Indian Consumers and the Mirage of Compensation for Deficient Service
Every so often, when one posts a consumer grievance issue on social media, a host of well-meaning sympathisers will say—take them to court, demand compensation, make them pay! The reality is very different. In many ways, it is a better time to be a consumer anywhere in the world.
Awareness about bad products or service through social media, empathy from fellow sufferers and the risk of reputational damage that is disproportionately higher than the cost of grievance redress has forced companies with a public profile to pay attention to individual complaints that were ignored earlier. Hotels, airlines, restaurants, food, consumer goods and personal products companies respond to complaints with a fair degree of alacrity these days. Every major company spends a packet on ‘reputation management’ which includes tracking social media and using artificial intelligence (AI) tools for damage control and to frame positive narratives. Consequently, it is not unusual for people to claim that a post on social media fetches immediate results.
Studies have shown that things turn tricky when dealing with public sector undertakings (PSUs) in power and telecom, financial services—especially public sector banks (PSBs), post-office savings, public and private insurers and hospitals. Even here, PG Portal ( has made PSUs more accountable and simple complaints are quickly resolved, but complex ones are quietly closed without explanation. The same happens with all the financial regulators.
Remember, we are only talking about basic grievance redress. Those who have faced extraordinary trauma and want compensation along with redress have to fight a long, expensive and debilitating battle, only to discover that adequate compensation is just a mirage. While consumer courts have easier processes and are supposed to deliver faster justice, this never happens in any complex case which can drag on for a decade or two. Worse, companies fork out large sums on legal fees and appeals, all the way to the apex consumer forum—the national consumer disputes redressal commission (NCDRC), perhaps worried that paying out fair compensation would set a precedent attracting similar demands.
This was brought home to us, once again, on receiving an email from Dr Ajay Sood, a California-based doctor who fought a long battle with Bank of India (BOI) after Rs1.33 crore vanished from his account with the Chandigarh branch through two large debits (Rs98 lakh and Rs35 lakh) because of the Bank’s lack of due diligence. What was crucial here is that he had in his possession the original chequebook with the exact two cheque numbers which, the Bank alleges, were used to defraud the Bank.
After a police complaint, it was discovered that the fraudsters had changed his registered mobile number by producing a fake Aadhaar card and communication from an unregistered email. Dr Sood did not even possess Aadhaar, but the fraudsters had produced one with the same photo he has on his Bank records but got his father’s name wrong.
We wrote about this in September 2018 (Read: Rs1.33 Crore Withdrawn from NRI's Account through Fake Cheques and Changing His Registered Mobile Number) when Dr Sood approached Moneylife Foundation after BOI and Reserve Bank of India’s (RBI’s) customer services department refused to respond to multiple calls and emails from him. The Bank even alleged that the large withdrawals were by someone known to him.
It is only when we escalated the case through RBI that the Bank filed a first information report (FIR). Subsequently, the police arrested members of an inter-state gang who had defrauded several people of crores of rupees. In December 2018, BOI credited Rs1.33 crore to Dr Sood’s account and in October 2019, it credited interest for the period when the amount was debited without even an apology.
When Dr Sood demanded compensation for the months of mental agony he had suffered, the response was stunning. Although the fraud amount of Rs1.33 crore is huge by any standard, the district consumer forum rejected it. Its order, rejecting his claim for compensation and a penal interest of 18% said, “…The sole grouse of the complainant through the present complaint is that the amount of Rs98 lacs and Rs35 lacs debited fraudulently from his account”… and although the amount was “made good”, he is “is seeking interest @18% for the period when the amount was fraudulently debited from his account till the recovery along with (sic) compensation and litigation cost.”. The district forum actually said that no case is made out against the Bank since it had acted on the complaint. It is another matter that the Bank acted only after relentless pressure and escalation to RBI.
In most civilised countries, costs and compensation should be considered a fair ask. After all, Dr Sood incurred legal fees, paid for US documentation required to initiate legal action, made a couple of trips to India to follow up on the case, and suffered great mental agony. Unwilling to give up, he filed an appeal with the state commission. Earlier this month, on 5th October, the state commission ruled in his favour with slightly better results.
The ‘moot question’, said the state consumer forum, was whether he was entitled to ‘get any compensation’. Apart from documenting costs, Dr Sood produced several RBI circulars going back to 2014, which required the Bank to exercise care and to initiate several specific preventive measures after detecting a rise in ‘cheque-related fraud’. The circular specifically referred to cases such as this, where fake cheques were presented while the originals remained with the customer. A circular dating back to 2013 on ‘fraud reporting’ procedures when the amount involved was over Rs100 lakh and a 2017 circular limiting customer liability in case of digital fraud (which ought to be extended to physical fraud as well) were submitted to the forum.
BOI made the stunning argument that, since it was also a victim of fraud, it is not required to compensate the victim, especially since it has returned the money with interest. But isn’t a bank, as trustee of our funds, required to have fool-proof systems, exercise due diligence in verifying transactions and, finally, have a robust insurance cover to account for such exigencies? Instead, the Bank had ignored Dr Sood’s complaints and even claimed that money was withdrawn by people known to him.
The state forum’s opinion was that interest payment alone cannot be said to be “just and fair compensation against the mental agony, harassment and financial loss” when the Bank was negligent in providing services. It ordered a compensation of Rs5,33,627 along with 9% interest to be paid within 30 days. Of this, Rs2 lakh was for mental agony, and the rest on costs incurred. The interest rate rises to 12% if the money is not paid.
While Dr Sood is willing to close the matter, there is always a chance that BOI will escalate it to NCDRC, as corporations do, despite the fact that it could end up spending more money on legal fees than on compensation. Typically, instead of using insurance to cover such exigencies, companies prefer to spend on fighting the consumer. These lonely battles usually lead to pyrrhic victories that do not even begin to cover the cost or effort involved.
This is especially true in cases of medical negligence when victims (usually families of those who have died of medical negligence) have fought for 10-15 years to see results. I pulled out a few cases where NCDRC has granted a seemingly large compensation, and it is clear that the fight only adds to the trauma while justice is far away. Consider these.
1. The only positive one pertains to a May 2023 order, when NCDRC actually ignored the Supreme Court’s (SC’s) direction to reduce compensation for bad hair treatment against the beauty salon of ITC Maurya. NCDRC retained the Rs2 crore compensation it had granted in 2021 and added interest at 9%. The case was filed in 2018 and a final decision, after a detour to the SC, fortunately, came about in just five years. What should worry consumers is that our highest court, the SC, had found the compensation of Rs2 crore excessive for mental breakdown and trauma and pain, despite the fact that it seriously affected the victim’s career as a model and actually remanded the matter back to NCDRC. (Read: Rs2 Crore for Bad Hair Treatment! NCDRC Keeps Compensation Unchanged Even after SC’s Reference)
2: A 2013 order of NCDRC granting compensation of Rs5.96 crore for medical negligence by Kolkata-based AMRI Hospital is the biggest I have found, after SC directed NCDRC to reconsider the original compensation of Rs1.73 crore ordered in 2011. It was a 15-year battle for justice by Dr Aniruddha Saha after his wife died in 1998 due to medical negligence. (Read: SC asks Kolkata hospital, doctors to pay Rs5.96 crore for medical negligence)
3: What is more typical is the 2008 case, where the family had sought compensation of Rs3.10 crore for the death of a 37-year-old at a well-known Kolkata hospital. After a 15-year battle, in April 2023, NCDRC ordered just Rs60 lakh as compensation and Rs2 lakh in legal fees. (Read: Kolkata-based Woodlands Medical Centre, Doctors Asked To Pay Rs60 Lakh to Deceased Patient's Family)
4. In another case, Delhi-based Mata Chanan Devi Hospital was asked to pay only a Rs10-lakh compensation after a 22-year-old battle, rejecting the family’s plea to enhance the compensation to Rs50 lakh. (Read: Mata Chanan Devi Hospital Asked To Pay Rs10 Lakh Compensation in 22-year Old Case)
5. Not only is the average time for a final order between 9-22 years, but in a case relating to Batra Hospital, NDCRC retained the Rs10 lakh compensation ordered by the state forum but reduced the rate of the penal interest payable from 12% to 7% (Read: NCDRC Asks Batra Hospital To Pay Rs10 Lakh Compensation To Widow of Deceased).
All this suggests that consumer battles in India are only for those who primarily seek the satisfaction of having proved a point. In most cases, ill-equipped customers spend time and money on an unequal battle for justice against expensive and knowledgeable lawyers deployed by large organisations.
Only when courts empathise with consumers and begin to order serious, exemplary damages companies will work to settle and resolve matters in a quick and fair manner rather than wearing down customers through litigation. Don’t forget a large number of people simply give up the battle at the district forum itself because the process is further punishment, and true justice is only a mirage.
6 months ago
Another great eye-opener. Thank you, Ms Dalal. You are so right about the pg.portal. Stories like these motivate us to persevere with our grievances.
Replied to desouza comment 6 months ago
Sadly, I feel quite the contrary because i am in the middle of a situation with Airtel for my father (82yrs) and he has no energy to pursue this. Clearly it falls under unfair practice. But the bill is hardly anything compared to the above cases. A thousand rupees is still huge money for most people in this country. This article only makes me agree with my father and give up even before starting.
Veeresh Malik
6 months ago
I used to consider myself a reasonably aware consumer and have taken large corporates on in the past. Just doesn't work anymore. Shall add one more point - probably due to the present boom, even private companies providing goods or services are not bothered in resolving issues.

The after-sales service has increasingly been farmed out to lowest bid 3rd party vendors, delivery is done via logistics companies, B2B2C kind of transactions eliminate the responsibilities of the manufacturers, and likewise call centres on lowest bids and as for escalations on websites - the trend is to not display any management org charts or similar.

There has to be a structured system fix - without expecting consumers to slog it out in the Justice Delivery System for years and years.

6 months ago
The Greek mythological tale in which Sisyphus forever pushes a huge rock up a hill only to see it rolling down every time characterizes what Indian consumers undergo.
6 months ago
Banks fancy to incur legal expenditure in preference to justifiable compensation as there is no bar on such legal expenditure statutorily or from the regulator. Regulator - RBI, SEBI, PFRDI, IRDAI should pur a cap on the proportion of legal exenditure banks can incur. Similarly, the Judiciary should have self-regulation on the number of amendments they can allow on such cases and the same should be allowed even for the Consumer Courts/Tribunals. In all these cases, the data is verifiable from the institutions and statement of accounts of the consumer or the Bills of purchase/sale.
6 months ago
Rbi and banks , have nothing to loose .. They wo’nt act against culprit .. Courts also same , would give adjournment etc to prolong the matter!! There is no accountability
Replied to kpushkar comment 6 months ago
The record of adjournments should go to the Gujerat Govt. lawyers who, I have read, managed to get 61 adjournments in 35 years because the documents involved in the case could not be translated.
6 months ago
There should be strict punishment to organisation who involve in these kind of activities to trap gullible investors.
6 months ago
6 months ago
Courts show empathy in only those cases which aren't against the govt and where judges are sure reporting will be vast. They are all attention hungry people. Not at all different from celebrity lawyers, which pick cases only for their marketing potential.
Dilip Modi
6 months ago
Absolutely true, experiencing it firsthand for last 10 months. Can't say much more at present as sill doing the rounds of RBI. Will be very happy to share details, once the outcome is known.
6 months ago
Consumers be given awareness through social media that is only the platform where each and every complaint can be shared .A new trend started that if consumer makes a complaint against wrong doers the account of that consumer will be put on hold .In this case the licence of that e-commerce company be terminated,just give the lesson to others also .
6 months ago
I agree with the author. In one of my case the company only complied with the Court order and paid compensation when they had to file for IPO and wanted to probably reduce the outstanding litigations in their DRHP
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