Delhi State Commission Rules Consumer Forums Cannot Handle Fraud Allegations

Delhi State Commission Rules That Fraud-Related Complaints Fall Outside Consumer Forum’s Jurisdiction

August 5, 2024

The Delhi State Consumer Disputes Redressal Commission, led by Justice Sangita Dhingra Sehgal (President) and Pinki (Judicial Member), has ruled that consumer forums do not have jurisdiction over complaints involving allegations of fraud and forgery, as these cases are too complex for summary resolution.

Summary of Facts:

The complainants reported issues with Kotak Mahindra Bank, claiming unauthorized deductions totaling ₹1,20,000 from their account during a period when they were updating their Know Your Customer (KYC) details. Despite promptly notifying the bank, the transactions continued, leading to the full loss of ₹1,20,000. The bank failed to act quickly to freeze the account or provide transaction details. The complainants subsequently filed a case against the bank with the District Consumer Disputes Redressal Commission, Central Delhi.

The bank defended itself by asserting that there was no negligence on its part and that the complainants had carelessly shared their account details and passwords. The bank also claimed it had requested a fund recall from other banks and payment platforms.

The District Commission found that the bank did not adequately protect the complainants’ funds or provide timely information, ordering a refund of ₹1,20,000 with interest, along with ₹20,000 in compensation and ₹5,000 in litigation costs.

Dissatisfied, the bank appealed to the State Consumer Disputes Redressal Commission, Delhi.

State Commission’s Observations:

The State Commission referenced the NCDRC’s decision in Capital Charitable and Education Society Vs. Axis Bank Limited [Consumer Case No. 269/2017], which determined that cases involving fraud and forgery are beyond the jurisdiction of consumer forums due to their complexity. The Commission noted that consumer protection proceedings are intended for faster, less complex cases and are not suited to handle intricate matters like fraud and forgery.

The State Commission concluded that consumer forums, which operate under a summary procedure, are not equipped to deal with the detailed scrutiny required for fraud cases. Given the fundamental issue of fraud and the substantial evidence presented, which requires thorough examination, the decision of the District Commission was overturned.

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