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Bank liable for wrong done by its employees: SC orders bank to compensate man

May 06,2024

In a recent ruling, the Supreme Court has held the District Cooperative Bank in Varanasi accountable for service lapses, affirming its vicarious liability for the actions of its employees . The apex court directed the bank to compensate a man with Rs 25,000 nearly three decades after he was wrongly denied access to his fixed deposit.

A bench comprising Justices P S Narasimha and Aravind Kumar upheld the decision of the district consumer forum from 1997, which had initially granted compensation to the aggrieved individual. The National Consumer Disputes Redressal Commission’s (NCDRC) contrary ruling was overturned by the apex court.

The case revolves around the non-release of fixed deposit receipts totaling Rs 1,60,000 by the District Cooperative Bank in Varanasi. The petitioner alleged that the bank had unlawfully prevented him from withdrawing his funds. The district consumer forum, upon review, ordered the bank to refund the amount along with 15% interest, and an additional Rs 25,000 in damages.

The Supreme Court, in its judgment, emphasized, “It is seen from the record that the district forum was satisfied that the appellant had, in fact, handed over Rs 1,60,000 to the bank’s officials. This is evidenced from the bank’s ledger.” The court noted the establishment of an inquiry committee that recommended criminal proceedings against certain officials, which the bank had duly pursued. Additionally, it acknowledged the periodic renewal of fixed deposit receipts, thereby affirming the bank’s vicarious liability for its employees’ actions.

Source: Economic TImes

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