Canara Bank vs. Kavita Chowdhary

2026 INSC 363

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION


CIVIL APPEAL NO. 2587 OF 2025


CANARA BANK APPELLANT(S)


VERSUS

KAVITA CHOWDHARY RESPONDENT(S)

With
CIVIL APPEAL NO. 2588 of 2025


J U D G M E N T

UJJAL BHUYAN, J.
Facts and issue in both the civil appeals being
identical, those were heard together and are being disposed of
by this common judgment and order.
2. The two appeals have been preferred by the Canara
Bank (‘appellant or bank’ hereinafter) under Section 23 of the
Consumer Protection Act, 1986/Section 67 of the Consumer
Signature Not Verified
Digitally signed by
CHANDRESH
Date: 2026.04.15
15:49:56 IST
Reason:
Protection Act, 2019 assailing the judgment and order dated
24.09.2024 passed by the National Consumer Disputes

Redressal Commission, New Delhi (briefly ‘the Commission’ hereinafter)
allowing Consumer Complaint No. 123 of 2019 ( Kavita Chowdhary Vs.
Canara Bank) and Consumer Complaint No. 124 of 2019 ( Priya
Chowdhary Vs. Canara Bank).
3. It may be mentioned that vide the impugned judgment
and order dated 24.09.2024, the Commission has allowed the
aforesaid two complaints by directing the appellant bank to pay
10 percent of the total cheque amount alongwith interest at
the rate of 8 percent per annum from the date of filing
of the complaints within two months, further imposing
litigation cost of Rs. 50,000.00 in favour of each of the
complainants. The Commission has clarified that any delay in
making the payment by the appellant bank would result in
enhanced interest at the rate of 10 percent per annum till the
date of final realisation.
4. For the sake of easy reference, we may refer to the facts
of the first appeal i.e. Civil Appeal No. 2587/2025 ( Canara Bank
Vs. Kavita Chowdhary). This appeal arises out of Consumer
Complaint No. 123 of 2019 ( Kavita Chowdhary Vs. Canara
Bank).
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5. Respondent Kavita Chowdhary had filed Consumer
Complaint No. 123 of 2019 before the Commission under
Section 21(a)(i) of the Consumer Protection Act, 1986 alleging
deficiency in service on the part of the appellant and seeking
compensation alongwith interest. Prayer made in the complaint
was as under:
(i) To pass necessary order directing the opposite party to pay
Rs. 1,06,10,768.00 (Rupees one crore six lakhs ten thousand
seven hundred sixty eight) to the complainant alongwith
interest at the rate of 18 percent per annum.
(ii) To direct the opposite party to pay Rs. 25,00,000.00 (Rupees
twenty five lakh) to the complainant towards interest/
compensation/damages.
6. Complainant i.e. Kavita Chowdhary holds a savings bank
account with the appellant at its Maharani Bagh (Ashram Chowk)
Branch, New Delhi, the account number being 0349101015565. On
29.05.2018, she (respondent-complainant) had deposited two CTS
cheques into this savings bank account, the details of which are as under:
(i) Cheque No. 46382 dated 03.03.2018 for Rs.
11,36,868.00; and
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(ii) Cheque No. 46381 dated 03.03.2018 for Rs.
94,73,900.00.
7. Both the aforesaid cheques were issued in favour of the
respondent by Assotech Limited and drawn on Vijaya Bank,
S.S.I. Branch, Noida.
8. Appellant credited the two cheque amounts into the
aforesaid savings bank account of the respondent on
01.06.2018. The transactions were recorded at 13.01.34 and
14.55.06 hours respectively as indicated by the accounts
clearing section of Vijaya Bank. However, on the same day, both
the cheque amounts were debited from the account of the
respondent with the caption ‘online cheque return’.
9. Later in the day, respondent received SMS notifications
on her registered mobile number stating that the two cheque
amounts were debited from her account. There was another SMS
thereafter stating that the cheque No. 46381 for Rs.
94,73,900.00 which was deposited on 29.05.2018 was returned
due to ‘connectivity failure’.
10. On 05.06.2018, appellant deposited cheque No.
46381 into the account of the respondent deducting certain
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amount on account of collection charges. However, the said
cheque amount was debited once again with the caption ‘online
cheque return’. Subsequently, the said cheque was returned to
the respondent on 05.06.2018 itself alongwith a return memo
dated 05.06.2018 with the endorsement ‘instrument out
dated/stale’.
11. Likewise, on 11.06.2018, cheque No. 43682 for
Rs. 11,36,868.00 was credited into the account of the
respondent. Once again, the said amount was debited from the
account of the respondent on that day itself with the description
‘online cheque return’ after deducting a certain amount as
collection charges. This cheque was returned to the respondent
alongwith a return memo dated 11.06.2018 citing the reason
‘instrument out dated/stale’.
12. On both the occasions, collection charges at the
rate of Rs. 177.00 were debited by the appellant from the
account of the respondent.
13. According to the respondent, appellant had failed
to present the cheques for clearing or collection to the drawee
bank within the validity period causing the cheques to expire.
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Because of such negligence leading to deficiency in service, respondent
had incurred a loss amounting to Rs. 1,06,10,768.00. This also deprived
the respondent from availing the legal remedies against the
drawer of the cheques, Assotech Limited, including the remedy under
Section 138 of the Negotiable Instruments Act, 1881 as Assotech Limited
was undergoing corporate insolvency resolution process but continued
to remain liable for criminal liability under Section 138 of the
Negotiable Instruments Act, 1881.
14. Respondent sent a legal notice on 26.07.2018 to
the appellant seeking compensation for the loss of Rs.
1,06,10,768.00 i.e. sum of both the cheque amounts. Due to a
typographical error in the said notice, where the date of deposit
was wrongly mentioned as 29.06.2018 instead of 29.05.2018,
a subsequent legal notice was issued to the appellant on
02.08.2018. However, despite receipt of such legal notice,
appellant failed to make the payment.
15. Aggrieved thereby, respondent preferred a
consumer complaint under Section 21(a)(i) of the Consumer
Protection Act, 1986 before the Commission seeking the
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aforementioned reliefs, which came to be registered as
Consumer Complaint No. 123 of 2019.
16. Appellant, which was arrayed as the opposite
party in the aforesaid consumer complaint, responded to the
notice issued by the Commission and submitted its reply. Stand
taken by the appellant was as under:
(i) Complainant is having savings bank account No.
0349010115565 with the appellant bank .
(ii) On 29.05.2018, complainant had deposited two
cheques i.e. cheque No. 46382 dated 03.03.2018 for Rs.
11,36,868.00 and cheque No. 46381 dated 03.03.2018
for Rs. 94,73,900.00, both payable at Vijaya Bank, SSI
Branch, Noida where Assotech Limited had account No.
71320030100505.
(iii) Appellant had lodged the two cheques on the
same day which got reflected in the paying bank on the next
date i.e. 30.05.2018. However, there was a bank strike on
30.05.2018 and 31.05.2018. Therefore, the payee bank
returned the cheques which were shown to the
presenting bank on 01.06.2018 in the evening.
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(iv) On the request of the complainant, the two
cheques were again punched for clearing on 04.06.2018
and uploaded to clearing on 05.06.2018. Since
03.06.2018 was a Sunday, a holiday, tenability of the
cheques had expired on 02.06.2018.
(v) Denying any loss to the complainant, appellant
stated that complainant could recover the cheque
amounts from the drawer of the cheques in case there was
a legally recoverable debt. Appellant denied any negligence
or deficiency of service on its part. When the banks were on
strike on 30.05.2018 and 31.05.2018, appellant cannot be
held liable for any damage or loss to the respondent.
16.1. In the circumstances, appellant sought for
dismissal of the complaint and to hold that appellant bank was
not liable for any deficiency in service the complainant.
qua
17. Respondent filed rejoinder to the reply of the
appellant. Respondent pointed out that cheques were presented
for clearing on 29.05.2018. After the cheques were returned, on
instructions, one cheque for the amount of Rs. 94,73,900.00
was sent for clearing only on 04.06.2018 whereas the other
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cheque was presented for clearing on 08.06.2018. Appellant
was fully aware of the fact that the cheques were due for
expiration but still neglected to send the two cheques for
clearance in proper time.
18. The complaint was adjudicated by the
Commission. Vide the impugned judgment and order dated
24.09.2024, the Commission allowed the complaint by holding
that there was deficiency in service on the part of the appellant
and directing the appellant bank to pay 10 percent of the total
amount of Rs. 1,06,10,768.00 to the complainant alongwith
interest at the rate of 8 percent per annum from the date of
filing of the complaint within two months. In addition, litigation
costs of Rs. 50,000.00 in favour of the complainant (respondent
herein) was also awarded. Commission clarified that any delay in
making the aforesaid payments by the appellant would result in
enhanced interest at the rate of 10 percent per annum till the
date of final realization.
19. Aggrieved thereby, the two related civil appeals
came to be filed by the appellant.
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20. On 14.02.2025, this Court had issued notice both
on the civil appeals as well as on the interim prayer. Finally,
the two civil appeals were heard on 20.02.2026.
21. Learned counsel for the appellant at the outset
has referred to Section 75A of the Negotiable Instruments Act,
1881 which says that the delay in the presentment for
acceptance or payment of a cheque would be excused if such
delay is caused by circumstances beyond the control of the
holder of the cheque and not imputable to his default,
misconduct and negligence; though the section provides that as
soon as the cause of delay ceases to operate, presentment
should be made within a reasonable time. Insofar as the present
case is concerned, the delay in presentment of the cheques was
caused because of the strike in the bank which was beyond the
control of the appellant. There was no default or negligence on
the part of the appellant. In such a case, Section 75A of the
Negotiable Instruments Act, 1881 would be attracted.
Commission has completely overlooked the mandate of Section
75A while passing the impugned judgment and order.
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21.1. Learned counsel for the appellant thereafter has
narrated the factual background of the case in detail and
submits that appellant would be liable only in the event of default,
misconduct or negligence. There was no default, misconduct or
negligence on the part of the appellant. While the cheques could
not be presented for clearing immediately because of the strike
in the bank, those were presented thereafter within the
prescribed timeline.
21.2. Learned counsel has referred to Section 105 of
the Negotiable Instruments Act, 1881 to explain the concept of
‘reasonable time’ as defined in the said Act. As per Section 105,
to determine what could be a reasonable time for presentment of a cheque
for acceptance for payment, for giving notice of dishonour etc., regard shall
be had to the nature of the instrument and the usual course of dealing
with respect to similar instruments; while calculating such time,
public holiday shall be excluded. Thus, learned counsel submits
that respondent had failed to make out any case to show that the
appellant did not take the requisite steps within ‘reasonable
time’ because of which actual loss was caused to her for which
she was entitled to compensation from the appellant.
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21.3. Learned counsel submits that it is evident from the
record that the cheques were re-presented for clearing on
02.06.2018. Therefore, the view taken by the Commission that
those should have been forwarded on the very same date, is
beyond the mandate of law and established banking practice.
Appellant cannot be fastened with any liability in the absence
of any lapse or wrongdoing.
21.4. Learned counsel has also referred to and relied
upon the RBI Master Circular dated 04.11.2011 which says
that cheques presented beyond validity period are liable to be
rejected.
21.5. Regarding the quantum of compensation, learned
counsel has placed reliance on Section 73 of the Indian
Contract Act, 1872 to contend that the compensation awarded
is much beyond reasonable compensation. The impugned
judgment and order do not discuss any parameters or
precedent for arriving at the awarded amount determined as
reasonable compensation. In these circumstances, it is submitted
that Commission has awarded compensation to the respondent on mere
surmises and conjectures.
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21.6. In this connection, it is submitted that the issuer of
the cheques, M/s. Assotech Limited, was already under
liquidation on the date of presentation of the cheques. Thus, there
could not have been any recovery outside the liquidation
mechanism as provided under the Insolvency and Bankruptcy
Code, 2016.
21.7. That being the position, learned counsel for the appellant
submits that there was no merit in the complaint lodged by the
respondent against the appellant. Commission has fallen in grave error in
allowing the complaint by awarding compensation to the respondent and
against the appellant. Therefore, the impugned judgment and order is
liable to be set aside and the complaint dismissed.
22. Per contra , learned counsel for the respondent
submits that there is no error or infirmity in the impugned
judgment and order and, therefore, no interference is called for.
22.1. Referring to the facts of the case, learned counsel
submits that on 29.05.2018, respondent had deposited the two
CTS cheques, both dated 03.03.2018, amounting to Rs.
1,06,10,768.00, in total, into her savings bank account with the
appellant in its Maharani Bagh (Ashram Chowk) Branch, New
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Delhi within the validity period. Those cheques were presented
for clearing on the same day i.e. 29.05.2018.
22.2. Having failed to elicit any response as to the fate
of the two cheques, respondent took recourse to the provisions
of the Right to Information Act, 2005. Only in terms of the
directions issued by the Information Commissioner, Central
Information Commission in the second appeal, appellant
furnished to the respondent the cheque return memos which
showed that the cheques were returned on 30.05.2018 for the
reason ‘bank on strike’.
22.3. Though the cheques were returned on
30.05.2018, appellant made a false statement that the cheques
were returned on the evening of 01.06.2018. Since the cheques
were returned on 30.05.2018, appellant should have presented
the cheques again on the date of opening of the bank after the
strike i.e. on 01.06.2018. In this connection, learned counsel for
the respondent has placed reliance on a circular dated 07.05.2013
of the Reserve Bank of India which says that if the cheques are
returned for technical reasons, those should be re-presented in
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the next immediate clearing not later than 24 hours without
having recourse to the payee.
22.4. Moreover, physical presentation of cheques for
clearing has been done away with. Now the cheques are presented
digitally. Since the appellant had already captured the relevant
data from the cheques on 29.05.2018 and had uploaded the
same on its computer, it only needed to punch a few keys on its
computer to re-present it.
22.5. Since the company Assotech Limited which had
issued the two cheques in favour of the respondent is under
liquidation, proceedings under Section 138 of the Negotiable
Instruments Act, 1881 were the only remedy available to the
respondent for realisation of the cheque amount. But the
respondent has been deprived of the said remedy due to the
negligent conduct of the appellant.
22.6. In these circumstances, the Commission has
rightly held that there was deficiency of service on the part of
the appellant for which respondent had suffered loss of the cheque
amount. Therefore, Commission has rightly awarded
compensation against the appellant to be paid to the respondent.
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He submits that there is no merit in the two appeals. As such,
the appeals should be dismissed.
23. Submissions made by learned counsel for the
parties have received the due consideration of the Court.
24. Though we have already narrated the facts, it
would be apposite to see as to how the Commission dealt with
the same. Commission noted that it found discrepancies
regarding the date of stamping on the back of the cheques by
the appellant. To clarify such discrepancies, appellant was
directed to file an affidavit. In the compliance affidavit,
appellant stated in para 5 that the cheques were returned on
the evening of 01.06.2018. Commission found that this
statement contradicted the return memo dated 30.05.2018.
Though this statement was incorrect, Commission proceeded
on the basis that the cheques were returned on the evening of
01.06.2018; appellant had not provided any specific reason for such
return, like insufficient funds, signature mismatch etc., despite the bank
being open that day i.e. 01.06.2018. This part of the impugned judgment
is extracted hereunder:
11. During the course of hearing on 07.02.2023, this
Commission noted discrepancies regarding the date of
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stamping on the back of the cheques by the Opposite
Party and directed its clarification on affidavit. On
13.03.2023, the Opposite Party filed an affidavit in
compliance with this Commission's order. In paragraph
5, the Opposite Party stated under oath that the cheques
were returned on the evening of 01.06.2018, which
contradicts the Return Memo dated 30.05.2018. This
false statement made under oath warrants penalization;
that even assuming, for argument's sake, that the
cheques were returned on the evening of 01.06.2018,
the Opposite Party has not provided a specific reason for
this return, such as, insufficient funds, a signature
mismatch, or outdated cheques, despite the Bank being
open that day. The issuer of the cheque, Assotech Ltd., had
issued post-dated cheques to secure the repayment of money
borrowed from the complainants.

24.1. After recording so, the Commission further
examined the compliance affidavit filed by the appellant and
highlighted the material statements in the said affidavit as
under:
6. That again on the request of the complainant, these
cheques were punched for clearing on 04.06.2018 after
cheque being returned on 01.06.2018.
7. That any stamp to the contrary may have been
put inadvertently on 04.06.2018.
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8. That it is also a matter of record that even if the
cheques were scanned and sent to paying Bank by OP
on 02.06.2016, the same could have been presented to
the Paying Bank only on 04.06.2018 as 03.06.2018 was
Sunday. The validity of the cheque was only till
02.06.2018 by which date, the said cheque could not
have been honoured by the Payer Bank. Thus even then
the cheques on being scanned and sent on 02.06.2018,
would have returned as stale.

24.2. After extracting the material statements as above,
Commission posed a question to itself as to whether the
clearing report was received by the appellant in the late hours
of 01.06.2018 and if that is so, why the cheques were not
submitted again on 02.06.2018 which was a working day?
Commission found that there was no satisfactory explanation
for this, further noting that a fresh affidavit was filed by the
manager of the appellant Ms. Supriya Dogra on 04.04.2024 in
purported compliance of the order of the Commission dated
07.02.2023 notwithstanding the fact that already an affidavit
was filed. On a careful reading of the entire written statement
and the affidavits filed, Commission noted that there was no
explanation by the appellant as to why the cheques were not
re-forwarded/endorsed to the payee bank on 02.06.2018 which
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was a working day. Rather in a subtle way, the blame was
sought to be shifted to the complainant by saying that the
cheques in question were re-forwarded to the payee bank on
her instructions on 04.06.2018 and 08.06.2018 though the
same is not supported by the record. Strangely enough during
the oral hearing, a submission was made that because of a
technical failure, on 02.06.2018, the cheques could not be
endorsed to the payee bank. Commission rejected this
submission as it was beyond the pleadings and contrary to the
statements already on record. The Commission held as under:
16. From a careful reading of the entire written
statement, the affidavit in evidence filed by the earlier
Manager Ms. Richa Amrita and the two affidavits filed by
the subsequent Manager Ms. Supriya Dogra it is seen
that no explanation whatsoever has been forthcoming
from the side of the Opposite Party as to why the
cheques in question were not re-forwarded/endorsed to
the payee Bank on 02.06.2018 which was a working
day. In this regard, in a rather disguised manner, the
blame has been sought to be passed on to the
complainant herself by contending that the cheques in
question were re-forwarded to the payee Bank on her
instructions on 04.06.2018 and 08.06.2018, which is
not at all a convincing excuse as there is nothing on
record to show that any of the complainants had given
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any such instructions. To top it at all, it is remarkable
that no written synopsis/arguments have been filed at
all on behalf of the Opposite Party in both these
complaints in spite of clear directions to do so. But at
the stage of final hearing, learned counsel for Opposite
Party orally raised a contention that it was the incidence
of a ‘technical failure’ on 02.06.2018 on account of
which the cheques could not be endorsed to the payee
Bank. But this oral submission is palpably beyond the
own pleadings of the Opposite Party, and even the
statements made by its Managers in their three
affidavits on record. The learned counsel for Opposite
Party, however, in seeking to substantiate this
contention regarding 'technical failure' sought to draw
attention to document No. 4 filed along with the second
affidavit of Ms. Supriya Dogra which contains a list of
some of 55 cheques with the stamp of 02.06.2018,
which were ‘not cleared due to technical issue’. But as
already noted earlier, this contention is palpably beyond
the pleadings and no reference to such technical failure
whatsoever was made even in the affidavit dated
04.04.2024 along with which this particular document
had been filed.

24.3. On the aforesaid basis, Commission concluded that there
was manifest deficiency in service on the part of the appellant in dealing
with the cheques delivered by the complainant which could not be
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encashed as the same had become stale by the date on which
those were passed on to the payee bank.
25. After holding that there was deficiency of service on the
part of the appellant, Commission went on to hold that respondent would
be entitled to a reasonable compensation on account of such deficiency in
service.
25.1. According to the Commission, had the cheques
been endorsed to the payee bank on 02.06.2018, the payee
bank would have become liable to compensate the complainant
instead of the appellant but the fact that the cheques were not
endorsed at all to the payee bank on 02.06.2018 rendered the
appellant liable for the consequences. Dealing with the
contention of the appellant that the drawer of the bank i.e. M/s.
Assotech Limited was a company under liquidation and,
therefore, no withdrawal from its account would be possible,
Commission held that even if a company is under liquidation,
Directors of the company would continue to be liable in the
event of the cheques being dishonoured due to insufficiency of funds.
Thus, the valuable rights of the complainant to initiate proceedings under
Section 138 of the Negotiable Instruments Act against the Directors of the
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drawer company got extinguished because of deficiency on the part of the
appellant. Having noted the same, Commission was however of the view
that what would be the final outcome of such a proceeding if initiated by
the complainant would be difficult to hazard. In such circumstances, a
token compensation of an amount assessed at the rate of 10 percent of
the face value of the cheques would be a reasonable amount of
compensation. Accordingly, the complaints were allowed in the following
manner:
22. The complaints are, therefore, allowed with a
direction upon Opposite Party/Bank to pay 10% of the
total amount of Rs. 1,06,10,768/- .(Rs. One Crore Six
Lacs Ten Thousand Seven Hundred Sixty Eight) to each
of the complainants along with interest, @ 8% p.a. from
the date of filing these complaints within two months
from the date of this Order. In addition, litigation costs
assessed at Rs. 50,000/- in favour of each of the two
complainants are also awarded to them. Any delay in
making the aforesaid payments by the Opposite Party
shall result in enhanced interest @ 10% p.a. till the
date of final realization.

26. From the above, what is noticeable is that there
are two issues here. First, the correctness or otherwise of the
finding of the Commission that there was deficiency in service
on the part of the appellant. Second, which is a corollary to the
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first issue, is whether the compensation awarded is reasonable
or excessive.
27. Before we deal with these two issues, it would be
appropriate to briefly refer to the relevant statutory provisions.
28. First, we deal with the Negotiable Instruments
Act, 1881 (for short ‘the NI Act’ hereinafter).
29. NI Act is an Act to define and amend the law
relating to promissory notes, bills of exchange and cheques. As
per Section 6, a ‘cheque’ is a ‘bill of exchange’ drawn on a
specified banker and not expressed to be payable otherwise
than on demand and it includes the electronic image of a
truncated cheque and a cheque in the electronic form. We may
mention herein that ‘bill of exchange’ is a defined expression. It
is defined in Section 5 which says that a ‘bill of exchange’ is an
instrument in writing containing an unconditional order,
signed by the maker, directing a certain person to pay a certain
sum of money only to, or to the order of, a certain person or to
the bearer of the instrument.
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29.1. As per Section 7, the maker of a ‘bill of exchange’
or cheque is called the ‘drawer’; and the person thereby directed
to pay is called the ‘drawee’.
30. Section 25 says that when the day on which a
‘promissory note’ or ‘bill of exchange’ is at maturity is a public
holiday, the instrument shall be deemed to be due on the next
preceding business day. As per the Explanation, the expression
‘public holiday’ would include a Sunday. A ‘promissory note’ is
again a defined expression in terms of Section 4 which means
an instrument in writing (not being a bank-note or a currency
note) containing an unconditional undertaking signed by the
maker, to pay a certain sum of money only to, or to the order
of, a certain person, or to the bearer of the instrument.
31. Liability of a drawer is provided for in Section 30
of the NI Act. It says that the drawer of a ‘bill of exchange’ or
cheque is bound in case of dishonour by the drawee or acceptor
thereof, to compensate the holder, provided due notice of
dishonour has been given to, or received by the drawer as
provided in the NI Act.
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32. Section 64 deals with presentment for payment.
As per sub-section (1), promissory notes, bills of exchange and
cheques must be presented for payment to the maker, acceptor
or drawee thereof respectively, by or on behalf of the holder as
provided in the NI Act. In default of such presentment, the other
parties thereto are not liable thereon to such holder.
32.1. Section 72 deals with presentment of cheque to
charge drawer. This provision is subject to Section 84 which
deals with a situation when a cheque is not duly presented and
the drawer is damaged thereby. What Section 72 says is that,
subject to Section 84, a cheque must, in order to charge the
drawer, be presented at the bank upon which it is drawn before
the relation between the drawer and his banker has been
altered to the prejudice of the drawer.
33. On the other hand, Section 75A deals with excuse
for delay in presentment for acceptance or payment. This
section says that delay in presentment for acceptance or
payment is excused if the delay is caused by circumstances
beyond the control of the holder and not imputable to his
default, misconduct or negligence. However, as and when the
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cause of delay ceases to operate, presentment must be made
within a reasonable time.
34. Section 84 of the NI Act deals with a situation
when a cheque is not duly presented and the drawer suffers
damage thereby. As per sub-section (1), where a cheque is not
presented for payment within a reasonable time of its issue and
the drawer or person on whose account it is drawn had the
right, at the time when presentment ought to have been made,
as between himself and the banker, to have the cheque paid
and suffers actual damage through the delay, he is discharged
to the extent of such damage, that is to say, to the extent to
which such drawer or person is a creditor of the banker to a
large amount than he would have been if such cheque had been
paid.
34.1. What is a reasonable time is dealt with in sub-
section (2) of Section 84 thereof which says that in determining
what is a reasonable time, regard shall be had to the nature of
the instrument, the usage of trade and of bankers, and the facts
of the particular case.
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35. As per Section 85(1), where a cheque payable to
order purports to be endorsed by or on behalf of the payee, the
drawee is discharged by payment in due course. Be it stated
that as per Section 15, when the maker or holder of a negotiable
instrument signs the same, otherwise than as such maker, for
the purpose of negotiation, on the back or face thereof or on a
slip of paper annexed thereto, or signs for the same purpose, a
stamped paper intended to be completed as a negotiable
instrument, he is said to endorse the same and is called the
‘endorser’. We may also mention that in terms of Section 14,
when a ‘promissory note’, ‘bill of exchange’ or cheque is
transferred to any person, so as to constitute the person the
holder thereof, the instrument is said to be negotiated.
36. Reasonable time is provided for in Section 105 which says
that in determining what is a reasonable time for presentment for
acceptance or payment, for giving notice of dishonour and for
noting, regard shall be had to the nature of the instrument and
the usual course of dealing with respect to similar instruments;
and in calculating such time, public holidays shall be excluded.
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37. This brings us to Section 138 of the NI Act which
deals with dishonour of a cheque for insufficiency of funds etc
in the account of the drawer. This section provides for the
procedure to be followed for prosecuting the drawer of a cheque
in the event of dishonour of cheque for insufficiency of funds
etc in its account. While the procedure may not be relevant
insofar as the present case is concerned, the proviso is
important. As per proviso (a), the cheque has to be presented to
the bank within a period of three months from the date on
which it is drawn or within the period of its validity, whichever
is earlier.
38. We may now turn to a few of the provisions
contained in the Consumer Protection Act, 1986, as well as in
the Consumer Protection Act, 2019.
39. In spite of various provisions providing protection to the
consumer and providing for stringent action against adulterated and sub-
standard articles in different enactments like the Code of Civil
Procedure, 1908, the Indian Contract Act, 1872 and the Sale of
Goods Act, 1930, etc., very little could be achieved in the field
of consumer protection. In order to provide for better protection
28

of the interest of the consumers and for that purpose to make
provision for the establishment of various authorities for the
settlement of consumer disputes etc., the Consumer Protection
Act, 1986 came to be enacted. What would be of immediate
relevance to us is the definition of ‘service’ and ‘deficiency’.
Though ‘deficiency’ is placed ahead of ‘service’ in the
expressions used in the Consumer Protection Act, 1986 and
defined, it would be appropriate however to first examine the
definition of ‘service’.
40. As per Section 2(o), ‘service’ means service of any
description which is made available to potential users and
includes but not limited to the provision of facilities in
connection with banking, financing, insurance, transport,
processing, supply of electrical or other energy, boarding or
lodging or both, housing construction, entertainment,
amusement or the purveying of news or other information but
does not include the rendering of any service free of charge or
under a contract of personal service.
41. The expression ‘deficiency’ has been defined in
Section 2(g) to mean any fault, imperfection, shortcoming or
29

inadequacy in the quality, nature and manner of performance
which is required to be maintained by or under any law for the
time being in force or has been undertaken to be performed by
a person in pursuance of a contract or otherwise in relation to
any service.
42. While administering the Consumer Protection
Act, 1986 over the years, many shortcomings came to be
noticed. Therefore, a new Consumer Protection Act, 2019 came
to be enacted incorporating, inter alia , many innovative features
while addressing the shortcomings of the previous enactment.
43. Again, confining to the definitions of ‘service’ and
‘deficiency’, we find that in Section 2(42), ‘service’ has been
defined to mean service of any description which is made
available to potential users and includes, but is not limited to,
the provision of facilities in connection with banking, financing,
insurance, transport, processing, supply of electrical or other
energy, telecom, boarding or lodging or both, housing
construction, entertainment, amusement or the purveying of
news or other information but does not include the rendering
30

of any service free of charge or under a contract of personal
service.
43.1. From a comparison of the definition of ‘service’ in the
previous Consumer Protection Act, 1986 and the present Consumer
Protection Act, 2019, we find that the definition of ‘service’ has been
retained; however, in the present Act, it has been made more specific by
including facilities in connection with telecom.
44. Section 2(11) defines ‘deficiency’ to mean any
fault, imperfection, shortcoming or inadequacy in the quality,
nature and manner of performance which is required to be
maintained by or under any law for the time being in force or
has been undertaken to be performed by a person in pursuance
of a contract or otherwise in relation to any service and
includes:
i. any act of negligence or omission or commission by
such person which causes loss or injury to the consumer;
and
ii. deliberate withholding of relevant information by such
person to the consumer.
31

44.1. Thus, the definition of the expression ‘deficiency’
in the Consumer Protection Act, 2019 has been made more
specific. While retaining the broad elements constituting
deficiency, fault, imperfection, shortcoming or inadequacy in
the quality, nature and manner of performance required to be
maintained or undertaken under a statute or a contract in
relation to a service as provided in the previous enactment, the
definition of ‘deficiency’ has been made more inclusive by
confining such fault, imperfection etc. to any act of negligence
or omission or commission by such person which causes loss
or injury to the consumer; and including deliberate withholding
of relevant information by such person from the consumer.
45. Let us also deal with Section 73 of the Indian Contract Act,
1872. It has got two parts. The first part deals with compensation for
loss or damage caused by breach of contract. As per the first
part, when a contract has been broken, the party who suffers
by such breach is entitled to receive, from the party who has
broken the contract, compensation for any loss or damage
caused to him thereby, which naturally arose in the usual
course of things from such breach, or which the parties knew,
when they made the contract, to be likely to result from the
32

breach of it. However, by way of clarification, it is stated that
such compensation is not to be given for any remote or indirect
loss or damage sustained by reason of the breach.
45.1. The second part of Section 73 provides for compensation
for failure to discharge obligation resembling those created by contract. It
says, when an obligation resembling those created by contract
has been incurred and has not been discharged, any person
injured by the failure to discharge it is entitled to receive the
same compensation from the party in default as if such person
had contracted to discharge it and had broken his contract.
45.2. The Explanation to Section 73 clarifies that in estimating
the loss or damage arising from a breach of contract, the means
which existed of remedying the inconvenience caused by the
non-performance of the contract must be taken into account.
46. The scope and ambit of the definition of ‘service’
as defined under the Consumer Protection Act, 1986 was
examined by this Court in Lucknow Development Authority Vs.
1
M.K. Gupta . After extracting the definition, it was observed that
the definition is in three parts; the main part is followed by

1
(1994) 1 SCC 243
33

inclusive clause and ends by exclusionary clause. This Court
opined that the main clause is itself very wide. It applies to any
service made available to potential users. The words ‘any’ and
‘potential’ are significant. Both are of wide amplitude. After
referring to the dictionary meaning of the word ‘any’ which
means one or some or all, it has been opined that the use of the
word ‘any’ in the context in which it has been used in clause (o)
indicates that it has been used in a wider sense extending from
one to all. Similarly, the word ‘potential’ is also very wide; the
dictionary meaning being ‘capable of coming into being,
possibility’. In other words, service which is not only extended
to actual users but those who are capable of using it are covered
in the definition. The clause is thus very wide and extends to
all or any actual or potential users. The statute has expanded
the meaning of the word ‘further’ by extending it to consumer
in connection with banking, financing etc.
46.1. On the question as to whether the statutory or
public authorities are amenable to jurisdiction under the
Consumer Protection Act, 1986, this Court observed that in the
absence of any indication, express or implied, there is no reason
to hold that authorities created by the statute are beyond the
34

purview of the Consumer Protection Act. A nationalised bank
renders as much service as a private bank. The legislative
intention is thus clear: to protect a consumer against services
rendered even by statutory bodies. The Bench concluded that a
government or a semi-government body or a legal authority is
as much amenable to the Consumer Protection Act as any other
private body rendering similar service. The test is not if a person
against whom the complaint is made is a statutory body but
whether the nature of the duty and function performed by it is
a service.
46.2. Proceeding further, this Court held that a
consumer forum is entitled to award not only the value of the
goods or services but also to compensate the consumer for the
injustice suffered by him. Compensation includes both the just
equivalent for loss of goods or services and also for sufferance
of injustice. When a citizen seeks to recover compensation from
a public authority in respect of injuries suffered by him for
capricious exercise of power and the consumer forum finds it
duly proved, then it has a statutory obligation to award
compensation.
35

47. In Managing Director, Maharashtra State
2
Financial Corporation Vs. Sanjay Shankarsa Mamarde , the
question which arose for consideration was whether the
Commission was correct in holding that there was deficiency in
service provided by the Maharashtra State Financial
Corporation to the complainant on account of their failure to
release the balance loan amount? After adverting to the
definition of ‘service’ in the Consumer Protection Act, 1986, this
Court held as follows:
18. The use of the words “any” and “potential” in the context these have
been used in clause ( o ) indicates that the width of the clause is very wide
and extends to any or all actual or potential users. The legislature has
expanded the meaning of the word further by extending it to every such
facilities as are available to a consumer in connection with banking,
financing, etc. Undoubtedly, when the bank or financial institutions
advance loans, they do render “service” within the meaning of the clause.
In that behalf, there is no dispute.

47.1. This Court held that the width of the words ‘any’
and ‘potential’ were very wide and the definition of ‘service’
extends to all or any actual or potential users. The legislature
has expanded the meaning of the word ‘service’ by extending it

2
(2010) 7 SCC 489
36

to every such facility as are available to a consumer in
connection with banking, financing etc.
47.2. After adverting to the definition of ‘deficiency’ in
clause (g) of Section 2(1) of the Consumer Protection Act, 1986,
this Court observed that the scope of the clause is also very
wide but there is no single decisive test to determine the extent
of fault, imperfection, nature and manner of performance etc.
required to be maintained. It must depend on the facts of a
particular case. Having regard to the nature of the ‘service’
provided or to be provided, this Court held thus:
20. It is manifest from the language employed in the clause
that its scope is also very wide but no single test as decisive
in the determination of the extent of fault, imperfection,
nature and manner of performance, etc. required to be
maintained can be laid down. It must depend on the facts of
the particular case, having regard to the nature of the
“service” to be provided. Therefore, insofar as the present case
is concerned, in order to examine whether there was a
deficiency in service by the Corporation, it has to be seen if
there was any inadequacy in the quality, nature and manner
of performance which was required to be maintained by the
Corporation in terms of their letter dated 2-7-1992, conveying
the sanction of loan to the complainant.
37

3
48. This Court in Arun Bhatia Vs. HDFC Bank again
examined the definition of ‘deficiency’ in terms of the Consumer
Protection Act, 1986. Referring to the earlier decision in Sanjay
Shankarsa Mamarde , this Court observed that the scope of
‘deficiency’ as defined under Section 2(1)(g) of the Consumer
Protection Act, 1986 is wide and has to be determined on the
basis of the facts and circumstances of a particular case.
48.1. After referring to the definition of ‘service’ in the
said enactment, this Court observed that service of every
description will fall within the ambit of the definition of
‘services’ under Section 2(1)(o) of the Consumer Protection Act,
1986.
49. A three-Judge Bench of this Court in Chief Administrator,
4
Haryana Urban Development Authority Vs. Shakuntla Devi has held that
the for entitlement of compensation is proof of loss or injury
sine qua non
suffered by the consumer due to the negligence of the opposite party. Once
the said conditions are satisfied, the consumer forum would have to
decide the quantum of compensation to which the consumer is entitled.

3
(2022) 17 SCC 229
4
(2017) 2 SCC 301
38

The computation of compensation has to be fair, reasonable and
commensurate to the loss or injury. This Court held thus:
13. The sine qua non for entitlement of compensation is proof
of loss or injury suffered by the consumer due to the
negligence of the opposite party. Once the said conditions are
satisfied, the Consumer Forum would have to decide the
quantum of compensation to which the consumer is entitled.
There cannot be any dispute that the computation of
compensation has to be fair, reasonable and commensurate
to the loss or injury. There is a duty cast on the Consumer
Forum to take into account all relevant factors for arriving at
the compensation to be paid.
49.1. Referring to an earlier decision of this Court in
5
Charan Singh Vs. Healing Touch Hospital , this Court observed
that calculation of damages depends on the facts and
circumstances of each case; no hard and fast rule can be laid
down for universal application; while awarding compensation,
a consumer forum has to take into account all relevant factors
and assess compensation on the basis of accepted legal
principles on moderation. The compensation has to be
reasonable, fair and proper in the facts and circumstances of a

5
(2000) 7 SCC 668
39

given case according to the established judicial standards
where the claimant is able to establish his charge.
50. Now turning to the NI Act, more particularly,
Section 138 thereof, a three-Judge Bench of this Court in MSR
6
Leathers Vs. S. Palaniappan held thus:
12. The proviso to Section 138, however, is all important and
stipulates three distinct conditions precedent, which must be
satisfied before the dishonour of a cheque can constitute an
offence and become punishable. The first condition is that the
cheque ought to have been presented to the bank within a
period of six months from the date on which it is drawn or
within the period of its validity, whichever is earlier.
The second condition is that the payee or the holder in due
course of the cheque, as the case may be, ought to make a
demand for the payment of the said amount of money by
giving a notice in writing, to the drawer of the cheque, within
thirty days of the receipt of information by him from the bank
regarding the return of the cheque as unpaid. The third
condition is that the drawer of such a cheque should have
failed to make payment of the said amount of money to the
payee or as the case may be, to the holder in due course of
the cheque within fifteen days of the receipt of the said notice.
It is only upon the satisfaction of all the three conditions
mentioned above and enumerated under the proviso to
Section 138 as clauses ( a ), ( b ) and ( c ) thereof that an offence

6
(2013) 1 SCC 177
40

under Section 138 can be said to have been committed by the
person issuing the cheque.
50.1. After referring to Section 138 and Section 142 of
the NI Act, this Court observed that the aforesaid sections do
not forbid the holder or payee of the cheque from presenting the
cheque for encashment on any number of occasions within a
period of six months of its issue or within the validity period of
the cheque, whichever is earlier. The holder or the payee of the
cheque has the right to present the same any number of times
for encashment during the period of its validity.
50.2. This Court explained that presentation of the
cheque and dishonour thereof within the period of its validity is
just one of the three requirements that constitute the ‘cause of
action’ within the meaning of Sections 138 and 142(b) of the NI
Act. For a dishonour to culminate into the commission of an
offence of which a court may take cognizance, two other
requirements should be fulfilled. This Court explained thus:
16. The presentation of the cheque and dishonour thereof
within the period of its validity or a period of six months is
just one of the three requirements that constitutes “cause of
action” within the meaning of Sections 138 and 142( b ) of the
Act, an expression that is more commonly used in civil law
41

than in penal statutes. For a dishonour to culminate into the
commission of an offence of which a court may take
cognizance, there are two other requirements, namely, ( a )
service of a notice upon the drawer of the cheque to make
payment of the amount covered by the cheque, and ( b ) failure
of the drawer to make any such payment within the stipulated
period of 15 days of the receipt of such a notice. It is only
when the said two conditions are superadded to the
dishonour of the cheque that the holder/payee of the cheque
acquires the right to institute proceedings for prosecution
under Section 138 of the Act, which right remains legally
enforceable for a period of 30 days counted from the date on
which the cause of action accrued to him………….

51. A three-Judge Bench of this Court in Ajay Kumar
Radheyshyam Goenka Vs. Tourism Finance Corporation of India
7
Limited was concerned with the issue as to whether during
the pendency of the proceedings under the Insolvency and
Bankruptcy Code, which have been admitted, proceedings
under the NI Act can continue simultaneously or not. The three-
Judge Bench answered this question in the following manner:
17. We have no hesitation in coming to the conclusion that
the scope of nature of proceedings under the two Acts is quite
different and would not intercede each other. In fact, a bare

7
(2023) 10 SCC 545
42

reading of Section 14 IBC would make it clear that the nature
of proceedings which have to be kept in abeyance do not
include criminal proceedings, which is the nature of
proceedings under Section 138 of the NI Act. We are unable
to appreciate the plea of the learned counsel for the appellant
that because Section 138 of the NI Act proceedings arise from
a default in financial debt, the proceedings under Section 138
should be taken as akin to civil proceedings rather than
criminal proceedings. We cannot lose sight of the fact that
Section 138 of the NI Act are not recovery proceedings. They
are penal in character. A person may face imprisonment or
fine or both under Section 138 of the NI Act. It is not a
recovery of the amount with interest as a debt recovery
proceedings would be. They are not akin to suit proceedings.
18. It cannot be said that the process under IBC whether
under Section 31 or Sections 38 to 41 which can extinguish
the debt would ipso facto apply to the extinguishment of the
criminal proceedings. No doubt in terms of the scheme under
IBC there are sacrifices to be made by parties to settle the
debts, the company being liquidated or revitalised. The
appellant before us has been roped in as a signatory of the
cheque as well as the Promoter and Managing Director of the
accused Company, which availed of the loan. The loan
agreement was also signed by him on behalf of the Company.
What the appellant seeks is escape out of criminal liability
having defaulted in payment of the amount at a very early
stage of the loan. In fact, the loan account itself was closed.
So much for the bona fides of the appellant.
43

19. We are unable to accept the plea that if proceedings
against the Company come to an end then the appellant as
the Managing Director cannot be proceeded against. We are
unable to accept the plea that Section 138 of the NI Act
proceedings are primarily compensatory in nature and that
the punitive element is incorporated only at enforcing the
compensatory proceedings. The criminal liability and the
fines are built on the principle of not honouring a negotiable
instrument, which affects trade. This is apart from the
principle of financial liability per se. To say that under a
scheme which may be approved, a part amount will be
recovered or if there is no scheme a person may stand in a
queue to recover debt would absolve the consequences under
Section 138 of the NI Act, is unacceptable.
52. Explaining the position from a different
perspective, a two-Judge Bench of this Court in Vishnoo Mittal
8
Vs. M/s Shakti Trading Company , observed that a return of
cheque dishonoured simpliciter does not create an offence
under Section 138 of the NI Act. The ‘cause of action’ would
arise only when the demand notice is served and payment is
not made pursuant to such demand notice within the
stipulated fifteen day period. In other words, the ‘cause of
action’ arises only when the amount remains unpaid even after

8
(2025) 9 SCC 417
44

the expiry of 15 days from the date of receipt of the demand
notice.
52.1. After adverting to Section 17 of the Insolvency
and Bankruptcy Code, the Bench observed that once the
Interim Resolution Professional is appointed, the powers vested
with the Board of Directors of the company facing insolvency
were to be exercised by the Interim Resolution Professional in
accordance with the provisions of the Insolvency and
Bankruptcy Code.
53. This Court in Consolidated Construction
9
Consortium Limited Vs. Software Technology Parks of India ,
examined Section 73 of the Indian Contract Act, 1872
conjointly with Sections 55 and 74 thereof and held that in a
contract whether time is of the essence or not, if the contractor
fails to execute the contract within the specified time, the
contract becomes voidable at the option of the promisee and the
promisee would be entitled to compensation from the promisor
for any loss occasioned to him by such failure. However, in case
of a contract where time is of the essence, the contract become

9
2025 INSC 574
45

voidable on account of the contractor’s failure to execute the
contract within the agreed time. The promisee cannot claim
compensation for any loss occasioned by such breach of the
contract unless he gives notice to the promisor of his intention
to claim compensation. This is made more specific in Section
73. Section 74 on the other hand contemplates a situation
where penalty is provided for and quantified as compensation
for breach of contract. In such a case, the party complaining of
the breach is entitled to compensation whether or not actual
damage or loss is proved to have been caused thereby but such
compensation shall not exceed the quantum of penalty
stipulated.
54. Reverting back to the facts of the present case, we
find that the two cheques in question were dated 03.03.2018,
cheque No. 46382 for Rs. 11,36,868.00 and cheque No. 46381
for Rs. 44,73,900.00. Both the cheques were deposited by the
respondent into her savings bank account bearing No.
0349101015565 in the Maharani Bagh (Ashram Chowk)
Branch of the appellant on 29.05.2018. On the basis of the
directions issued by the Central Information Commission,
appellant furnished to the respondent the cheque return memos
46

which showed that the cheques were returned on 30.05.2018
for the reason ‘bank on strike’. It is true that the employees of
the bank were on strike on 30.05.2018 and 31.05.2018.
Commission noted from the affidavit filed on behalf of the
appellant on 13.03.2023 wherein in paragraph 5, it was stated
that the cheques were returned on the evening of 01.06.2018
which clearly contradicted what was stated in the return memos
dated 30.05.2018. Commission opined that even if for
arguments sake, this contradiction was overlooked and it was
taken that the cheques were returned on the evening of
01.06.2018, then also there is no explanation provided by the
appellant as to why no specific reason was provided for this
return. It may be mentioned that the validity of the cheques was
only till the working hours of 02.06.2018 which was a working
day (03.06.2018 being a holiday on account of Sunday).
Appellant failed to provide any satisfactory explanation as to
why the cheques could not be re-presented before the bank of
the drawer again on 02.06.2018 which was a working day.
However, if we accept the return memos (and there is no reason
why we should not), the cheques were returned on 30.05.2018.
In that event, there were two full working days for the appellant
47

to resubmit the two cheques i.e. on 01.06.2018 and 02.06.2018.
Considering the fact that the validity of the cheques would have
expired by the close of the working hours on 02.06.2018,
appellant was required to resubmit the two cheques on
01.06.2018 or latest by 02.06.2018 which it failed to do.
55. As per Section 64(1) of the NI Act, promissory
notes, bills of exchange and cheques are required to be
presented to the maker, acceptor or drawee thereof respectively
for payment by or on behalf of the holder which would exonerate
the holder from any liability. In other words, in default of such
presentment, the drawer would not be liable. This is explained
more in detail in Section 72 as per which the cheque must, in
order to charge the drawer, be presented at the bank upon
which it is drawn before the relation between the drawer and
his banker has been altered to the prejudice of the drawer.
56. If there is a delay in presentment for acceptance
or payment of the cheque, such a delay would be excused under
Section 75A if it is caused by circumstances beyond the control
of the holder and not imputable to his default, misconduct or
negligence. But the moment the cause of delay ceases to
48

operate, presentment must be made within a reasonable time.
What is a reasonable time for the purpose of presentment for
acceptance or payment of a cheque is provided for in Section
84(2) as well as Section 105 which say that for determining what
is a reasonable time, regard shall be had to the nature of the
instrument, the usage of trade and of bankers and the facts of
the particular case.
57. This Court in Lucknow Development Authority,
Sanjay Shankarsa Mamarde and in Arun Bhatia has held that
the words ‘service’ and ‘deficiency’ have a wide meaning in the
context of the consumer protection law. ‘Service’ which is not
only extended to actual users but to those who are capable of
using it are covered by the definition of ‘service’. It is of a very
wide import and extends to all or any actual or potential users.
‘Service’ rendered by banks, public sector as well as private
sector, is covered by the Consumer Protection Act. The test to
be applied, as has been held by this Court, is whether the
nature of the duty and function performed by an authority is a
service. It does not matter whether that authority is a statutory
one or not. The legislature has expanded the meaning of the
word ‘service’ by extending it to every facility as is available to a
49

consumer in connection with banking. Insofar as ‘deficiency’ is
concerned, while the scope of the expression is also very wide,
there is no single decisive test to determine the extent of fault,
imperfection etc. It all depends on the facts of a particular case.
58. Insofar as the present case is concerned, we have
already noted that there is no explanation at all, not to speak of
any reasonable explanation, as to why the two cheques of the
respondent were not represented by the appellant before the
drawer’s bank on 01.06.2018 and 02.06.2018, knowing fully
well that the validity of the two cheques was only till
02.06.2018.
59. A bank receiving cheques for collection acts as an
agent of the customer and is under an obligation to exercise due
diligence in presenting the instruments within the prescribed
validity period. Failure to do so resulting in the instrument
becoming stale, in the absence of any reasonable explanation,
would result in negligence in the discharge of banking duties
which would constitute deficiency in rendering service within
the meaning of the consumer protection law.
50

60. Moreover, the finding recorded by the
Commission that there was deficiency in service on the part of
the appellant in dealing with the two cheques deposited by the
respondent is a finding of fact based on pleadings and evidence.
Appellant has not been able to demonstrate that such a finding
suffers from any patent error or perversity. We, therefore, see
no good ground to interfere with such a finding of fact.
61. That being the position, we are in agreement with
the view taken by the Commission that there was negligence on
the part of the appellant in presentation of the two cheques of
the respondent within the validity period of the cheques leading
to deficiency in service on the part of the appellant qua the
respondent.
62. Consequently, the first issue framed by us for
consideration as to the correctness or otherwise of the finding
of the Commission that there was deficiency in service on the
part of the appellant is answered in the affirmative and against
the appellant.
63. Having held that there was deficiency in service
on the part of the appellant qua the respondent, the next
51

question is what should be the quantum of compensation that
may be awarded for such deficiency in service. As we have
noticed, Commission has awarded 10 percent of the total
cheque amount of Rs. 1,06,10,768.00 to each of the
complainants alongwith interest at the rate of 8 percent per
annum from the date of filing the complaint within two months
from the date of the impugned order. The question is whether
such compensation awarded is just, fair and reasonable.
64. In Lucknow Development Authority , this Court
has held that a consumer forum is entitled to award
compensation to a consumer who has suffered deficiency in
service, which will be not only for the value of the goods or
services but also to compensate the consumer for the injustice
suffered by him. The compensation awarded would have two
components: just equivalent for loss of goods or services and
for sufferance of injustice. When a consumer forum finds the
claim of deficiency in service duly proved which has led to loss
or injury suffered by a consumer, then it has a statutory
obligation to award compensation.
52

65. This Court in Charan Singh had observed that
calculation of damages depends on the facts and circumstances
of each case; no hard and fast rule can be laid down for
universal application. However, while awarding compensation,
a consumer forum has to take all relevant factors into
consideration and assess the compensation on the basis of
accepted legal principles on moderation. The compensation has
to be reasonable, fair and proper in the given facts and
circumstances of a case by applying the established judicial
standards.
66. The aforesaid decision was referred to with
approval by a three-Judge Bench of this Court in Shakuntla
Devi. However, the Bench held that the sine qua non for
entitlement of compensation is proof of loss or injury suffered
by the consumer due to negligence of the service provider. The
computation of compensation has to be fair, reasonable and
commensurate to the loss or injury.
67. In MSR Leathers , a three-Judge Bench of this
Court categorically held that three distinct conditions must be
satisfied before the dishonour of a cheque can constitute an
53

offence. The first condition is that the cheque ought to have
been presented to the bank within the validity period. Secondly,
the payee or the holder in due course of the cheque ought to
make a demand for payment of the cheque amount by giving a
notice in writing to the drawer of the cheque within 30 days of
the receipt of information by him from the bank regarding
return of the cheque. The third condition is that the drawer of
such a cheque should have failed to make the payment of the
cheque amount to the payee or to the holder of the cheque
within 15 days of the receipt of the said notice. It has been held
that only upon satisfaction of all the above three conditions that
an offence under Section 138 of the NI Act can be said to have
been committed by the person issuing the cheque.
68. This position has been reiterated in Vishnoo Mittal
which says that return of a cheque dishonoured simpliciter
would not by itself create an offence under Section 138 of the
NI Act. The cause of action would arise only when the demand
notice is served and payment is not made pursuant to such
demand notice within the stipulated period.
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69. Insofar as the present case is concerned, the
Commission itself has noted that it is difficult to fathom as to
what would be the outcome of any proceeding that the
respondent may have drawn up against the drawer of the
cheques under Section 138 of the NI Act, though the possibility
of such an action being initiated by the respondent has been
nipped in the bud because of the deficiency in service on the
part of the appellant. Even if the cheques were presented within
time and would have been dishonoured, that would not have
ipso facto led to commission of an offence under Section 138 of
the NI Act. Respondent would have had to complete the other
two conditions before an offence could be said to have been
committed. It is only thereafter that a complaint could have
been filed under Section 138 of the NI Act. Even if a complaint
would have been filed, it would be difficult to foretell with any
degree of certainty the outcome of such a proceeding. All these
are within the realm of imponderability. The Commission has
also accepted this position and opined that only a token
compensation would suffice.
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70. Question is whether 10 percent of the face value
of the cheque amount awarded as token compensation would
constitute reasonable compensation?
71. While the approach adopted by the Commission
cannot be said to be wholly erroneous, in our considered
opinion, the compensation fixed by the Commission appears to
be on the higher side by applying the standard of reasonable
compensation having regard to the peculiar facts of the present
case. 10 percent of the face value of the cheque amount as a
token compensation would not accurately reflect the nature of
the loss suffered by the complainant because the loss itself is
indeterminate despite the finding of deficiency in service.
72. In our view, having regard to the totality of the
facts and circumstances of the case, compensation assessed at
6 percent of the total amount of Rs, 1,06,10,768.00 to each of
the complainants alongwith interest at the rate of 6 percent per
annum from the date of filing the complaints would be a
reasonable compensation and thereby meet the ends of justice.
73. It is ordered accordingly.
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74. Rest of the impugned judgment and order dated
24.09.2024 is not interfered with.
75. With the aforesaid modification of the impugned
judgment and order dated 24.09.2024, the civil appeals are
accordingly disposed of. However, there shall be no order as to
cost.

……………………………J.
[B.V. NAGARATHNA]




……………………………J.
[UJJAL BHUYAN]
NEW DELHI;
APRIL 15, 2026.
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