• Cheque bounced due to non renewal of Cash credit limit

A customer was maintaining a cash credit limit in my branch. He gave a cheque to insurance company of his CC account being an amount of his car insurance premium. The cheque got bounced when presented in clearing due to insufficient balance in the account. After six months at the time of claim settlement of his vehicle he got to know that his vehicle was not insured as the policy was not issued due to non payment of insurance premium. He filed a case in the consumer court against Insurance company for not informing him about cheque bounced and he made a party to bank also. His cash credit account was not renewed on the date when the cheque was bounced due to non submission of stock statements of his business and application to renew the account which bank had already asked him to submit but verbally only. It is pertinent to mention here that out of courtesy few of his other cheques were entertained at the Branch. He may take a plea of this why his other cheques were cleared when his account was not renewed except the one which bounced in clearing. Insurance company does not have no record of any memo or cheque which was returned by the bank unpaid. 
Will the bank be liable for any loss to the customer? Thanks in advance
Asked 7 years ago in Civil Law

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10 Answers

Under law no negative parity can be sought, so if a few cheques were honoured when technically they couldn't have been, he can't take a plea that this cheque too should have been meted out the same behavior.

It's between the Insurance Co and him and you have nothing to do with this.

Engage an able Lawyer dealing in consumer disputes and file a meticulously drafted reply to his complaint.

Let me know incase you need any further assistance.

Best,

Adv. Vibhanshu Srivastava

Vibhanshu Srivastava
Advocate, Lucknow
9659 Answers
307 Consultations

No the bank shall not have any liability in the case as told by you, for the reason that there has been no deficiency in service on your part.

As far as I can know from the facts as told by you, bank is not at fault in any case. Do not worry about, it is insurance company’s fault that they did not informed the customer about the bounced cheque.

Regards

Anilesh Tewari
Advocate, New Delhi
18090 Answers
377 Consultations

bank is not liable for loss caused to you

2) if you issue cheque there must be sufficent balance in your account

3) if your insurance premium cheque got dishonoured due to insufficient funds bank cannot be blamed

4) however bank ought to have informed you of dishonour

5)you may get nominal compensation from bank

Ajay Sethi
Advocate, Mumbai
96806 Answers
7811 Consultations

Yes in this bank seems prima facie liable there is not much proof is insufficiency of fund . if that is so then the customer can take plea of negligence on your part.

The lack of communications on your part about non renewal of insurance also makes this case wrose for you.

However without seeing the case papers further comment on the merit of the case can not be made.

Devajyoti Barman
Advocate, Kolkata
23198 Answers
511 Consultations

As told earlier there has been no deficiency on your part, if you have once given the TnC to the customer then it is not your duty to remind them again and again to new their cash credit limit.

Regards

Anilesh Tewari
Advocate, New Delhi
18090 Answers
377 Consultations

1) bank should have informed customer to complete formalities to renew cash credit limit

2) customer should have checked fund availability in his account before issue of cheque to insurance company

3) if his CC limit had expired customer should have renewed the same

Ajay Sethi
Advocate, Mumbai
96806 Answers
7811 Consultations

If all what you're saying about the terms and conditions is well documented and could be demonstrated before the Consumer Forum, the onus would be shifted upon the Consumer to establish that he applied for renewal of CC within time, i.e., within 12 months from the sanction of the credit limit. You have a very good case because going by the doctrine of privity of contract, you've nothing to do with the grievances of this Consumer. The dispute is basically between the Insurance co. and the Consumer wherein the bank has been unnecessarily dragged despite having no privity.

As I've said earlier, you need to engage an able Lawyer to defend this case.

Vibhanshu Srivastava
Advocate, Lucknow
9659 Answers
307 Consultations

Hi, the entire case is based on documentary evidence .. The bank has a good defence in its favour .. Rest it is the matter of trial and upto discretion of court in deciding the matter ..

Hemant Chaudhary
Advocate, Gurgaon
4630 Answers
67 Consultations

This can be a case decided on either's favor depending on how each side is interpreting law and presents sound argument convincing the court.

As per law the consumer has no case to fight and he cannot presume that his cheque for insurance premium payment was passed after having given the cheque. He should have reconciled his bank account properly and periodically especially when he has given cheques for differnt payments.

In my opinion the customer has no case to prosecute the bank or the insurance company, he cannot take shelter under any presumption.

T Kalaiselvan
Advocate, Vellore
87007 Answers
2335 Consultations

It is not the responsibility of the bank alone to inform the customer about the non-renewal of the cash credit limit.

The account holder also has to ensure the renewal periodically since it is he who is the beneficiary or end user.

The bank's liability is limited towards this since the agreement for loan/credit with the terms and conditions agreed thereupon by the customer hence the claim by the customer in this regard may not be maintainable.

T Kalaiselvan
Advocate, Vellore
87007 Answers
2335 Consultations

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