The Supreme Court ruled that consumer forums lack jurisdiction to adjudicate banking disputes involving allegations of fraud, forgery, or unauthorized pledges.

The Bench held that while a company can be a "consumer," complex factual disputes requiring detailed evidence must be tried in civil or criminal courts.

The Court noted that proceedings under the Consumer Protection Act are summary in nature and ill-equipped for cases involving criminal wrongdoing.

Although the court clarified that parking surplus funds for interest does not automatically make a transaction "commercial," the serious nature of the fraud allegations in this case necessitated dismissal of the consumer complaint.

[Sant Rohidas Leather Industries v. Vijaya Bank]

The Punjab and Haryana High Court directed that all cases under Section 138 of the Negotiable Instruments Act, 1881, relating to cheque dishonour should be referred to mediation once the accused has been served.

The Court observed that such disputes are essentially compensatory in nature and are better resolved through negotiated settlement rather than prolonged criminal trials.

It emphasised that mediation can help parties reach quicker financial resolution and reduce the burden on courts.

The High Court also noted that cheque dishonour cases arise from private financial disputes and should not unnecessarily involve the State, stressing that courts should not become recovery forums for such matters.

[Sonu Kumar v. Kulbir Singh]

The Gujarat High Court held that mere production of a disability certificate is not sufficient proof of actual or functional disability in motor accident compensation claims.

The Court observed that tribunals must carefully scrutinise medical evidence rather than mechanically relying on such certificates.

In the case, a claimant produced a certificate showing 90% disability, but the issuing doctor later stated that the disability could be around 55% permanent disability of the whole body, raising doubts.

The Court ruled that the Motor Accident Claims Tribunal should allow reassessment by a competent Medical Board and permit parties to challenge the authenticity or accuracy of disability certificates.

[Tata AIG General Insurance Co. Ltd. v. Sunil Ishwarbhai Panchal & Ors.]

The Bombay High Court has quashed the money laundering case against Nagpur-based lawyer Kishore Pessulal Dewani in connection with the alleged corruption case involving former Maharashtra Home Minister Anil Deshmukh.

The Court held that the Enforcement Directorate (ED) failed to establish any nexus between Dewani’s property transactions and the alleged “proceeds of crime” under the Prevention of Money Laundering Act.

The Court noted that the land transactions predated the alleged scheduled offences, making any connection legally unsustainable. The Court also criticised the special PMLA court for issuing notice without demonstrating proper application of mind, holding that the test of “sufficient ground for proceeding” was not satisfied.

Accordingly, the complaint against Dewani were set aside.

[Kishore Pessulal Dewani v. ED & Anr.]

The Delhi High Court upheld the removal of a Bank of Baroda officer accused of unauthorised transactions and misappropriation through office accounts.

The Court held that the maker-checker system is only a risk-control mechanism and does not grant immunity to an officer who initiates unlawful or self-serving transactions.

It said an unauthorised transaction remains illicit even if later approved by a supervisor.

Rejecting claims of selective targeting and procedural lapses, the Court found no infirmity in the disciplinary proceedings and dismissed the petition.

[Sakshi Sharma v. UOI]

The Bombay High Court has set aside a single-judge order that restrained banks from proceeding against Anil Ambani under the RBI’s 2024 Master Directions on fraud classification.

The Bench led by Chief Justice Shree Chandrashekhar termed the earlier relief “perverse” and “illegal,” refusing to stay its own ruling for four weeks.

The Court held that continuing the interim protection would perpetuate illegality.

The single judge had earlier stayed coercive steps based on a forensic audit into Reliance Communications, citing issues regarding ICAI registration of the signatory.

[Bank of Baroda v. Anil Ambani & Ors. & connected petitions]

The Delhi High Court condoned a 14-day delay by Avantha Holdings Limited in filing its written statement in recovery proceedings initiated by ICICI Bank before the Debts Recovery Tribunal (DRT).

The Court noted that the bank itself delayed service of summons by nearly a month despite directions for prompt compliance.

It held that similar conduct cannot be judged by different standards and that procedural fairness requires parity.

Observing that the bank faced no adverse consequence for a longer delay, the Court termed this a “special circumstance” under Section 19(5)(i) of the Recovery of Debts and Bankruptcy Act, 1993, set aside the DRAT order, and directed the written statement be taken on record.

[Avantha Holdings Ltd. v. ICICI Bank Ltd.]

The Supreme Court flagged handwritten and illegible order sheets issued by a Motor Accident Claims Tribunal in Hyderabad while hearing an appeal in a compensation case.

The Court said that despite the e-Courts project and large public expenditure on computerisation, tribunals continue to pass handwritten orders without mentioning officers’ names or UID numbers. 

It directed the Telangana High Court to examine the issue and take corrective steps.

The Court also asked that its order be circulated to all High Courts. It set aside the High Court’s order and directed fresh hearing on merits while asking the insurer to release ₹1 crore to the claimant.

[National Insurance Co Ltd. v. Rathlavath Chandulal & Ors.]

The Supreme Court, while hearing a suo motu case on rising digital arrest scams, expressed serious concern over alleged negligence and possible connivance of bank officials in facilitating fraudulent transactions.

Chief Justice of India Surya Kant observed that banks, as trustees of public money, are increasingly becoming a liability by extending loans to fraudsters and failing to carry out proper due diligence.

The Court flagged the misuse of mule accounts and weak monitoring systems.

The Bench directed coordinated action by the CBI, RBI, MeitY and other agencies, and ordered nationwide implementation of standard operating procedures and inter-agency mechanisms to prevent such cyber frauds and recover losses suffered by victims.

The Karnataka High Court has directed that the salaries of employees of online gaming platform Winzo be paid despite the Enforcement Directorate freezing the bank accounts of its subsidiary, Zo, under the PMLA.

While holding that the legality of the account freeze must be challenged before the PMLA adjudicating authority, the Court emphasised that employees’ livelihoods cannot be paralysed in the meantime.

It ordered the ED to permit limited account operations solely for salary disbursement after verification.

The Court noted that the business was prima facie lawful and employees were on the rolls prior to ED action.

[Zo v. ED]

The Kerala High Court held that a cheque dishonour complaint filed by a company under Section 138 of the Negotiable Instruments Act cannot be sustained if the authorised representative or power of attorney holder neither witnessed the transaction nor had direct knowledge of it.

The Court observed that while a company may act through an authorised person, such a representative must be able to prove execution of the cheque. 

It noted that presumptions under Sections 118 and 139 of the NI Act arise only after execution is proved.

Since the complainant’s witness lacked direct knowledge, the conviction was set aside.

[Pattasseril Private Ltd. & Ors. v. State of Kerala & Anr.]

The Madhya Pradesh High Court held that a secured creditor is not mandatorily required to invoke Section 14 of the SARFAESI Act, 2002, for taking physical possession of secured assets if no resistance is faced from the borrower.

The case arose from a writ petition filed by UCO Bank challenging the orders of the Debts Recovery Tribunal and Debts Recovery Appellate Tribunal, which had directed restoration of possession of mortgaged properties and refund of the auction amount.

The Court said that Section 13(4) read with Rule 8 of the Security Interest (Enforcement) Rules, 2002 permits direct possession, and Section 14 is only an enabling provision for seeking administrative assistance.

[UCO Bank v. M/s Asha Oil Industries & Ors.]

The Karnataka High Court has granted interim relief to Café Coffee Day (CCD) by deferring FEMA adjudication proceedings initiated by the Enforcement Directorate.

Justice BM Shyam Prasad ordered that the personal hearing scheduled for January 30, 2026, be kept in abeyance until the matter is heard next on February 23. 

The proceedings arise from alleged FEMA violations linked to foreign direct investment received by Coffee Day Enterprises Limited in 2010. CCD argued that the mandatory reasons for initiating an inquiry were neither properly recorded nor communicated, rendering the proceedings legally flawed.

The Court has sought the ED’s response and will examine the matter in detail at the next hearing.

The Jammu & Kashmir and Ladakh High Court held that deliberately appending a signature on a cheque which does not tally with the specimen signature available with the bank, with the intent to prevent encashment, attracts liability under Section 138 of the Negotiable Instruments Act, 1881.

The Court observed that the grounds of dishonour under Section 138 are not to be interpreted narrowly and include deliberate acts or omissions by the drawer aimed at frustrating payment.

Relying on Supreme Court precedents, the Court clarified that intentional signature mismatch or unauthenticated alterations are conscious steps to defeat honouring of the cheque and cannot shield the drawer from prosecution.

[Abdul Hamid Wani v. Abdul Hamid Lone]