Case study


-Complainant took a loan of ₹3,00,000 in May/June 2006

-The loan was issued by Kotak Bank on 26.06.06

-Period of Loan- 30 months due to be paid by Dec 2008.

-Mode of payment advanced cheques of ₹12,272.

-Complainant decided to prepay whole amount in March 2007 and deposited ₹2,32,526 along with prepayment charges.

-Amount was received by Kotak and they issued a receipt

-Complainant asked bank for the unused advanced cheques, bank denied stating company policy but complainant was given verbal assurance by the bank

-Later Complainant received a Legal Notice u/s 138 Negotiable Instruments Act

-Complainant visited the bank’s office and was reassured after checking their records that the loan was paid off as on March 2007 and their office instructed the counsel to withdraw the notice

-The complainant received a court summons in Sept 2008 stating the bank had filed complaint u/s 138 NIA

-Complainant visited the bank office again and was issued a letter stating full repayment of her loan had been done, and the case is being withdrawn

-When the case came up the bank did not withdraw the criminal complaint

-Before the second hearing the bank withdrew the complaint and the court allowed the same.

-Aggrieved by the unethical conduct and harassment, complainant filed the complaint for negligence and unfair trade practice praying an award of ₹15 lacs @18% interest p.a. as well as legal expenses and ₹15 lacs compensation for harassment, humiliation, torture and mental agony.


In this case, Kotak was held responsible for not terminating the loan account of the complainant and stopping the encashment of balance post-dated cheques after the closing of the account. This amounted to negligence in addition to unnecessary harassment of the complainant at the hands of Kotak Bank. Therefore, the court directed Kotak to pay a compensation of Rs. One Lakh including the cost of litigation to the complainant for the mental agony and trauma caused.

C. LEARNINGS FROM THE CASE  In matters of bank and financial transactions, it’s preferable to keep everything in writing. If your loan is closed, you should take the loan closure letter from the bank.