Once upon a time we all stood in long, snaking queues to pay one bill after another. We queued to pay telephone bills, electricity bills and, sometimes, to make our credit card payments.
Now, there are easier options. One widely used method is the drop-box.
This works easily enough: all you do is drop the cheque in and it's cleared at the end of the day. If you want to be extremely careful, you can have the counterfoil stamped by the bank.
But what happens if you find the payment so made not reflected in your account, or no credit thereof given in future bills? What if the bank denies that it received any such cheque for collection? You have no substantiating evidence.
Kunjilal had a bitter experience after dropping his firm's cheque in a bank's drop-box.
Sharda Textiles, M G Road, Indore, sent him on September 3, 1999 to the State Bank of Indore to deposit a cheque for Rs 28,452.
Kunjilal dropped the cheque, drawn on the Central Bank of India in the box placed for this purpose. He also put the bank's seal on the counterfoil.
The bank later denied that it had ever received the cheque even though it was shown the counterfoil.
The bank, however, advised Kunjilal, who made repeatedly inquiries on behalf of his firm, to check whether the cheque was ever presented to the Central Bank of India for payment.
The enquiry revealed that the cheque was presented for payment and encashed by the drawee bank.
Sharda Textiles filed a complaint against the State Bank of Indore and the Central Bank before the district consumer disputes redressal forum, claiming compensation from both of them.
During the course of the proceedings, it was revealed that someone had stolen the cheque dropped in the box.
The person then struck off the 'account payee' endorsement and converted it into a bearer cheque. This was done with the seal and signature of the account holder, Sharda Textiles.
The Central Bank of India took it to be a bearer cheque and made an over-the-counter payment.
With that being the position, the district forum held the Central Bank not liable for any deficiency but the State Bank of Indore was found to be deficient in its services, having misplaced the cheque and/or allowed it to be stolen. It was ordered to pay the amount of the cheque with interest.
The State Bank of Indore filed an appeal before the Madhya Pradesh State Consumer Disputes Redressal Commission which, after perusing the record, by its order dated July 22, 2003, agreed with the district forum that the Central Bank was not responsible because the payment was made by it in due course.
The said bank, having followed the proper procedure, was exonerated.
The state commission, however, noted that while no signs of forgery were detected, in the circumstances the matter needed elaborate investigation with the help of handwriting experts.
The State Commission sent the matter to a civil court to be decided after taking the evidence of experts about the genuineness of the firm's stamp and the signatures of the authorised signatory changing the nature of the cheque from 'account payee' to 'bearer'.
The proceedings of the above case demonstrate that the system of putting cheques in drop-boxes is not foolproof.
The bank might disown its responsibility and the depositor will suffer because he has no evidence to prove that the bank received the cheque.
It might be pertinent to state in this connection that in the judgement of the Madhya Pradesh State Commission in the matter, the court also noted that the counterfoil with the depositor had not been initialised by one of the bank's clerks, and an unsigned counterfoil cannot be treated as reliable evidence.
Undoubtedly, drop-boxes are very convenient. The system, however, can lead to many complications.
If cheques so deposited are not accounted for, credit cards providers levy 30 to 36 per cent service charges for delayed payment, while electricity and telephone authorities threaten disconnection.
Likewise, a depositor issuing cheques to other parties on the assumption that the cheque dropped in the box had been credited, runs the risk of his cheques bouncing. The system needs improvement to avoid situations like the above.
Till such improvements are made, depositors should verify the status of the dropped cheques after a few days to avoid unpleasant consequences.
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