The State Bank of India has been asked to pay Rs. 11 lakh by the Delhi consumer commission on account of ignoring an order from an Italian company not to honor cheques from a lost cheque book.

The charge was put on SBI by Delhi State Consumer Disputes Redressal Commission president Barkat Ali Zaidi and member M.L. Sahni. "When a banking institution is guilty of negligence, it cannot shirk its liability to make good the loss suffered by a consumer due to deficiency in service," the commission said.

"In the present case, the admitted facts constitute deficiency in service on the part of the bank, which, therefore, is held liable to indemnify the loss suffered by the complainant," it added.

The bank has been asked to pay Rs. 11 lakh to the company to release the payments. An additional Rs. 10,000 has been charged as litigation expenses.

The bank put its defense saying that it had encashed only those cheques about which no instruction had been provided to it by the company to stop payment.

The case stands out to be an old one dating back to 2003. The Italian company had informed the bank that it had lost a cheque book and that the bank must see to it that no payment is released against the lost unused cheques. The company had also given the details of the cheques that had been used from the cheque book before it got lost.

But the bank did not pay any heed to the notification and released cheques worth Rs. 11 lakh from the lost ones. This led the company to approach the consumer court for compensation.