If you have ever deposited a check in the bank and you are afraid that no fake signature check should withdraw money from your account? So now there is news of relief. The Kerala High Court has made it clear in a historic judgment that if the bank clears a fake signature check, it will have the responsibility of the bank. The court has also said that even a little carelessness of the customer cannot cover the bank’s mistake. The Kerala High Court has recently given an important verdict in favor of customers in a large bank fraud case. The entire case is related to 47 checks on which money was withdrawn by making fake signatures. Out of this, 32 checks were given to the third party, which made it difficult to get the money back, while there were 15 account-pay checks, so their money could be brought back.
The most shocking thing of this fraud was that neither the bank nor the customers could catch it for three months. By the time the truth came out, many customers had lost millions of rupees and had to file a complaint in the court.
The bank earlier shocked its responsibility and said that all the necessary processes were completed while processing the check. But the Kerala High Court rejected the bank’s argument and ordered that all the affected customers be returned with 6% annual interest. The matter was earlier related to Vijaya Bank but then joined the Bank of Baroda, as Vijaya Bank’s merger was done in Bank of Baroda.
Customers had received the investigation report of this fraud through RTI. It was clearly stated in this report that the checks on which the signature were done did not match the sample signature kept in the bank. In some cases, samples were not present in the signature bank. The bank also tried to dismiss the report and said that the officer making the report did not follow the correct process. But the court also refused to accept this argument.
The bank also said that the signature may be forgery by any knowledgeable person of the customer, so the bank cannot be held responsible. But the court also rejected this argument. The Kerala High Court in its judgment considered three main questions.
Who is responsible for encashment due to fraud and negligence of checks?
Who has taken this responsibility, proved it?
Was the decision of the lower court correct that the customers could not prove their case correctly?
The court said this
On these three questions, the court found that there has been negligence from the bank. The court cited an old verdict of the Supreme Court stating that if the signature is forged on the check, the bank has no right to enacted it. It is the responsibility of the bank to examine the signature and if he fails in this process, he will have to compensate the customer for the loss.
The court clearly stated that any check on which is fake signature, not valid and if the bank clears such a check, it will be considered its fault. Customer’s negligence such as not keeping the checkbook properly, cannot become the basis of rescue for the bank.
In this case, the bank could not prove that the reports in which the signature was described as fake was wrong. Therefore, the court accepted these reports correctly and said that the bank had to challenge their truth, but it did not make any such concerted efforts.
The effect of this decision can be very large. Now the bank will have to be more cautious in the verification of the signature before clearing the check. Customers will also feel relieved to know that if money is withdrawn from their account through fake signature, they can take action against the bank.
This decision also states that if the customer proves the point of fake signature on the check, then it comes to the bank to prove himself right. If he is unable to do so, he will have to return the money. After this decision, there will be pressure on banks to further strengthen their internal checking system, so that such fraud does not harm customers.