The Delhi State Consumer Commission, led by Justice Sangita Dhingra Sehgal, Ms. Pinki, and Mr. J.P. Agrawal, has ruled that banks are legally responsible for ensuring the safety of their customers’ accounts. Failure to do so constitutes a deficiency in service, as was evident in a recent case involving the State Bank of India (SBI).
Case Summary
The complainant, a customer of State Bank of India, had a savings account and an ATM card linked to it, with SMS alerts activated for all account transactions. While in Etah, Uttar Pradesh, he discovered unauthorized withdrawals amounting to ₹80,000 from his account in Bangalore, despite having both his ATM card and PIN with him. No SMS alerts were received for these transactions.
Upon noticing the fraudulent activity, the complainant contacted SBI customer care to report the issue and requested that his ATM card be blocked. After returning to his home city, he filed a written complaint with the bank and reported the incident to the police and the cybercrime cell. Initially, the bank refunded ₹40,000 but later reversed the amount without notifying the complainant via SMS. The bank acknowledged that no SMS alerts were generated for the transactions and failed to conduct a thorough investigation.
The District Consumer Commission ruled in favor of the complainant, ordering SBI to refund ₹80,000 with 6% interest and pay ₹10,000 in litigation costs. Dissatisfied with this decision, the bank appealed to the Delhi State Consumer Commission.
Bank’s Defense
SBI argued that since the complainant had the ATM card and PIN, it was implausible for any third party to access the funds. The bank also contended that the District Commission had erroneously stated that the SMS alerts were sent from Bangalore, when, in fact, they originated from the ATM switch center in Mumbai. Based on these points, the bank claimed the District Commission’s ruling was incorrect and sought a reversal.
State Commission’s Ruling
The State Commission addressed whether the District Commission was right to hold SBI liable for a service deficiency and direct the refund of ₹80,000 along with litigation costs. The complainant consistently maintained he was not in Bangalore when the unauthorized withdrawals occurred, and the temporary refund of ₹40,000 indicated that the transactions were indeed fraudulent. The Commission also noted that evidence suggested the ATM card and PIN had been cloned, ruling out any fault on the complainant’s part.
Regarding the SMS alerts, the Commission found that the bank’s claim of generating the alerts did not prove that they were actually delivered to the complainant. Without proof of receipt, the bank could not justify its failure to inform the customer in a timely manner. The Commission emphasized that banks are legally obligated to ensure account security and provide alerts for transactions. The failure to do so amounted to a breach of contractual obligations and a deficiency in service.
Conclusion
The State Commission found no fault with the District Commission’s decision and upheld the ruling to refund the ₹80,000 along with the interest and litigation costs. The bank’s appeal was dismissed without any additional costs imposed.
This ruling serves as a reminder of the critical responsibility banks have in safeguarding customer accounts and ensuring timely communication regarding unauthorized transactions.
