Banks Legally Obligated To Ensure Account Safety: Delhi State Commission Holds SBI Liable For Deficiency In Service

Brief Facts of the Case

The complainant had a savings account with State Bank of India/bank and an ATM card linked to it. He activated SMS alerts for account transactions. While he was in Etah, UP, he noticed unauthorized withdrawals totaling Rs. 80,000 made in Bangalore, despite having his ATM card and PIN with him. No SMS alerts were received for these transactions. The complainant immediately contacted customer care, reported the issue, and requested the ATM card be blocked. Upon returning from Etah, he filed written complaints with the bank and later reported the matter to the police and cybercrime cell. The bank temporarily refunded Rs. 40,000 but reversed the amount later without informing the complainant via SMS. The bank admitted that SMS alerts were not generated for the transactions and did not conduct a proper investigation. The complainant filed a complaint before the District Commission, which allowed the complaint. It directed the bank to refund the complainant a sum of Rs. 80,000 with 6% interest and pay Rs. 10,000 as litigation costs. Aggrieved by the District Commission's order, the bank appealed before the State Commission of Delhi.

Contentions of the Bank

The Bank argued that it was impossible for a third party to withdraw the disputed amount as the ATM card and the PIN was with no one else but the complainant. Furthermore it was argued that the District Commission overlooked the fact that the SMS alerts for the transitions were sent from the nearby ATM switch centre in Mumbai and not Bangalore. Based on these arguments, the bank contended that the District Commission's order was unjust and appealed to rectify the same.

Observations by the State Commission

The State Commission observed that the key issue was whether the District Commission rightly held the bank liable for a service deficiency and directed them to refund Rs. 80,000 along with litigation costs. The complainant consistently denied being in Bangalore, and the subsequent credit of Rs. 40,000 to his account indicated unauthorized transactions. Evidence suggested the ATM card and PIN were cloned, absolving the complainant of responsibility. The bank's assertion that SMS alerts were generated did not prove they were delivered. Without evidence of receipt, the bank could not justify its failure to inform the complainant. The Commission held that banks are legally obligated to ensure account security and provide timely alerts. Failing to do so in this case amounted to a breach of contractual obligations. The bank's failure to secure its systems and monitor transactions was deemed a deficiency in service. The State Commission found no error in the District Commission's order and upheld the decision to refund the amount and litigation costs. The appeal was dismissed with no additional costs.

Case Title: State Bank of India Vs. Mr. Vikas Jain

Case Number: F.A. No. 39/2015

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