Supreme Court of India· 15 April 2026
How should a consumer forum assess compensation for deficiency in service where the loss suffered is itself indeterminate?
CANARA BANK v. KAVITA CHOWDHARY
2026 INSC 363 · Civil Appeal No. 2587 of 2025
Coram: Ujjal Bhuyan; B.V. Nagarathna
Answer
The sine qua non is proof of loss or injury suffered due to the negligence of the opposite party, and the computation has to be fair, reasonable and commensurate to the loss or injury. Where the loss is indeterminate — dishonour alone not amounting to an offence under Section 138 of the Negotiable Instruments Act, 1881 until the demand notice is served and payment fails within fifteen days — only a token compensation is warranted. 10 percent of the face value was held to be on the higher side and was reduced to 6 percent.
Headnote
Consumer Protection Act, 1986 — s.2(g) — Consumer Protection Act, 2019 — s.2(11) — Negotiable Instruments Act, 1881 — s.75A — s.105 — s.138 — Deficiency in service — Presentment within validity period — Reasonable compensation —
Consumer Protection Act, 1986 — s.2(g) — Bank receiving cheques for collection — Cheque allowed to become stale —
Held: A bank receiving cheques for collection acts as an agent of the customer, bound to present them within the validity period. Allowing them to become stale, unexplained, is negligence in the discharge of banking duties and deficiency in rendering service. (¶59)
Negotiable Instruments Act, 1881 — s.75A — Delay in presentment — Excuse ceases with its cause —
Held further: Delay in presentment is excused only while circumstances beyond the control of the holder operate and are not imputable to his negligence. Once the cause of delay ceases to operate, presentment must be made within a reasonable time. (¶56)
Consumer Protection Act, 2019 — s.2(11) — Quantum of compensation — Loss indeterminate —
Held further: Compensation must be fair, reasonable and commensurate to the loss or injury proved. Where the loss stays indeterminate, only token compensation is due; 10 percent of the face value was reduced to 6 percent and the appeals disposed of. (¶69, 71, 72)
In the Court's own words
Paragraph 66The aforesaid decision was referred to with approval by a three-Judge Bench of this Court in Shakuntla Devi. However, the Bench held that the sine qua non for entitlement of compensation is proof of loss or injury suffered by the consumer due to negligence of the service provider. The computation of compensation has to be fair, reasonable and commensurate to the loss or injury.
Paragraph 69Insofar as the present case is concerned, the Commission itself has noted that it is difficult to fathom as to what would be the outcome of any proceeding that the respondent may have drawn up against the drawer of the cheques under Section 138 of the NI Act, though the possibility of such an action being initiated by the respondent has been nipped in the bud because of the deficiency in service on the part of the appellant. Even if the cheques were presented within time and would have been dishonoured, that would not have ipso facto led to commission of an offence under Section 138 of the NI Act. Respondent would have had to complete the other two conditions before an offence could be said to have been committed. It is only thereafter that a complaint could have been filed under Section 138 of the NI Act. Even if a complaint would have been filed, it would be difficult to foretell with any degree of certainty the outcome of such a proceeding. All these are within the realm of imponderability. The Commission has also accepted this position and opined that only a token compensation would suffice.
Paragraph 71While the approach adopted by the Commission cannot be said to be wholly erroneous, in our considered opinion, the compensation fixed by the Commission appears to be on the higher side by applying the standard of reasonable compensation having regard to the peculiar facts of the present case. 10 percent of the face value of the cheque amount as a token compensation would not accurately reflect the nature of the loss suffered by the complainant because the loss itself is indeterminate despite the finding of deficiency in service.
Acts & Sections
s.75A Negotiable Instruments Act, 1881s.2(g) Consumer Protection Act, 1986s.2(11) Consumer Protection Act, 2019s.105 Negotiable Instruments Act, 1881s.84 Negotiable Instruments Act, 1881s.138 Negotiable Instruments Act, 1881s.2(o) Consumer Protection Act, 1986s.2(42) Consumer Protection Act, 2019s.73 Indian Contract Act, 1872One judgment a day. That's the whole habit.
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