezing of the complainants’ joint savings account. The presiding member, Hon’ble Dr. Inder Jit Singh, issued an order that not only vindicates the complainants but also highlights the importance of consumer protection under the Consumer Protection Act of 1986.
The complainants sought several remedies from the opposing party, including a declaration of deficiency in services, the removal of restrictions on their savings account, rectification of loan account records, preservation of their CIBIL status, and financial compensation. The complainants demanded a substantial amount, totaling Rs. 3,55,00,000/- (Rupees Three Crores Fifty-Five Lakhs only), to cover damages, mental distress, legal expenses, and loss of reputation.
According to the complaint, the dispute arose when the complainants attempted to withdraw money from an ATM operated by another bank. To their surprise, the transaction was declined due to the non-updated KYC (Know Your Customer) details of complainant No. 2. This led to the temporary freezing of their joint savings account by the OP on November 5, 2015. The complainants visited the bank branch, where they were informed of outstanding amounts in two loan accounts, which were already settled and closed in 2009 and 2010. Despite the complainants’ objections and evidence of closure, the bank continued to freeze their account, resulting in the dishonor of their cheques.
The complainants’ argument rested on the claim that their KYC details were duly updated in May 2015, contradicting the bank’s assertion of non-updated records. They accused the bank of negligence, deficiency of service, and a disregard for proper communication. The complainants, particularly Anil Milkhiram Goyel, a well-known businessman with a strong reputation, argued that the freezing of their account caused humiliation, embarrassment, and potential criminal liability.
The OP, in its written statement, maintained that the freezing of the account was a result of the non-updated KYC details of complainant No. 2. They claimed that repeated requests for the required documents went unanswered, leaving them no choice but to restrict debit operations on the account. The bank contended that it acted in accordance with RBI guidelines and denied any outstanding amounts being the reason for freezing the account.
During the proceedings, the commission reviewed various documents, communications, and RBI guidelines on KYC. It found no evidence to support the bank’s classification of the complainants as high-risk customers or any unusual activity that warranted freezing the account. Furthermore, the commission noted that the two loan accounts in question were settled and closed in 2009 and 2010, rendering the demand for further payment unjustified. The commission held the OP accountable for negligence, deficiency of service, and the adverse impact on the complainants’ reputation and potential criminal liability.
In its order, the commission directed the OP to immediately lift the freeze on the complainants’ joint savings account and allow normal operations. It also emphasized that the OP should not demand any further amounts related to the settled loan accounts. The ruling highlights the importance of consumer rights and serves as a reminder to financial institutions to uphold their responsibilities towards customers.
This victory for the complainants not only provides them with relief but also establishes an important precedent in consumer protection. It demonstrates the power of the Consumer Protection Act of 1986 in safeguarding consumer interests and holding corporations accountable for their actions. The ruling reiterates the need for banks to exercise diligence, maintain accurate customer records, and fulfill their obligations without causing undue harm or inconvenience.