Intermediaries Responsible For Fund Transfer Issues, Bangalore Commission Orders Phonepe To Refund Amount, Pay Rs.6k Compensation And Rs. 5k Litigation Cost

Brief Facts of the Case:

N.D. Vinaya Kumar (“Vinaya”) and Unnikrishna. B (“Unnikrishna”) held PhonePe accounts, each linked to their respective bank accounts with Canara Bank and Karnataka Bank respectively. The incident in question occurred on October 11th, 2017 when Vinaya transferred an amount of Rs.10,000 to Unnikrishna through PhonePe. Notably, Vinaya received confirmation of a successful transaction and that the transferred amount had been deducted from his bank account. However, Unnikrishna reported that he did not receive the transferred amount in his bank account with Canara Bank. Despite their repeated requests for resolution, the issue remained unresolved. Canara Bank's response was evasive, denying the receipt of the alleged amount.

These circumstances subjected Vinaya and Unnikrishna to mental and financial hardships, leaving them with no choice but to approach the Additional Bangalore District Consumer Disputes Redressal Commission (“District Commission”) for a resolution.

Vinaya and Unnikrishna contended that PhonePe, as an intermediary in online transactions, bears significant responsibility for the transaction in question. They argued that PhonePe should have exercised diligence in every transaction on its platform. They sought a refund of Rs.10,000 along with 9% annual interest from the date of the alleged transaction on 11/10/2017. To support their claim, they submitted evidence in the form of bank statements, letters, and notices.

Conversely, PhonePe denied the allegations and partially refuted the claims made by Vinaya and Unnikrishna. It was argued that the transaction was indeed successful and that it merely served as an intermediary facilitating online transactions. They maintained that there was no deficiency of service on their part and urged the dismissal of the complaint, coupled with substantial costs. Canara Bank asserted that they are the bank where Vinaya holds an account and that the Rs.10,000 in question was deducted from that very account. They maintained that no deficiency of service occurred on their part and, therefore, requested the dismissal of the complaint.

Observations by the Commission:

The District Commission held that PhonePe being third-party application provider, authorized by the National Payments Corporation of India should be held accountable for alleged transaction of Rs.10,000. Consequently, the District Commission held PhonePe liable for both the deficiency of service, as defined under Section 2(g) of the Consumer Protection Act, 1986, and unfair trade practices, as defined under Section 2(r) of the same Act. Further, it noted that PhonePe’s failure to refund the claimed amount of Rs.10,000 to either Vinaya or Unnikrishna, despite numerous requests, constitutes a clear deficiency in service and an unfair trade practice.

Therefore, the District Commission determined that Vinaya was entitled to the refund of Rs.10,000, accompanied by interest at the rate of 9% per annum from the date of the alleged transaction on 11/10/2017. Additionally, considering the mental agony and financial hardship endured by both Vinaya and Unnikrishna, the District Commission ordered a compensation of Rs.3,000 to both the complainants. Furthermore, the District Commission imposed litigation costs amounting to Rs.5,000.

Case: N.D. Vinaya Kumar and anr. vs PhonePe Private Limited

Case No.: CC/1503/2019

Advocate for the Complainant: Rohit K Reddy

Advocate for the Respondent: JSM Law Partners

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