SBI Ordered to Pay Compensation for Wrongful Cheque Dishonour Despite Sufficient Funds.


Consumer Commission Holds Bank Liable for Deficiency in Service. In a significant ruling protecting banking consumers, the District Consumer Disputes Redressal Commission directed State Bank of India (SBI) to compensate a senior citizen after his cheque was wrongly dishonoured despite sufficient funds being available in his account.
Background of the Dispute
The complainant had issued a cheque in favour of a housing society towards payment of dues. However, the cheque was returned by the bank with the remark “Insufficient Funds.”
The bank also deducted a penalty charge from the customer’s account for the alleged dishonour.
The complainant challenged the action, stating that his account maintained a balance exceeding ₹1.48 lakh when the cheque was presented for clearance.
Bank Admits Error
After the customer raised objections, bank officials reportedly admitted that the cheque had been wrongly returned and refunded the penalty amount.
Despite the refund, the consumer approached the commission seeking compensation for the inconvenience and mental harassment caused by the wrongful dishonour.
Findings of the Commission
The consumer commission examined the account statement and found that sufficient funds were available in the account at the relevant time.
The commission observed that wrongful dishonour of a cheque can seriously affect the reputation and credibility of an account holder, particularly when the cheque is issued towards lawful obligations.
It further noted that SBI did not appear before the commission despite service of notice and was proceeded against ex parte.
Relief Granted
The commission directed SBI to:
Pay ₹10,000 as compensation and litigation expenses.
Comply with the order within the stipulated period.
Pay additional interest in case of delay in compliance.
Key Legal Takeaway
Banks have a duty to process cheque transactions with due care. Wrongful dishonour of a cheque despite sufficient funds may amount to deficiency in service and can expose banks to compensation claims before consumer forums.

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