Mumbai District Central Cooperative bank to get back its Rs10 crore and interest
MDCC Bank will also get from ICICI Bank an additional interest on its investment at the rate of 8% per annum by way of compensation and yet another sum of Rs25,000 towards litigation cost.mumbai Updated: Mar 27, 2018 10:15 IST
The National Consumer Disputes Redressal Commission has directed ICICI Bank to refund with interest a sum of Rs10 crore the Mumbai District Central Co-operative (MDCC) Bank had invested with it in fixed deposits and which was purportedly embezzled by the branch manager of the private sector bank using forged documents.
MDCC Bank will also get from ICICI Bank an additional interest on its investment at the rate of 8% per annum by way of compensation and yet another sum of Rs25,000 towards litigation cost.
In 2014, MDCC Bank invested Rs 10 crore in fixed deposits with the Vasai branch of ICICI Bank. The amount was invested in two term deposits of 364 days and was to earn interest at the rate of 9.25%. In February 2015, ICICI Bank informed the complainant bank that the amount invested by it had been allegedly embezzled by manager of its Vasai branch.
ICICI Bank had also lodged a complaint against its own manager and his accomplices – some outsiders, alleging they siphoned off the fixed deposits to the account of a private firm, Prakash Trading Company, held with ING Vysya Bank. On the basis of its complaint, a first information report was registered on February 28, 2015, and the branch manager was arrested by the police. However, when MDCC Bank sought its investment refunded with accrued interest, ICICI Bank took a stand that the amount had been liquidated and paid in terms of instructions issued by the investor bank.
The stand of ICICI Bank compelled the MDCC Bank to approach the national consumer commission where the former objected the complaint was maintainable as the transaction involved was commercial one.
The national commission overruled the objection saying main objectives of MDCC Bank were to supervise and assist co-operative banks and as the term deposit was incidental to it, it could not be termed as commercial transaction.
On merit, the national commission held that the funds were admittedly embezzled by branch manager of ICICI Bank purportedly using forged documents, thereby causing wrongful loss to MDCC Bank. “The opposite party, namely ICICI Bank is vicariously liable for the acts of misconduct committed by its employee(s) and the siphoning of the funds of the complainant constitutes gross deficiency in service rendered by the opposite party to the complainant,” it said.