SC Directs Bank To Compensate A School Who Lost Money In Online Banking Fraud [Read Judgment]

The Supreme Court has directed a bank to give compensation of Rupees Twenty Five Lakhs to a school whose money from the bank account was siphoned out by the miscreants.

The complaint of the Principal of the DAV Public School before the Consumer Forum alleged deficiency of service against the Indian Bank inasmuch as the School's bank accounts without net banking facility, was linked with the personal Customer Information File (CIF) of the Principal of the School, facilitating online transaction which led to siphoning of Rs 30,00,000/- (Rupees Thirty Lakhs), from the school's account.

Both the State Commission as also by the NCDRC found that there was deficiency in service by the Bank, but limited the compensation to Rs. 1,00,000/- on the ground of alleged complicity of the Principal. Assailing this order, the school approached the Apex Court.

The bench comprising Justice Dhananjaya Y. Chandrachud and Justice Hrishikesh Roy noted the finding of the State Commission, the Banking Ombudsman and also by the NCDRC, that, the bank has rendered themselves liable by enabling net banking facility by linking the individual account of the school's Principal, to the school's account.

Referring to the charge sheet filed in this regard, the bench said that the police did not find complicity of the Principal of the school, with those fraudulent transaction, and therefore denial of compensation to the tune of Rs. 25,00,000/- was not justified.

However, it observed that when the siphoning of a large sum of Rs. 25,00,000/- was first detected by the school staff, the official complaint was not lodged immediately and only on the next date, the complaint was filed with the Bank authorities. Therefore, it held that the additional sum siphoned on the next date from the School's account need not be compensated. 

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