Banks to pay compensation for wrong payment: SC

The Supreme Court has held that banks are liable to compensate a customer whose money is wrongly paid to another person without verifying the original signature of the account-holder as it amounted to deficiency of service. A bench of Justices D K Jain and T S Thakur said the bank was guilty of honouring the cheque presented by the fraudster by releasing an amount over and above the amount in the account even though the customer Gurnam Singh had no overdraft facility. "On a query by the Court how in the absence of any overdraft facility being enjoyed by the complainant, a cheque for the amount which was in excess of the balance amount in the account of the complainant could be honoured, learned counsel is unable to furnish any satisfactory explanation. – www.presstrustofindia.com