In this age of credit rating and recovery agents, a bounced cheque truly spells disaster. If that cheque is meant to pay your credit card dues, it may well prompt your card company to send an adverse report to the Credit Information Bureau, thereby affecting your credit score If the cheque is part of a monthly instalment payment on a car loan or a personal loan, it may well be an invitation for a bouncer to visit your home, not withstanding the the Reserve Bank of India’s (RBI’s) clear instructions on the issue.
Naturally, one tends to be extra careful while issuing cheques . But there have been cases where banks have not shown responsibility and dishonoured cheques without sound reason.
One consumer had to suffer disconnection of power supply because a cheque bounced despite there being adequate funds in the account!
Banks call such mistakes “inadvertent” but make no amends in such cases. Consumers have had to seek the intervention of the consumer court. And whether it was in the case of Ishwar Prakash Chopra vs. State Bank of India or Punjab and Sind Bank vs. Manpreet Singh Sood, the unanimous verdict of the state consumer disputes redressal commissions has been that dishonouring a cheque despite sufficient balance constituted negligence and the banks had to compensate the consumer for any financial loss and also for any harassment undergone. But the best verdict was delivered by the apex consumer court a
couple of years ago, when it held that banks also had to pay punitive damages in cases such as this.
In this case, the dishonoured cheque was meant for an insurance premium covering risks to a state-run sugar factory in Bihar. But after a factory explosion, the sugar corporation’s claim suffered because of the premium problem. The company approached the apex consumer court, but its claim was not honoured because the policy did not cover a molasses tank explosion. However, the court said the bank should not go unpunished and imposed a punitive damage of Rs. 5 lakh.
(Puspa Girimaji is a Senior journalist, consumer affairs specialist)