Case Law Details
M.S. Bakankar Vs State Bank of India (NCDRC)
Zero Liability of consumer in events involving contributory negligence on the part of the Bank pertaining to unauthorized transactions
Conclusion: In present facts of the case, the National Commission while relying upon the RBI Circular dated July 6, 2017 observed that there will be zero liability of a customer where the unauthorized transaction occurs in events involving contributory negligence on the part of the Bank and have accordingly allowed the Petition.
Facts: In present facts of the case, the Revision Petition (RP) has been filed against the Respondent, under Section 21 of the Consumer Protection Act, 1986, against the Order dated 07.08.2019 of the Madhya Pradesh State Consumer Disputes Redressal Commission at Bhopal.
Brief facts of the Case are that in order to operate his savings bank account, the Complainant was provided with an ATM Card by the Bank. On 27.07.2017, in the morning the Complainant went to withdraw a sum of Rs.6000/- from the ATM. On the said date, the Complainant went to another ATM of Bank to check balance in the account. When the Complainant was inside the ATM, two unknown persons entered into the ATM and offered help in getting the balance checked but failed to get the balance checked. The said persons returned some other ATM card to the Complainant and retained his card with them, which the Complainant did not notice. On 28.07.2017 at about 4.00 pm, the Complainant received a call on his mobile from the Bank asking him to check his account as some transactions were being carried out successively by his ATM card. Upon checking, the Complainant found that a total sum of Rs.5,07,017.22. was withdrawn from his account between 27.07.2017 and 28.07.2017 through various transactions. The Complainant immediately lodged complaints with the local police and other authorities, stating that he had kept the said amount in his savings account and in spite of the withdrawal limit of Rs.40,000/- within 24 hours, the Bank had allegedly allowed withdrawal of the aforesaid amount. The Complainant also filed the afore-noted CC before the District Forum, alleging that the Bank had committed deficiency in service by not sending SMS about any of the aforesaid transactions.
The District Forum held that both the Complainant and the Bank were negligent for the aforesaid unauthorized transactions in the savings bank account of the Complainant and, therefore, directed the Bank to refund a sum of Rs.1,00,000/- out of the total unauthorized transactions’ amount of Rs.5,07,017/-.
The Complainant appealed to State Commission which was dismissed. Before, the National Commission the Petitioner submitted that as per Circular instructions dated July 6, 2017 issued by the Reserve Bank of India to all Scheduled Commercial Banks and others, there will be zero liability of a customer where the unauthorized transaction occurs in events involving contributory negligence on the part of the Bank. The Petitioner also contends that neither in his Complaint nor in his FIR to the Police has he stated that he shared the ATM Card PIN with the two unknown persons. These facts are borne out of the relevant documents and are admitted by the other side.
The National Commission after taking submissions from both sides observed that in the instant case as there is contributory negligence on the part of the Bank, which is established with the concurrent findings of both the Fora below, the RBI Circular dated July 6, 2017, would be applicable, i.e. the zero liability of the customer and as the customer being entitled to zero liability, the entire liability in the case has to be borne by the Bank. The Petitioner was held to be entitled to refund of total sum of Rs.5,07,017.22 instead of Rs.1,00,000/- only.
Accordingly, the Respondent Bank was directed to pay an amount of Rs.4,07,017 along with interest @ 8% per annum w.e.f. 04.10.2018 till the date of actual payment.
FULL TEXT OF THE JUDGMENT/ORDER OF NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION DELHI
1. The present Revision Petition (RP) has been filed by the Revision Petitioner against the Respondent as detailed above, under Section 21 of the Consumer Protection Act, 1986, against the Order dated 07.08.2019 of the Madhya Pradesh State Consumer Disputes Redressal Commission at Bhopal (hereinafter referred to as the State Commission) in First Appeal (FA) No. 294 of 2018, in which the Order dated 04.09.2018 of the District Consumer Disputes Redressal Forum, Gwalior (hereinafter referred to as the District Forum) in Consumer Complaint (CC) No. 16 of 2018 was challenged, inter alia, praying for setting aside the Impugned Order dated 07.08.2019 passed by the State Commission and allow the prayers made in CC No. 16 of 2018, filed by the Revision Petitioner.
2. While the Revision Petitioner (hereinafter referred to as the Complainant) was the Appellant and the Respondent Bank (hereinafter referred to as the Bank) was the Respondent in the said FA before the State Commission, the Revision Petitioner was the Complainant and the Respondent was the Opposite Party before the District Forum in CC No. 16 of 2018. Notice was issued to the Bank 06.02.2020. The Parties filed written arguments/synopsis on 20.07.2023 and 21.07.2023 respectively.
3. Brief facts of the Case, as emerged from the RP, Order of the State Commission, Order of the District Forum and other case records are that in order to operate his savings bank account, the Complainant was provided with an ATM Card by the Bank. On 27.07.2017, in the morning the Complainant went to withdraw a sum of Rs.6000/- from the ATM situated at Nai Sadak, Lashkar, Gwalior. On the said date itself at about, the Complainant went to another ATM of Bank to check balance in the account. When the Complainant was inside the ATM, two unknown persons entered into the ATM and offered help in getting the balance checked but failed to get the balance checked. The said persons returned some other ATM card to the Complainant and retained his card with them, which the Complainant did not notice. On 28.07.2017 at about 4.00 pm, the Complainant received a call on his mobile from the Bank asking him to check his account as some transactions were being carried out successively by his ATM card. Upon checking, the Complainant found that a total sum of Rs.5,07,017.22. was withdrawn from his account between 27.07.2017 and 28.07.2017 through various transactions. The Complainant immediately lodged complaints with the local police and other authorities, stating that he had kept the said amount in his savings account as his grand-daughter was likely to get married and in spite of the withdrawal limit of Rs.40,000/- within 24 hours, the Bank had allegedly allowed withdrawal of the aforesaid amount. The Complainant also filed the afore-noted CC before the District Forum, alleging that the Bank had committed deficiency in service by not sending SMS about any of the aforesaid transactions.
4. Vide Order dated 04.09.2018, the District Forum held that both the Complainant and the Bank were negligent for the aforesaid unauthorized transactions in the savings bank account of the Complainant and, therefore, partly allowed the CC and directed the Bank to refund a sum of Rs.1,00,000/- out of the total unauthorized transactions’ amount of Rs.5,07,017/- within 30 days, failing which interest @ 8% per annum was directed to be paid on the said amount.
5. Aggrieved by the said Order dated 04.09.2018 of the District Forum, the Complainant as well as the Bank appealed by way of FA No. 294 of 2018 and 371 of 2018 respectively in the State Commission and the State Commission vide the Impugned Order dated 07.08.2019 has dismissed both the FAs. The State Commission, inter alia, was of the opinion that the withdrawal limit of Rs.40,000/- was made effective from 10.10.2017 and in none of the transactions the amount exceeded the said limit but there was deficiency in service on the part of the Bank in not sending SMS to the Complainant about the said unauthorized transactions and, therefore, the State Commission held that there was no merit in the said FAs filed by both the Parties.
6. The Complainant has challenged the Order dated 07.08.2019 on the following grounds:
(i) The Impugned Order passed by the State Commission is erroneous, perverse and bad in law. Though the State Commission has held that there was deficiency in service on the part of the Bank but did not give any justifiable reason for awarding compensation of Rs.1,00,000/- only in lieu of loss of Rs.5,07,000/-.
(ii) The finding of the State Commission that the Complainant had given PIN of his ATM to the unknown persons is totally perverse. Neither it is pleaded nor it has been proved that the Complainant had provided PIN to the said unknown persons and the Complainant has explained how his ATM card exchanged and huge amount was withdrawn.
(iii) The State Commission ought to have appreciated that the District Forum had wrongly accepted that more than Rs.40,000/- can be withdrawn by using green channel.
(iv) There are several Circulars/Guidelines of the Reserve Bank of India (RBI) relating to limited liability of the customer in case of unauthorized banking transactions. The facility of cash deposit, cash withdrawal and fund transfer is fixed at Rs.40,000/- and the Complainant had informed the Bank about the commission of the said unauthorised transactions within a period of three days as per the guidelines of RBI.
7. Heard Counsels for both sides. The contentions/pleas of the Parties, on various issues raised in the RP, written arguments and oral arguments advanced during the hearing, are summed up below.
8. The instant Revision Petition has been filed by the Petitioner against the Order dated 07.08.2019 of the State Commission passed in First Appeal No. 294 of 2019 (combined Order for First Appeal No. 294 of 2018, filed by the Petitioner, as well as First Appeal No. 371 of 2018, filed by the Respondent Bank. These First Appeals were filed challenging the Order dated 04.09.2018 of the District Forum in CC No. 16 of 2018. The District Forum has partially allowed the Complaint by directing the Bank to refund Rs.1,00,000/- out of the total unauthorized transactions’ amount of Rs.5,07,017/- on account of the contributory negligence on the part of the Bank in not sending SMSs in respect of the transactions. The State Commission dismissed both the Appeals. In compliance of the State Commission’s Order in First Appeal No. 371 of 2018, dismissing Bank’s Appeal, the Bank has already paid Rs.1,00,000/-, as ordered by the District Forum. The State Commission rejected the Appeal of the Petitioner also considering negligence on his part.
9. The Petitioner is relying on Circular instructions dated July 6, 2017 issued by the Reserve Bank of India to all Scheduled Commercial Banks and others. As per these instructions, there will be zero liability of a customer where the unauthorized transaction occurs in events involving contributory negligence on the part of the Bank. Relevant extract of these instructions is reproduced below:-
“Limited Liability of a Customer
(a) Zero Liability of a Customer
6. A customer’s entitlement to zero liability shall arise where the unauthorised transaction occurs in the following events:
i. Contributory fraud/negligence/deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer).
(ii) Third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorised transaction.”
10. The Petitioner contends that he did raise these instructions in his Complaint before the District Forum itself. However, the State Commission failed to take cognizance of these instructions. The Petitioner also contends that neither in his Complaint nor in his FIR to the Police has he stated that he shared the ATM Card PIN with the two unknown persons. These facts are borne out of the relevant documents and are admitted by the other side.
11. It is contended by the Counsel for the Respondent Bank that they have not admitted that SMSs were not sent. However, it is also admitted that they have not categorically taken a stand before the District Forum/State Commission that SMSs were indeed sent. In fact, there are concurrent findings of both the Fora below on this and it is in view of the non-sending of SMSs, which were mandatorily required as per RBI instructions, that the Fora below held the Respondent Bank deficient in service, making them pay Rs.1,00,000/- and that Order of the District Forum, as confirmed by the State Commission, has been accepted by the Respondent Bank, not challenged in any Revision Petition before this Commission, and complied also by paying the said amount to the Petitioner. Hence, the fact of deficiency on the part of the Bank in terms of not sending the SMSs as mandatorily required under the RBI guidelines, is established. Hence, in the instant Case, both the Petitioner and the Bank were found negligent, the Petitioner in terms of sharing his Card/using his Card in the presence of unknown persons, and the Respondent in not sending the SMSs with respect to various transactions.
12. The Counsel for the Respondent Bank, on the other hand, contended that there is a limited liability of a customer in cases where the loss is due to his negligence such as where he has shared the payment credentials, then the customer will bear the entire loss until he reports the unauthorized transaction to the Bank. The Respondent relied on Para-7 of the RBI Circular cited, relevant extracts of which is given below:
“(b) Limited Liability of a Customer
7. A customer shall be liable for the loss occurring due to unauthorised transactions in the following cases:
i. In cases where the loss is due to negligence by a customer, such as where he has shared the payment credentials, the customer will bear the entire loss until he reports the unauthorised transaction to the bank. Any loss occurring after the reporting of the unauthorised transaction shall be borne by the bank.
ii. In cases where the responsibility for the unauthorised electronic banking transaction lies neither with the bank nor with the customer, but lies elsewhere in the system and when there is a delay (of four to seven working days after receiving the communication from the bank) on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be limited to the transaction value or the amount mentioned in Table 1, whichever if lower.
XXX XXX XXX”
13. The Respondent Bank relied on judgment of this Commission in Revision Petition No. 3945 of 2014. The Petitioner on the other hand relied on judgment of this Commission in Revision Petition No. 3333 of 2013.
14. On careful consideration of the entire facts and circumstances of the Case, the Orders of the State Commission/District Forum, instructions dated July 6, 2017 issued by the Reserve Bank of India (RBI) on the subject of Customer Protection – Limiting Liability of Customers in Unauthorized Electronic Banking Transactions, we are of the view that in the instant case as there is contributory negligence on the part of the Bank, which is established with the concurrent findings of both the Fora below, and we agree with such findings: Hence, it is para-6 instructions of the RBI Circular dated July 6, 2017, which has been reproduced above, on which the Petitioner wishes to place reliance, that will be applicable, i.e. the zero liability of the customer. In the instant case, para-7 instructions, i.e. limited liability of the customer, which have been reproduced above, on which the Respondent Bank places reliance, will not be applicable. Hence, the customer being entitled to zero liability, the entire liability in this case has to be borne by the Bank. The Petitioner is entitled to refund of total sum of Rs.5,07,017.22 instead of Rs.1,00,000/- only, as ordered by the District Forum and upheld by the State Commission.
15. Accordingly, RP is disposed of and the Orders of the State Commission and the District Forum are modified as follows:
(i) The Respondent Bank shall pay an amount of Rs.4,07,017 (Rs.5,07,017/- minus Rs.1,00,000/- already paid) along with interest @ 8% per annum w.e.f. 04.10.2018 (30 days from the date of District Forum’s Order) till the date of actual payment.
(ii) The total amount due shall be paid by the Respondent Bank within two months of the date of this Order, failing which the total amount will entail interest @ 12% per annum.
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