Mumbai: NCDRC Orders Punjab And Sind Bank To Repay ₹ 11.5 Crore With Interest To PHFI For Deficient Service In Embezzlement Case

Mumbai: NCDRC Orders Punjab And Sind Bank To Repay ₹ 11.5 Crore With Interest To PHFI For Deficient Service In Embezzlement Case

The Governing Body of of PHFI in 2013-2014 had decided to deposit 80 per cent of its funds in ‘Fixed Deposit’ with several banks so as to keep the money safe and to use the interest of the money for the completion of its projects.

Pranali LotlikarUpdated: Sunday, May 19, 2024, 01:30 AM IST
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Image: Punjab and Sind Bank (Representative)

The National Consumer Dispute Redressal Commission (NCDRC) has passed a strong judgment against a Mumbai based bank, which is accused of allegedly embezzling crores of money and causing loss to its customer. The Commission held that the banking facilities are not free of charge of deficient service as the banks earn on it.

The Commission has held the Punjab and Sind Bank for allegedly embezzling a huge money of Rs 11. 5 crores, which the Public Health Foundation of India (PHFI) had invested as ‘Fixed Deposit’ with the bank. The Bank was thus held guilty for providing faulty services as it failed to provide with the right monetary assistance to PHFI, resulting  in loss of its projects. The Punjab and Sind Bank is directed to return the entire amount of Rs 11.5 Crores along with nine per cent interest on the amount from 2014. 

The Governing Body of of PHFI in 2013-2014 had decided to deposit 80 per cent of its funds in ‘Fixed Deposit’ with several banks so as to keep the money safe and to use the interest of the money for the completion of its projects.

As per the copy,  in 2014, the money was divided in two accounts of Rs five crores each and the maturity amount for each  of the account was Rs r,46,54,166.

However after the money was invested, the PHFI had  received an email on June 28,2014, from Senior Inspector, Economic Offences Wing, CBI, Mumbai stating that a large scale of embezzlement of Rs.58 crores had occurred and that during investigation it was revealed that an amount of Rs.14.50 crores was transferred to the account of SIES Trust from the account of the PHFI. 

PHFI however refused the same and an email dated July 2,2014, was addressed to the EOW stating that no such amount was transferred by the PHFI to the SIES Trust.Senior Inspector sought for confirmation from the PHFI for that transaction.

Further the Punjab Sind bank decided to return the money back to the PHFI and so the money which was deposited in two halves were returned to the respective bank account’s. But the PHFL was not allowed to access the money as those account’s were freezed by the investigating agency claiming the money to be ‘tainted’. 

Thus a consumer complaint was filed against the bank for its deficiency in service on the part of the bank.  Rather complaint says , “ Bank have not followed the KYC norms, Anti-money Laundering Standard/ Combating of Financing of Terrorism/ Obligations of Banks under Prevention of Money Laundering Act, 2002 and Real Time Gross Settlement Guidelines, 2013 issued by RBI. The branch manager of the bank in collusion with the fraudsters opened FDRs in the name of PHFI and overdraft accounts on fabricated papers. “

The bank in its defence said that PHFI  was attempting to deviate the focus of criminal prosecution in order to avoid being brought to justice. “The modus operandi adopted by the complainant is feigning ignorance of its various bank accounts and transactions affected therein and claiming innocence. The bank verily believe that the complainant would be found guilty of having committed grave and aggravate penal offences and it would soon be brought to justice. The accounts of the complainant were frozen by CBI as complicity of the complainant was found in various fraudulent transfer of money through several banks,”said the bank in its reply. 

The Commission after hearing the case , asked the bank about the alleged money embezzlement , to which the bank stated that the money was immediately remitted back to the PHFI’s bank account’s . However the bank was silent on the aspect of several other transfer which the bank had utilised for the alleged wrongful gains , had gone unexplained, the commission’s order copy maintains.

The Commission after going through the evidence turned down the banks plea. The Commission held that the very purpose to enact the Consumer Protection Act is to provide a better protection of the interests of the consumers. “Consumer markets for goods and services have undergone drastic transformation since the enactment of the Consumer Protection Act. The modern market place contains a plethora of products and services. The emergence of global supply chains rise in international trade and the rapid development of e-commerce have led to new delivery systems for goods and services and have provided new options and opportunities for the consumers. “

“Equally, this has rendered the consumer vulnerable to new forms of unfair trade and unethical business practices. Misleading advertisements, tele-marketing, multi-level marketing, direct selling and e-commerce pose new challenges to consumer protection and will require appropriate and swift executive interventions to prevent consumer detriment. The Consumer Protection Act, 2019, has been enacted, repealing the earlier Act to meet out new challenges, in which, false and misleading advertisement and manufacture and sale of spurious and 'adulterant have been declared as an offence.”A person is  a ‘consumer' who buys any goods or avails service paying consideration, for his own uses and not for commercial purpose. The nature of the dispute which can be raised before consumer foras are defects in goods, deficiency in service and unfair trade practice. Banking facilities are not free of charge as the banks earn on it,” read the detailed order. 

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