The Supreme Court on 8th October 2018, ordered the Industrial Credit and Investment Corporation of India (ICICI) Bank to deposit INR 10 crores to the National Consumer Disputes Redressal Commission, New Delhi to compensate the losses borne by the Mumbai District Central Cooperative Bank (MDCC) due to the fraud committed by ICICI bank’s branch manager in displacing the money invested by the MDCC in ICICI.
On 7th August 2014, the MDCC, a cooperative bank had invested a sum of INR 5 crores with ICICI Bank Ltd. This was done so for a period of 364 days at the interest of 9.25% per annum. This was followed by another investment of INR 5 crores with the said bank on 24th September 2014, to be kept in fixed deposit. At the time of the first deposit, the MDCC had in the email sent to ICICI Bank mentioned that the investments are being made as subject to the condition of No-Premature withdrawal. In response, two balance confirmation certificates were issued by ICICI. Henceforth, the officers of both the parties had a meeting in which it allegedly transpired that a fraud had taken place wherein the officials and associates of ICICI siphoned off the amount of the aforesaid two FDRs by the use of fake and forged documents. An FIR was thereafter lodged by the ICICI bank on 28thFebruary 2015, alleging forgery and embezzlement of funds, etc leading to the arrest of its branch manager on 4th March 2015. The MDCC thereafter sought a pre-mature withdrawal of both the Fixed Deposits of INR 5 crores each, which was refused by the ICICI bank on the contention that the said FDRs had been liquidated in paid in terms of the instructions received through the representatives of the MDCC itself. The MDCC thus filed a complaint in the Consumer Commission against ICICI seeking payment of the aforesaid two FDRs of INR 10 crores and interest on that amount.
The ICICI Bank opposed the complaint taking the stand of Section 2(1)(d) of the Consumer Protection Act, contending that MDCC did not come under the ambit of this definition, it having availed the services of the bank for commercial purposes. Another preliminary objection the Bank took support of was that the complaint of MDCC regarding fraud committed by the officials of ICICI Bank does not come under the purview of the Consumer Protection Act, the complaint involving adjudication of complicated questions of facts and law, which cannot be done in a summary jurisdiction. Regarding the first contention, Justice VK Jain decided that this contention had no merit and that since commerce and trade for commercial purposes has not been defined in the Consumer Protection Act, the Commission will go by the dictionary definitions. The meaning of these words is subjective with the facts and circumstances of each case. After rigorous investigation into the facts of the case, the Commission also set aside the second contention put forth by the ICICI Bank being able to find enough evidence against the branch manager and the bank’s conduct. While giving the order on 21st March 2018, Justice VK Jain said, “For the reasons stated hereinabove, I hold that the funds of the complainant bank, invested with ICICI Bank were siphoned off by the bank official(s) in connivance with some outsiders, thereby causing wrongful loss to the complainant. The opposite partly namely ICICI Bank is vicariously liable for the acts of the misconduct committed by its employee(s) and the siphoning of the funds of the complainant constitutes gross deficiency in service rendered to the complainant…” The ICICI bank was ordered to refund the entire principle amount of INR 10 crores to the complainant along with other minute expenditure refund.