'Bank Liable If Customer Suffers Loss Due To Unauthorized Transactions': Kerala Consumer Forum Orders Compensation

The Ernakulam Consumer Disputes Redressal Commission recently directed the State Bank of India (SBI) to return an amount of Rs. 85,000/- to a customer from whose account certain money was fraudulently withdrawn. 

The Bench comprising the President D.B. Binu and the two Members V. Ramachandran and Sreevidhia T.N. observed that banks owe a duty of care to protect the interests of its customers. 

"It is impossible to define exhaustively the duties of care owed by a bank to its customer. It depends on the nature of service extended by the bank to its customers. But one thing is oetain that where a bank is providing service to its customer, it owes a duty to exercise reasonable care to protect the interests of the customer. Needless to say that a bank owes a duty to its customers to take necessary steps to prevent unauthorised withdrawals from their accounts. As a corollary, there is no difficulty in holding that if a customer suffers loss on account of the transactions not authorized by him, the bank is liable to the customer for the said loss," the Bench said. 

The complainant herein who is a road tarring contractor, having educational qualification only up to 8th grade, noticed that someone had fraudulently withdrawn an amount of Rs. 1.6 Lakhs from his account on various days. On approaching the Banking Ombudsman, the complainant received a sum of Rs. 90,000/-. He hence filed the present application for the issuance of the direction to the Bank to disburse him the remaining amount of Rs. 70,000/. 

SBI, in its version, averred that it was not responsible for paying the amount sought for to the complainant since there was no deficiency of service nor unfair trade practice on their part. It was submitted that the complainant, being a customer of the bank, was duty bound to abide by the terms and conditions relating to the conduct thereof, and also of any changes brought about time and again. It was added that SMS alerts had been sent to the complainant regarding the withdrawals which were ATM transactions. 

It was in this regard that the Commission was of the considered view that the bank owe a duty of care to its customers to take necessary steps to prevent unauthorized withdrawals from their accounts. 

"In the instant case the complainant is not duty bound to read all the messages and some among them have been received in the odd hours of the night by the complainant, and hence the complainant had established his argument on merit..." the Commission observed. 

It thus directed the Bank to return Rs. 70,000/- along with the interest from the date of loss of the amount, and to pay additional amounts of Rs. 10,000/- and Rs. 5,000/- as compensation, and the cost of proceedings, respectively. 

The Complainant was represented by Advocate Tom Joseph. 

Case Title: Salim P.M. v. State Bank of India 

Cse Number: C.C. No. 413/ 2019

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