National Consumer Commission Orders Axis Bank to Compensate Firm for Demonetisation Era Deposit Refusal, Axis Bank directed to pay over Rs. 3.19 crore with interest for non-acceptance of demonetised notes due to service deficiency.
In a significant ruling, the National Consumer Disputes Redressal Commission (NCDRC) has ordered Axis Bank to compensate Procure Logistics Services Private Limited a sum exceeding Rs. 3.19 crore, along with interest, for refusing to accept demonetised currency notes within the statutory period. The case, presided over by AVM Jonnalagadda Rajendra and Justice Anoop Kumar Mendiratta, highlights the obligations of banks to adhere to statutory guidelines during the demonetisation period declared in November 2016.
The complaint filed by Procure Logistics alleged that Axis Bank failed to accept substantial deposits of demonetised Rs. 500 and Rs. 1,000 notes, despite the account being fully KYC compliant. The bank's refusal was purportedly based on an internal policy, which the Commission found contravened the Government of India and RBI's directives, allowing unlimited deposits into KYC-compliant accounts during the demonetisation window.
The NCDRC's judgment focused on several pivotal issues, including whether the company qualified as a 'consumer' under the Consumer Protection Act, 1986, and whether Axis Bank's refusal constituted a deficiency in service. The Commission determined that the transaction in question was not commercial but rather regulatory, intended to comply with the demonetisation policy. Consequently, Procure Logistics was deemed a consumer, eligible to seek redress for service deficiency.
Axis Bank's defense cited enhanced scrutiny under RBI norms and claimed the account was categorized as high-risk. However, the Commission noted that no explicit RBI or governmental directives supported the bank's outright refusal, and the bank's internal policy could not override statutory provisions. The refusal was deemed arbitrary, resulting in the complainant holding worthless currency post the deposit deadline.
Axis Bank is now mandated to pay Rs. 3,19,58,500 with a 6% annual simple interest from December 30, 2016, until final payment. A higher interest rate of 9% per annum will apply if payment is delayed beyond two months from the order date.
The decision underscores the necessity for banks to balance regulatory compliance with the statutory rights of account holders, especially during extraordinary policy measures like demonetisation.
Bottom Line:
Bank's refusal to accept demonetised notes within the statutory timeframe despite account being KYC compliant constitutes deficiency in service under Section 2(1)(g) of Consumer Protection Act, 1986.
Statutory provision(s): Consumer Protection Act, 1986 - Sections 2(1)(d), 2(1)(g), 21.
