Court issued an order after Bank officer cleared 47 checks using forged signatures

The Kerala High Court has mandated that Bank of Baroda reimburse clients who suffered financial losses as a result of the bank clearing fraudulent checks.  47 checks with fake signatures were cleared by a Bank of Baroda (formerly Vijaya Bank) personnel.  Of them, 15 were account payee checks, which were finally recovered, and 32 were paid to third parties, making the money hard to retrieve.

Many clients suffered significant financial losses as a result of the fraud, which went unnoticed for three months.  Following their initial complaints to the bank, several clients filed lawsuits.

According to the bank, it cleared the checks in accordance with all the correct processes and shouldn't be held accountable because the forgery might have been done by an insider or someone close to the consumers.

The Kerala High Court, however, dismissed each of these claims.

Key Points from the High Court Judgment

The High Court said that:

The Bank Was Negligent

The court said that the bank did not properly verify the signatures on the cheques. Many of the forged cheques.Did not match the specimen signatures kept by the bank. In some cases, no specimen signatures were even available.

 

Forgery Confirmed by Vigilance Reports

A vigilance officer’s report, accessed by the customers under the Right to Information Act (RTI), 2005, clearly showed that the cheques were forged. This report became a key piece of evidence in court.

1.      Bank’s Refusal to Accept the Report Was Rejected

The bank said the vigilance report was invalid because proper procedure wasn’t followed. But the court ruled that:

The bank did not prove what was wrong with the procedure.

The burden was on the bank to prove that the report was incorrect, but it failed to do so.

2.      Legal Principle from the Supreme Court Applied

The High Court cited the Supreme Court case Canara Bank vs. Canara Sales Corporation (1987), which said:

o    If a cheque’s signature is forged, the bank has no legal right to process or pay it.

o    Even if the customer was careless (e.g., lost cheque book), the bank still cannot escape responsibility unless the customer knowingly allowed the fraud.

Final Court Order

The trial court’s earlier decision was overturned. Bank of Baroda was ordered to refund the full

amount of the forged cheques. The Court ordered bank to pay 6% interest per year from the date

the case was filed until full recovery. The bank was also ordered to pay legal costs.

Why Court ruled against Bank

1. Burden of Proof on the Bank

The court clarified that once a forgery is proved:

o    The bank must prove it wasn’t at fault.

o    The bank cannot blame the customer unless it proves the customer was involved or ignored signs of fraud.

2. Internal Reports Can Be Used as Evidence

     The bank’s own internal vigilance reports were used in court against it. The judgment makes it clear that if a report points to negligence, the bank must prove why it is wrong—just denying it is not enough.

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BOI Chief Manager sent to 3 Years Jail in Loan Fraud Case

For his role in a bank fraud case, Jeevangine Srinivasa Rao (J.S. Rao), the former chief manager of Bank of India's SM Road Branch in Ahmedabad, was convicted to three years in prison and fined ₹1.5 lakh by a special CBI court in Ahmedabad. 

On October 30, 2003, J.S. Rao and others were the subject of a case filed by the Central Bureau of Investigation (CBI). 

According to the Prevention of Corruption Act, the lawsuit was founded on claims of criminal conspiracy, fraud, forgery of valuable security, and criminal misconduct. 

The CBI claims that in order to obtain a loan, private participants in the conspiracy provided fictitious collateral security.

According to the investigation, J.S. Rao used dishonest methods to approve a loan of ₹80 lakh for private individuals. 

Among the loans were: 

As working capital, 

₹30 lakh A Letter of Credit (LC) for ₹25 lakh As a term loan, 

₹25 lakh These loans were made using fake and falsified collateral security, 

which caused the bank to suffer an unjustified loss and the accused to profit illegally.

 Additionally, the CBI discovered that Rao failed to properly investigate the business operations of the private entity both before and after the sanction. 

Even though he was aware that the company had previously provided fictitious collateral security, he nevertheless approved more phony paperwork, including as an equitable mortgage for a Gandhinagar plot.

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High Court Orders BOI to Pay Dues to Employee Following Compulsory Retirement

 

An employee who is given mandatory retirement in contravention of the law and then reinstated will be eligible to receive full pay and other benefits for the time they were out of work, according to a division bench of the Madhya Pradesh High Court. 

This verdict followed the Bank of India's (BOI) appeal of a single-judge decision that mandated the bank reimburse an employee for the time he was unemployed owing to mandatory retirement. 

Narmada Prasad Chaudhary, who began working for the Bank of India in July 1974, is at issue in this case. He was prematurely retired from his job by the bank in January 2002. In the High Court, Chaudhary contested the ruling and prevailed.

The Supreme Court upheld the High Court's verdict after the bank appealed the decision there. Chaudhary was consequently given his position back in September 2009.

 However, the bank failed to factor in the more than seven years he was unemployed as a result of the mandatory retirement when determining his post-retirement compensation. 

The computation of his pay and retirement benefits was impacted by this omission.

Chaudhary then filed an appeal with the High Court once more. A one-judge panel decided in his favor in this matter, directing the bank to reimburse him for his lost income, perks from his promotion, and other obligations during his leave of absence. 

This verdict was contested by the bank management, and a division bench heard the case. Chief Justice SK Kait and Justice Vivek Jain led the division bench, which affirmed the ruling of the lower court. 

During Chaudhary's forced retirement, they mandated that the Bank of India give him his full salary, benefits from his promotion, and other entitlements. Additionally, the bank was ordered by the court to pay him 8% interest on the amount owing.

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