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

Protection Act, 2019 assailing the judgment and order dated

24.09.2024 passed by the National Consumer Disputes

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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 qua the complainant.

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 30.0 5.2018.

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 comp leted 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

29

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

30

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

31

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.

32

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

33

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.

M.K. Gupta

1. 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

34

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

35

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.

36

47. In Managing Director, Maharashtra State

Financial Corporation Vs. Sanjay Shankarsa Mamarde

2, 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

37

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.

38

48. This Court in Arun Bhatia Vs. HDFC Bank

3 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,

Haryana Urban Development Authority Vs. Shakuntla Devi

4 has held that

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.

3

(2022) 17 SCC 229

4

(2017) 2 SCC 301

39

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

Charan Singh Vs. Healing Touch Hospital

5, 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

40

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

Leathers Vs. S. Palaniappan

6 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

41

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

42

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

Limited

7 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

43

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.

44

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

Vs. M/s Shakti Trading Company

8 , 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

45

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

Consortium Limited Vs. Software Technology Parks of India

9,

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

46

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

47

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

48

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

49

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

50

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.

51

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

52

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.

53

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

54

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.

55

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.

56

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.

57

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.