Consumer Law Updates

CONSUMER LAW UPDATES AND JUDGMENTS

In a significant ruling on banking liability under consumer law, the Supreme Court partly allowed two civil appeals filed by Canara Bank against a judgment of the National Consumer Disputes Redressal Commission (NCDRC) which had held the Bank guilty of deficiency in service in failing to present two cheques deposited by the respondent-complainants within their validity period.

NOTABLE JUDGMENTS APRIL 2026

1. Bank's Failure to Present Cheques Within Validity Period Can Constitute Deficiency in Service Under Consumer Protection Act

Case Title: Canara Bank v. Kavita Chowdhary (Click Here)

Citation: Civil Appeal Nos. 2587-2588 of 2025

Court: Supreme Court of India

Decided on: 15.04.2026

In a significant ruling on banking liability under consumer law, the Supreme Court partly allowed two civil appeals filed by Canara Bank against a judgment of the National Consumer Disputes Redressal Commission (NCDRC) which had held the Bank guilty of deficiency in service in failing to present two cheques deposited by the respondent-complainants within their validity period.

Facts:

The respondent-complainant, Kavita Chowdhary, had deposited two CTS cheques, issued by Assotech Limited and drawn on Vijaya Bank, SSI Branch, Noida into her savings bank account at the Bank's Maharani Bagh (Ashram Chowk) Branch, New Delhi on 29.05.2018. The cheques were returned unpresented on account of a bank strike on 30.05.2018 and 31.05.2018. When the strike ended, the Bank failed to re-present the cheques on either of the two working days that remained before their validity expired on 01.06.2018 and 02.06.2018 without furnishing any satisfactory explanation for this omission. When the cheques were eventually submitted for clearing at the complainant's request on 05.06.2018 and 08.06.2018, they were returned as 'instrument out dated/stale.' The Bank also made a materially false statement on affidavit before the Commission, claiming the cheques were returned on the evening of 01.06.2018, which directly contradicted the return memos dated 30.05.2018 that were produced pursuant to an RTI application.

Issues:

Whether there was deficiency in service on the part of Bank or not?

Judgement:

On the question of deficiency in service, the Supreme Court affirmed the NCDRC's finding and laid down an important principle: 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, would, in the absence of any reasonable explanation, constitute negligence in the discharge of banking duties amounting to deficiency in service within the meaning of the consumer protection law.

The Court also considered the effect of Assotech Limited being under a corporate insolvency resolution process at the relevant time and reiterated the settled position  drawing on a three-Judge Bench decision in Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation of India Limited, (2023) 10 SCC 545  that proceedings under Section 138 of the Negotiable Instruments Act, 1881 are penal in character and distinct from civil recovery proceedings, and would not automatically have been extinguished by the insolvency. The valuable right of the complainant to pursue such proceedings against the Directors of Assotech Limited was accordingly extinguished by the Bank's negligence.

2. The Consumer forum orders full refund on account of safety failure in Ford Car.

Case Title: A.B. Motors Pvt. Ltd. & Ford India Pvt. Ltd. v. Yogesh Jain (Click Here)

Citation: Revision Petition Nos. NC/RP/2602/2017 & NC/RP/2603/2017

Forum: National Consumer Disputes Redressal Commission, New Delhi

Decided on: 02.04.2026

Facts:

The NCDRC dismissed two revision petitions filed by a vehicle manufacturer, Ford India Pvt. Ltd., and its authorized dealer, A.B. Motors Pvt. Ltd. (Bhagat Ford, Amritsar), thereby affirming the concurrent findings of deficiency in service recorded by the District Consumer Disputes Redressal Forum, Amritsar and upheld by the State Consumer Disputes Redressal Commission, Punjab.

The complainant, Yogesh Jain, had purchased a Ford EcoSport in July 2015 for personal use. In May 2016, while under full manufacturer's warranty, the vehicle met with a serious accident on the GT Road, Pathankot-Amritsar Expressway, rolling over after impact with a road divider. The vehicle was fitted with six airbags; however, only two on the right side of the vehicle deployed at the time of impact. The front airbag on the driver's side and all three airbags on the left side failed to open. The complainant alleged that this constituted an inherent manufacturing defect, particularly given the severity of the accident. The vehicle was handed to the dealer's workshop on the night of the accident but was not repaired and returned within the promised period. The complainant thereafter registered a formal complaint with the manufacturer's head office but received no resolution.

The manufacturer contended that the airbag system a Supplemental Restraint System (SRS) is designed to deploy only during significant frontal collisions or collisions within 30 degrees of the frontal axis, and that the accident involved an overturn rather than a qualifying frontal impact. It further contended that the complainant had not produced any expert report or government-approved test result to substantiate the claim of manufacturing defect, and that the mandatory procedure under Section 13(1)(c) of the Consumer Protection Act, 1986 requiring referral of goods to an appropriate laboratory had not been followed. Neither the manufacturer nor the dealer, however, led any evidence of their own before the District Forum or the State Commission to rebut the complainant's case.

Issues

Whether lack of safety compliance can amount to a manufacturing defect?

Judgement

The NCDRC upheld the application of the doctrine of res ipsa loquitur to the admitted facts that only two out of six airbags deployed in a major accident and agreed that this was self-evidently indicative of a manufacturing defect requiring no expert evidence for its establishment. The Commission further held that the airbag system is entirely distinct and independent of the seat belt mechanism, and that the manufacturer's argument linking non-deployment to the absence of a fastened seatbelt was entirely unsupported by material on record. Reliance on the Owner's Manual was similarly found unpersuasive in the absence of any cogent evidence.

On the question of the dealer's liability, the State Commission had observed and the NCDRC affirmed that in the absence of any pleading establishing a principal-to-principal relationship between the manufacturer and dealer, such a relationship could not be inferred, and both remained jointly and severally liable. Noting that the revisional jurisdiction of the National Commission under Section 21(b) of the Act is extremely limited as settled by the Supreme Court in Sunil Kumar Maity v. State Bank of India, (2022) 20 SCC 543 and finding no material irregularity or jurisdictional error in the concurrent findings below, the NCDRC dismissed both revision petitions. The direction to refund the cost of the vehicle (Rs. 10,42,776) along with Rs. 20,000 as compensation and Rs. 5,000 towards litigation costs was accordingly confirmed.  

3. Banks cannot escape liability by blaming Customers. State Bank of India asked to refund ₹1.99 lakh lost in online fraud

Case Title: State Bank of India v. Prodosh Kumar Banerjee (Click Here)

Citation: Second Appeal No. 540 of 2025

Forum: National Consumer Disputes Redressal Commission, New Delhi

Decided on: 15.04.2026

Facts:

The complainant, an account holder with SBI's C.V. Raman Nagar Branch, Bengaluru, received a fraudulent SMS on 19.07.2022 purportedly from BESCOM (Bangalore Electricity Department), threatening disconnection of his electricity connection unless an outstanding bill was paid. On calling the number provided and downloading what appeared to be the BESCOM application, an attempt to pay Rs. 20 resulted in a message stating that the complainant had wrongly entered his password three times and could not transact. Immediately thereafter, amounts of Rs. 25,000 and Rs. 1,99,000 were debited from his SBI account without his sharing any OTP for either transaction. The complainant's mobile thereafter stopped functioning, and he was unable to reach SBI. He immediately reported the fraud to the Cyber Crime Police who raised CIRO No. 12895 on the same day, leading to the registration of FIR Crime No. 451/2022 and simultaneously emailed SBI's dedicated unauthorized transaction address. Upon reporting to the branch on 20.07.2022, the account was frozen and Rs. 25,000 was credited back. Despite a formal complaint with documents on 26.07.2022, the Bank refused to refund Rs. 1,99,000.

Before the National Commission, SBI contended that the transactions could not have occurred without the complainant voluntarily sharing his credentials, and that the Bank could not be held liable for the consequences of a customer's negligence in downloading a fraudulent application. The Commission rejected these contentions. It held that the complicity of a complainant cannot be presumed merely on account of downloading an application, and that since the two fraudulent transactions were not initiated by the complainant and no OTP was shared for them, the Bank could not establish that the transactions were authorized by the complainant. It was further noted that the Bank having already reversed the Rs. 25,000 and frozen the account could not credibly claim that it had received intimation of the fraud only on 26.07.2022, eight days after the event.

Issues:

Whether loss of Money was due to Consumer Negligence?

Judgement

The Commission reiterated that under Clause 8 of the RBI Circular dated 06.07.2017, where an unauthorized electronic banking transaction occurs due to a third-party breach that is, where the deficiency lies neither with the bank nor with the customer the customer's liability will be zero if the fraudulent transaction is reported within three working days of the customer receiving communication of it. Those conditions were clearly satisfied in the present case.

The Commission further noted that the Bank had taken no proactive steps after receiving intimation of the fraud it lodged no complaint with the cybercrime cell and made no 'charge back' request to the beneficiary bank and had sought to deny liability on the basis of mere bald allegations of customer negligence unsupported by any material on record. The second appeal was accordingly dismissed. In the event of the Bank's failure to pay within four weeks, the amount was directed to carry interest at 8% per annum from the date of default until realization.