American Express fined for not honouring transactions

New Delhi, Sep 25: The Delhi High Court has imposed a cost of Rs 30,000 on the multi-national American Express Bank for not honouring three transactions on the Amex credit cards, issued by the bank to customers who had purchased jewellery from three jewllers in the capital.

A division bench of Justices Mukul Mudgal and S Muralidhar directed the Bank to pay Rs 10,000 each to Giridhari Jewellers, Popular Jewellery House and Paras Jewellers as cost and the amount of the purchases by October 21 as it failed to honour the transactions despite signing agreements with them.

On January 2, 2004, the Monopolies and Restrictive Trade Practices Commission(MRTPC) had directed the bank to pay transaction amounts of Rs 75,887, Rs 1,50,000 and Rs 83,000 respectively to the jewellers with an interest at a rate of 8 per cent for not honouring the credit card transactions.

The jewellery were purchased by customers S Goswami and P K Mann by using their Amex credit cards.

When the transactions were submitted before the bank for money, the bank did not release the amount, saying that the cards were fake.

The Bank had filed an appeal challenging the order of the MRTPC to pay the amounts to the respective jewellers, who had signed agreements with the bank to accept the credit cards.

Counsel Abhik Mazumdar, appearing for the Bank, submitted that the transactions in question were part of a series involving a systematic fraud in respect of which a complaint had been made with the Economic Offences Wing(EOW) of the Delhi Police on July 6, 1998.

Counsel P S Bindra, appearing for the jewellers, submitted that under the clause 2 of the agreement, the shop owner was bound to entertain the cerdit card when presented, if it was prior to the expiry date and subsequent to the begining date if shown on the face of the card.

The jewellers had exercised due care and diligence in getting approval of the transaction from the bank's office after furnishing details. After giving such approval, the bank could not turn down the transactions, said the Counsel during the arguments.

UNI