National Consumer Commission Holds Axis Bank Liable For Refusing Demonetised Notes, Directed To Pay Rs 3.19 Crore

The National Consumer Disputes Redressal Commission (NCDRC) has ordered Axis Bank to pay Rs 3.19 crore to a Delhi-based logistics company after finding the bank guilty of deficiency in services related to accepting demonetised currency notes during the demonetisation period in 2016.

The order was passed by a bench comprising presiding member AVM J Rajendra and judicial member Anoop Kumar Mendiratta while hearing an appeal filed by Procure Logistics Services against the bank.

Case Against The Bank

The dispute dates back to the announcement of demonetisation on November 8, 2016 when the Centre withdrew Rs 500 and Rs 1,000 currency notes from circulation. After the announcement, individuals and businesses had a limited period of time to deposit the specified bank notes in their bank accounts.

According to the complaint, the logistics company had made an attempt to deposit the demonetised notes in its account with Axis Bank during the permitted period. However, the bank allegedly denied repeated requests to accept the deposit.

The company contended that the refusal prevented it from depositing the currency in the official deadline.

Commission's Observations

In its order on March 10, the commission said that the bank denied the company the facility to deposit the cash into its own know-your-customer (KYC) compliant account many times.

The Commission said the bank had failed to discharge its duty by disallowing the complainant to deposit the notified cash in its own KYC compliant account till the time the entire timeline lapsed.

The commission said the bank could not have refused the deposit without valid regulation grounds. Axis bank should have accepted the deposit but reported the matter to the relevant authorities if it stood to suspect the transaction, it added.

According to the commission, the legal framework in the demonetisation period did not empower banks to unilaterally refuse deposits in KYC compliant accounts in the allowed window.

The commission said that the bank’s actions deprived the company of its only lawful opportunity to deposit the demonetised currency before the deadline.

Compensation Ordered

The commission held that the bank had failed to accept the deposit, as a result of which the company had suffered an immediate loss since currency notes had become worthless after the expiry of the deadline.

It held that the refusal was a deficiency in service under Section 2(1)(g) of the Consumer Protection Act, 1986.

The commission ordered Axis Bank to pay Rs 3.19 crore to Procure Logistics Services with simple interest at 6 per cent per annum from December 30, 2016 to the date of payment.

The order further stated that the amount is to be paid within two months. If any delay is made in the payment beyond this period, the bank would be obliged to pay interest at 9 per cent per annum for the late period.