February 15, 2018

India: Liability of Bank for Non Availability of Cash in its ATM

 

Non-availability of cash is one of the most common messages reflected at the ATM. However, it is interesting to contemplate whether the bank can be held responsible for deficiency in its services for such non-availability of cash. A similar complaint was filed before the Consumer Forum at Raipur against the State Bank of India by one Mr. Rajiv Aggarwal in which the Consumer Forum decided if it would be considered as lack of service ignoring the withdrawer’s problem[1] .

Relation between bank and withdrawer

The Consumer Protection Act, 1986 (the ‘Act’) applies to all goods and services. It was contended by the bank that the complainant is not a consumer of the bank and it was using its ATM for some other bank and therefore the dispute cannot be governed by the Act. In a first of its kind order,[2] the Consumer Forum at Raipur held that, when the bank charges for using ATM for the whole year in advance and it provides that the bank account holder is free to use the ATM of any bank, such holder automatically becomes its consumer irrespective of whether or not the withdrawer holds an account with the bank .[3]

Negligence by the bank

The Forum further held that the complainant faced the problem of ‘Cash not available’ on multiple occasions[4] . Thus, the Forum rejected the contention by the bank that such message was due to the internet failure, therefore due to the fault of the internet service provider and not the bank [5]. The Consumer Forum held that it was due to the mismanagement and irregularities of the bank employees that resulted in deficiency of services by the bank.

Order

The Consumer Forum at Raipur held the bank liable for deficiency in its services and imposed a penalty of INR 2500 (USD 36 approx.) in form of INR 1500 (USD 22 approx.) for mental harassment and INR 1000 (USD 15 approx.) towards legal fees. The Court further held that if the bank can penalize customers for cheque bounce and missed payment or keeping less than minimum balance in their account, the bank should also be treated with the same standards and held responsible for its shortcomings. [6]

Effect and Analysis

As per the order of the Consumer Forum at Raipur, the bank can be held liable for non-availability of cash in its ATM. If the ATM machine is short of cash or without cash, then under such circumstances, banks can be penalized if their ATMs does not dispense cash for the reason “cash not available”. This order secures the interest of the consumer by imposing a duty on the banks to be more diligent about reloading its ATM.

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[1](September 10, 2017) Consumer forum fines SBI for ignoring customer’s problem available at https://dailypost.in/news/consumer-forum-fines-sbi-ignoring-customers/ .
[2]Rita Bansal, Analysis of deficiency in ATM Services vis–a-vis liability of the banks, International Journal of Legal Developments and Allied Issues, Volume 4 Issue 4, July 2018 available at http://ijldai.thelawbrigade.com/wp-content/uploads/2018/07/Rita-Bansal.pdf
[3](December 27, 2018) Banks Responsible for Failed Transactions and No Cash in ATMs available at https://www.moneylife.in/article/banks-responsible-for-failed-transactions-and-no-cash-in-atms/55999.html
[4](June 25, 2018) Ayush Jain, Consumer Forum holds bank liable for ‘Non-availability of Cash’ at the ATM available at
http://5thvoice.news/legalnews/MzA4MQ==/Consumer-Forum-holds-Bank-liable-for-Non-Availability-of-Cash-at-the-ATM#
[5](January 2, 2019) Chitranjan Kumar ed., SBI fined Rs 2,500 after its ATM failed to dispense cash available at
https://www.businesstoday.in/current/economy-politics/sbi-fined-rs-2500-after-its-atm-failed-to-dispense-cash/story/305922.html
[6](June 22, 2018) Consumer Forum holds Bank liable for ‘Non-Availability of Cash’ at the ATM available at https://www.latestlaws.com/latest-news/consumer-forum-holds-bank-liable-for-non-availability-of-cash-at-the-atm /. 


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