Promotion Exam – Scale I to II: General Banking (Objective)

---------------------------------------------------------------------------------------------------------------------------------

Consumer Protection Act (1986)

1. Three levels of Redressal forums have been setup:

a. District Forum
b. State Forum
c. National Forum

2. District Forum:

a. Consists of 3 members

i. one person who was or qualified to be a District Judge,

ii. Eminent person in trade, commerce or education,
iii. Lady social worker.

b. Term of office = 5 years

c. Complaints with claim amount up to Rs. 20 lakhs are entertained.

d. Appeal against the district forum can be filed within 30 days to the state
commission.

3. State Commission:

a. Consists of 3 members

i. one person who is or has been a High Court judge appointed by the
President,
ii. One who is having adequate experience/knowledge in economics,
law etc,
iii. One who are persons of integrity and standing.

Note: Out of the other 2 persons (other that the High court judge) must be a
woman

b. Has two main functions:

i. Hear appeals against the orders of the District Forum (appeal

should be filed within 30 days from the date of the District
Forum’s order).
ii. Hear complaints with claim amount more than Rs. 20 lakhs but not
exceeding Rs 100 Lakhs.

c. Appeal will be allowed to the person who has to pay compensation under
the District Forum’s order, only if he deposits minimum (50% of amount
ordered, Rs. 25000).

1
Prepared by Vikas Sehgal v1.0
 Promotion Exam – Scale I to II: General Banking (Objective)
---------------------------------------------------------------------------------------------------------------------------------

4. The National Commission:

a. Consists of 5 members:

i. The President of the commission is or has been a Supreme Court

judge.
ii. The other members (one of whom should be a woman) will be
persons of integrity and ability as well as well-experienced/well-
informed in economics, in law etc.

b. Has 2 main functions:

i. Hear appeals against the orders of the State Commission. The

appeal should be filed within 30 days.
ii. Hear complaints with claim amount more than Rs. 100 lakhs. In
this case the complaint should be filed within 2 years from the date
on which the cause of action has arisen.

c. The complaint has to be admitted or rejected within 21 days.

d. Decision Time Frame:

i. Within 3 months: If no analysis or testing of commodities is

involved
ii. Within 5 months: If any analysis or testing of commodities is
involved.
iii. Within 3 months: National and State Commission.

e. Appeal will be allowed to the person who has to pay compensation under
the State Commission’s order, only if he deposits minimum (50% of
amount ordered as compensation, Rs. 35000).

f. In case of the appeal to the Supreme court from National Commission, he

has to deposit minimum (50% of amount ordered as compensation, Rs
50000).

5. Failure to comply with the orders of the Redressal forums shall be punishable
with

a. Imprisonment ranging from 1 month and 5 years, or/and

b. Fine ranging between Rs. 2000 and Rs 10000.

6. Appeal from one forum to another forum has to be filed within 30 days from the
date of the decision.

2
Prepared by Vikas Sehgal v1.0
 Promotion Exam – Scale I to II: General Banking (Objective)
---------------------------------------------------------------------------------------------------------------------------------

The Negotiable Instrument Act (1881)

7. Section 3: This act is valid throughout India including Jammu and & Kashmir and
Sikkim.

8. The relationship between a banker and customer is debtor and creditor.

9.

10. Section 6: Defines the term Cheque as

“It is a Bill of Exchange drawn on a specified banker and not expressed to be

payable otherwise on demand.”

11. Section 31 explained:

a. The customer who has deposited his money with a bank being a creditor
has the right to ask back the money from the banker who is a debtor. In
other words, the banker is bound to pay the cheques drawn by his
customer.

b. Statement: The drawee of the cheque having sufficient funds of the drawer in his
hands properly available to the payment of such cheque when duly required to do so,
and, in default of such payment, must compensate the drawer for any loss or damage
caused by such default:

c. Expl:

“sufficient funds” – There should be sufficient credit balance in the drawer’s (i.e. the
customer who has issued the cheque) account.

“properly available” – The funds available in the customer’s account should also be
properly available for the payment of the cheque. The funds may not be available to pay
the cheque if:

i. The banker has exercised his right of set off for amounts due from the customer.
ii. There is an order passed by a court, competent authority or other lawful
authority restraining the bank from making the payment.

“when duly required to do so” - The banker should pay the cheque only if the cheque is
properly drawn and signed by the drawer.

“compensate the drawer” – In case the banker refuses payment wrongfully, then he is
liable to only to the drawer of the cheque and not to any endorsee or holder, except when:

i. The bank is wound up, in which case the holder becomes a creditor entitled to
make a claim.
ii. The banker pays a cheque disregarding the crossing, wherein the true owner can
hold the banker liable.

3
Prepared by Vikas Sehgal v1.0
 Promotion Exam – Scale I to II: General Banking (Objective)
---------------------------------------------------------------------------------------------------------------------------------

12. Sections 10, 85, 85A, 89 and 128: Grant protection to a paying Banker.

13. Section 10 - Protection to the paying banker:

“For a paying banker to claim protection under the NI Act, one of the criteria he has to satisfy, is
that the payment is in due course.”

Expl: “Payment in due course” means that the payment should be made is it is

a. In accordance with the apparent tenor (means the time that must elapse before a bill of
exchange or promissory note becomes due for payment) of the instrument
b. In good faith
c. Without negligence
d. To the person in possession of the instrument and
e. While making the payment the banker should not have reasons to “believe” that the
person in possession of the instrument is not entitled to receive payment mentioned in the
instrument.

14. Section 85:

15. Section 89 – Payment of instrument on which alteration is not apparent:

Stmt – “Where a promissory note, bill of exchange or a cheque has been

materially altered but does not appear to have so altered, or where a cheque is
presented for payment which does not at the time of presentation appear to be
crossed or to have had a crossing which has been obliterated, payment thereof by
a person or banker liable to pay, and paying the sum according to the apparent
tenor

16.

4
Prepared by Vikas Sehgal v1.0
 Promotion Exam – Scale I to II: General Banking (Objective)
---------------------------------------------------------------------------------------------------------------------------------

5
Prepared by Vikas Sehgal v1.0