Bank to return funds
yusuf
(Querist) 19 November 2013
This query is : Resolved
Hi There,
My father is a non resident Indian who has a OCI status.
A very close relative of my father has fraudulently withdrawn 1586000.00 rupees using forged signature on my father’s cheque book and has cashed the same amount into to his personal bank account.
At the same time when the funds were withdrawn, the bank failed to notify my father of a very large amount being withdrawn and informing my father of a unusual transaction of a very large amount.
Bank of Baroda (my father’s bank) have stated once the Indian police issue a FIR, the money in concern will be credited to my father’s account.
The police have issued a FIR, but the bank are now insisting that they also require a FSL REPORT confirming the signature on the cheque is a forged signature, and only then they will release the funds in concern.
Please can you help and advice in relation to this matter.
(1) Is there any Indian law that states the bank has a duty of care and responsibility of being vigilant to inform its customers of any unusual activity being carried on a customers account?
(2) What does the Indian law state in relation the bank returning the funds or in this case not returning the funds even though the local police have issued an FIR?
(3) How can my father get the amount in concern returned to his bank account?
Your help is very greatly appreciated.
thank you
malipeddi jaggarao
(Expert) 20 November 2013
First of all your father should lodge a written complaint with the concerned Branch of the Bank and to the higher authorities stating that the disputed withdrawal is not under his signature and he never withdraw the money and the same should be made good in his account without any delay. If no action is forthcoming within reasonable time, obtain a Power of Attorney in favour of you (or somebody in India who can deal with the matter) and serve a legal notice on the bank.
Obtaining FSL report is an internal matter of the Bank.
To your specific queries:
1. It is obligatory on the part of the Banks to be vigilant if the cash withdrawal is Rs.10 lac or more under Anti Money Laundering Act.
2. If the customer opts for SMS banking, they can send a message for each withdrawal. In case of your father's account if no Mandate Holder is nominated or the Mandate Holder even if nominated, not opted for SMS Banking, the bank will not advise the transactions.
3. There is no protection to the Bank for payment of cheques/amounts under forged signatures. They have to make good of the amount in reasonable time and it is for them to catch hold of the culprit. But since the amount involved is high, they Bank might have opted defer payment till FSL report is obtained. When it is a forged signature, you can wait for the report. Or else, you have to start legal battle in which the burden of proof that the signature is forged lies with you.
Your father should continue pursuing the matter with the Branch Manager marking a copy to the higher authorities for some time.
Rajendra K Goyal
(Expert) 20 November 2013
Your father was unable to keep his cheque book secured and it was used by the culprit. Since the culprit must be a known person, has police arrested him on the basis of FIR and has recovered the amount withdrawn fraudulently.
Without proper instructions or registration of SMS alert facility with the Bank, Bank is not supposed to inform such transactions to the customer specifically when he is abroad. Yes, cash transaction above specific amount (10Lacs) are to be informed to Anti Money Laundering cell.
Bank liability to return the amount of wrongful payment lies when it is proved that the signatures were forge.
The money would be returned if it is proved that the Bank was at fault. If Bank does not do so Legal suit can be filed.
T. Kalaiselvan, Advocate
(Expert) 20 November 2013
Mr. Mallipeddi Jagga Rao has answered your query very correctly especially with regards to the procedure to be followed under such circumstances. The Bank manager is liable to give you a reply or else you may take up the matter with higher bank official and in case his reply is also unsatisfactory, you may take up the matter with the banking ombudsman for redressing your grievances and solutions. After exhausting all the remedies you can approach the court of law/police for proper legal action against the bank/manager.
Thyagarajan
(Expert) 20 November 2013
You can approach the bank in which your relative has deposited the amount with a copy of FIR issued by police and ask for freezing the account until disputes is redressed.
I agree Mr. malipedi jaggarao the the onus of proving the signature as false lies on you.
Your father can start the litigation early with the help of local lawyer in India. The court will issue notice to your relative and also to the Bank to appear before it with concerned cheque.Then it will be the problem for the court to come to a conclusion whether it is forgery or not.
How the cheque book landed to your relative in India will be a big question throughout the litigation.
yusuf
(Querist) 21 November 2013
The police are making efforts to arrest the accused, however it is believed he has absconded to south Africa from local sources.
It is also been highlighted the mother and the brother of the accused have been aiding and abetting the accused in this matter, but the police are also finding it hard located these individuals as well.
malipeddi jaggarao
(Expert) 22 November 2013
Whether the culprit is traced or not is not a point here. Once it is proved that the signature is forged one, the Bank is liable to make good of the amount to the true owner. In this case since your father is an NRI how the cheque book landed into the hands of the culprit is one of the points but this will not be a defence for the bank for not making good of the amount. Forget about the whereabouts of the culprit. It is the duty of the bank or the police. Concentrate only on how to get back the money. Give reasonable time to the Bank it is waiting for Foresinc Lab Report.
