Banks Must Provide Adequate Security At ATMs To Avoid Frauds, New Delhi Commission Orders PNB To Refund Lost Amount

The New Delhi District Consumer Disputes Redressal Commission–VI (Delhi) bench comprising Poonam Chaudhary (President), Bariq Ahmad (Member) and Shekhar Chandra (Member) held Punjab National Bank liable for deficiency in service for not ensuring security measures in their ATM which subsequently led to a loss of Rs 40,000/- to the Complainant. 

Brief Facts: 

Mahesh Singh Rana (“Complainant”) was a consumer of Punjab National Bank (“Bank”). In December 2013, the Complainant travelled to Sitarganj, Uttarakhand. While attempting to withdraw money from the Bank’s ATM in Sitarganj, he found no security measures in place. While withdrawing money, three unknown individuals entered the ATM cabin and since they were standing at the back, the Complainant couldn’t pay much attention to them. In the process, these individuals changed the Complainant’s ATM card as they observed the PIN code. The Complainant later realized that Rs. 10,000/- and Rs. 5,000/- had been withdrawn from his account without his consent. He reported this immediately but by that time he had lost Rs. 40,000/- in total. The Complainant reported the incident to the police, and he also approached the bank, but no action was taken. The bank issued a new ATM card but failed to recover the lost amount. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission-VI, New Delhi (“District Commission”).

The Complainant contended that the bank had not provided adequate security at the ATM, leading to the fraudulent activity. The Complainant emphasized that the bank failed to take timely action when it was informed that Rs. 25,000/- had been transferred to another account. He demanded a refund of the lost Rs. 40,000/- with interest, along with litigation expenses and compensation for the mental agony and harassment suffered.

The bank argued that the money was withdrawn by the complainant himself, and the bank had no involvement in the withdrawal and transfer. They claimed that the complainant’s negligence and carelessness were the primary reasons for the incident. The bank asserted that since the incident involved changing the ATM card and potential criminal activities (IPC sections 419/420), it should be handled in a criminal court, and the Consumer Commission lacked jurisdiction. The bank also argued that the Complainant failed to adhere to the bank’s guidelines and warnings, willingly handing over the ATM card to strangers.

Observations by the Commission:

While acknowledging the Complainant’s negligence in protecting his ATM card, the District Commission firmly asserted that the bank was equally accountable for ensuring adequate security at its ATMs to facilitate hassle-free and secure transactions. The District Commission highlighted that the bank had admitted that Rs. 25,000/- had been transferred to another account, yet they had failed to initiate any measures to recover the complainant’s lost funds. This omission on the part of the bank was interpreted as a clear deficiency in their services.

Consequently, the District Commission directed the bank to refund the entire amount of Rs. 40,000/- that the complainant had lost, with the stipulation that this sum would accrue interest at a rate of 6% per annum. The bank was instructed to reimburse this amount within six weeks from the receipt of the order. No additional compensation was awarded to the complainant, as the District Commission acknowledged that a degree of negligence on the complainant’s part was evident. Finally, both parties were directed to bear their respective costs associated with this case.

Case: Mahesh Singh Rana vs Punjab National Bank and Anr.

Case No.: CC/777/2014

Advocate for the Complainant: N.A.

Advocate for the Respondent: N.A. 

Click Here To Read/Download Order