Author: Pavani Priya. Akula Sri Padmavathi Mahila Visvavidhyalayam
TO THE POINT:
The present is in the hand is about digital fraud and banks liability for fraudulent transaction. The judgment was given by the two-judge bench of Supreme Court by Justice J.B. Pardiwala and Justice Mahadevan. Special leave petition filed by State Bank of India against the Judgement of regarding single judge bench of Gauhati High Court regarding unauthorised transactions reported by a customer emphasizing the duty of Banks to safeguard customers accounts and to transfer the unauthorised amount of Rs. 94,204/- to the customer and Supreme Court also directed the same and couldn’t find any mistakes with the judgement of the High Court.
USE OF LEGAL JARGON:
– Contempt of Court: This refers to the willful disobedience or disrespect towards court rules or authority. In this case, the court may have held someone in contempt for not complying with its orders.
– Cognizance: This term refers to the court’s acknowledgement of a legal matter to be heard. The court would have taken cognizance of the case filed by the State Bank of India against Pallabh Bhowmick and others.
– Damages: This refers to the monetary compensation awarded to someone for loss or injury. The court may have ordered Pallabh Bhowmick and others to pay damages to the State Bank of India.
– Decree: This is a formal order or judgment by the court. The court would have passed a decree in the case, outlining the rights and obligations of the parties involved.
– Injunction: This is a court order requiring an individual or entity to do or refrain from doing a specific act. The court may have issued an injunction against Pallabh Bhowmick and others to prevent them from taking certain actions.
TO THE PROOF:
– Case Background: Pallabh Bhowmick had made an online purchase from the Louis Philippe store, which he later sought to return for a refund. However, the website was hacked, and his account information was compromised.
– Fraudulent Transactions: On October 18, 2021, a sum of ₹94,204 was siphoned off from Bhowmick’s account through three separate online transactions.
– Bank’s Liability: The court held the State Bank of India liable for not taking adequate measures to prevent the fraudulent transaction.
Important Provisions and Guidelines
– Section 5 of the Banking Regulation Act, 1949: Concerns the bank’s responsibility to protect customer accounts and prevent fraud.
– Section 10 of the Reserve Bank of India Guidelines: Relates to the bank’s obligation to ensure proper vigilance and security in financial transactions.
– Consumer Protection Act, 2019: Addresses consumer rights, particularly in in such incidents.
ABSTRACT:
The parties to the present leave petition are State Bank of India was the appellant and Pallabh Bhowmick was 1st Respondent, The Ombudsman Reserve Bank of India was 2nd Respondent, Louis Philipe was 3rd Respondent, Papender Kumar was 4th Respondent and DCP (crime) was 5th Respondent.
Pallabh Bhowmick who is 1st Respondent/Petitioner brought a blazer from Louis Philipe and wanted to return the product and get back his money. On 18/10/2021 he got a fraudulent call from Papendra Kumar (4th Respondent) posing himself as a Customer Care Manager of the Louis Philipe and he asked to download the mobile app believing the words of fraudulent pallabh Bhowmick downloaded the app the refund of Rs. 4,000/-. Soon after downloading the app, he lost sum amount of Rs. 94,204/- from his account by three separate online transactions first an amount of Rs. 64,017/- was transferred from the Bank by Gateway transaction, immediately thereafter, two other transactions took place for an amount of Rs. 30,186/-. The fraudulent transaction took place on 18/10/2021 through mobile. The fraudulent was transferred to the beneficiary account in the Federal Bank thereafter transferred to other Bank accounts.
On 18/10/2021 Pallabh Bhowmick informed the costumer care of State bank of India with a request to cancel the transactions and the same was registered as complaint by the State Bank of India and blocked the debit card. The same day he lodged an FIR with the Jalukbari Police Station reporting the incident and the police registered the complaint as Case No. 1229/2021 of the IPC. on 19/10/2021 he made a complaint before State Bank of India informing about the said fraudulent transactions. He also lodged 3 complaints with the cyber cell of criminal investigation department (CID), Assam Police and he also reported the same to National Cyber Crime Reporting Portal (NCCRP) of the Ministry of Home affairs, also he made an online complaint before State Bank of India through Integrated ombudsman Scheme, 2021. The said complaint was received vide acknowledgment dt. 15/02/2022. After complaint lodged before State Bank of India 3rd Respondent sent an E-mail to 1st Respondent which was forwarded by the State Bank of India regarding the complaint was received by them on the issue of fraudulent transaction on 18/10/2021. On 04/03/2022 the 1st Respondent was also forwarded with a copy of response received from Federal Bank, where fraudulent (4th Respondent) had account bearing No. 77770101374417, where from one UPI transaction of Rs. 64,017/- was initiated from 1st Respondent through State Bank of India Account was credited in the Neo Bank Jupitar saving Account operated in the name of 4th Respondent, therefore he transferred the above amount to other bank accounts by means of UPI transactions and as of now, there was no balance lying in the beneficiary account of 4th Respondent. The same was forwarded to the State Bank of India office through an electronic mail dt. 24/02/2022 which was forwarded to the petitioner by the office of 2nd Respondent on 25/02/2022.
1st Respondent approached the Gauhati High Court regarding fraudulent transaction and the court made Bank Liable basing on the Reserve Bank of India Circular dt. 06/07/2017 would apply which mean according to these rules there will be zero liability on customer for unauthorised transactions resulting from third party and directed State Bank of India to transfer the fraudulently lost amount that is Rs. 94,204/- to the 1st Respondent and to seek special leave State Bank of India approached Supreme Court and it was also dismissed accordingly and Supreme Court also directed to transfer the 1st Respondent fraudulently Lost amount of Rs. 94,204/- because when he lost the amount, he gave a complaint to the Bank and taken security measures according to it, and directed customer that is 1st Respondent customers should aware of cyber crimes and they should not share OTP or password with third party.
CASE LAWS:
1. ICICI Bank Ltd. vs. Sony Skaria: The Kerala High Court ruled that the bank was liable for a cybercrime that resulted in the unauthorized transfer of ₹2.4 lakhs from the respondent’s account.
2. Federal Bank Ltd. vs. K.R. Raveendran: The Kerala High Court held the bank liable for a phishing scam that resulted in the loss of ₹1.5 lakhs from the respondent’s account.
International Cases
1. Patco Construction Co. v. People’s United Bank: The US Court of Appeals for the First Circuit ruled that the bank was liable for a phishing scam that resulted in the loss of $345,000 from the respondent’s account.
2. Experi-Metal Inc. v. Comerica Bank: The US Court of Appeals for the Sixth Circuit ruled that the bank was liable for a phishing scam that resulted in the loss of $560,000 from the respondent’s account.
3. Shore v. Banco Popular: The US District Court for the District of Puerto Rico ruled that the bank was liable for a phishing scam that resulted in the loss of $90,000 from the respondent’s account.
CONCLUSION:
Hence, I conclude that I agree with the decision of High Court of Gauhati and Supreme Court because when a fraud was occurred it was the Bank duty to recover the amount from fraudulent. Now technology was increasing day by day and Banking sector also having developments with the increasing it has to stop cyber-crimes or even try to recover the amount which was lost in cyber frauds.
It is not only the duty of Banks to take safety measures in stopping the cyber-crimes as a customer’s we too have responsibility to take safety measures against the cyber-crimes. When we get any message or call from fraudulent, we have to cross verify the particular aspect and not to share any kind of OTP’s, password and E-mail id’s. Banks alone cant eradicate or stop the fraudulent transactions or cyber crimes it is also the duty of customers to safe from the fraudulent.
