President Dr. Arif Alvi has upheld a decision of the Banking Mohtasib (BM) and directed the Silk Bank Ltd (SBL) to refund the bank account of a fraud victim with Rs. 200,000 along with the remaining profit till the date the amount is credited in his bank.
The president gave these directions while rejecting a representation of SBL against a decision of BM in a case where a citizen had invested Rs. 200,000 in Term Deposit Receipt (TDR) with the bank, however, he was only paid profit for six months and when he went to withdraw the remaining profit from his account, he was informed that his TDR was fake and he had been hoodwinked by the ex-branch operations manager.
The president in his decision held that since the complainant had produced the original TDR which bore the bank’s logo, duly stamped and signed by the ex-branch operations manager, SBL was responsible for any document signed by its employee on purportedly its stationery and stamp. He added that there was no litmus test for the general public to differentiate between the original and fake stationery.
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The president held that the SBL’s contention, that profit amounts of six months were credited in the complainant’s account through fund transfers from multiple accounts of the customers and not from the bank’s payable account as normally done, carried no weight as a customer was usually satisfied when monthly profit was credited in his account. He said that it was not the duty of the customer to scrutinize the records and internal processes and to ascertain whether profit was credited to his account by the bank routed through the bank’s books and whether proper vouchers were passed.
The president said that the SBL was shifting responsibility to the complainant in order to cover its own internal lapses and controls. He observed that it had admitted that the ex-branch manager had signed the said TDR and had committed fraud and had been terminated from the bank’s service in a fraud case. He added that it was a well-settled principle of “vicarious liability” that an employee was liable for the loss caused to a customer through the wrongful act of his employee in the course of the employer’s business.
The president concluded that the appointment of vigilant officials and honest and professional staff was the responsibility of the bank and not of the complainant, who had posed his trust in the bank. He added that the SBL was the custodian and trustee of the hard-earned money of the account holder.
“The bank official was there in the bank duly posted by the management, and there was unimpeachable evidence of the commission of fraud by the bank official with the bank branch”, he stated.
The president, therefore, rejected the bank’s representation as the bank could not escape liability in a case of this kind when the commission of fraud was established and admitted.
“It is a case of wrongdoing and maladministration by the bank officials. The bank is, therefore, responsible to make good the loss of the complainant without further delay”, held the president.
