A Delhi consumer court has ordered multinational Citibank to refund Rs 12,292 with interest and also pay the litigation cost of Rs 10,000 to an aggrieved client for wrongful encashment of a cheque.

"The encashment of two cheques obtained by Citibank from the complainant as a part of the repayment of loan is definitely a deficiency in service, especially when the loan was not sanctioned," New Delhi District Consumer Disputes Redressal Forum president L C Jain, members Janak Juneja and R Narayana said in their order.

The New Delhi-based complainant Shelters had applied for a housing loan of Rs 440,000 in March 2002 and in pursuance of the same, Citibank had collected from it a total sum of Rs 648,711 through cheques.

However, Citibank later turned down the loan application of Shelters without giving reasons. Thereafter, the complainant intimated its bank to stop payment of cheques to Citibank.

But Citibank presented two cheques worth Rs 12,292 and got it encashed, Shelters alleged, adding that despite having requested, the bank did not return the amount.

Shelters then claimed damages of Rs 150,000 for being harassed and also demanded the refund of Rs 12,292.

The bank contended that the loan was not sanctioned, as the complainant had not fulfilled certain conditions.

The forum said presentation of cheques, meant for payment of equal monthly installments, towards booking charges particularly when the loan was not disbursed, amounted to deficiency in service.