Failure To Investigate Unauthorized Transactions, North-West Delhi District Commission Holds Allahabad Bank Liable For Deficiency In Service

Brief Facts:

The Complainant was holding a savings account with Allahabad Bank. He claimed that despite multiple withdrawals totalling Rs. 46,000/- from his account, he did not receive a single SMS notification regarding these transactions. Upon visiting the branch, the Complainant discovered unauthorized transactions from his account at different locations, only after updating his passbook. Alleging negligence, the Complainant reported the matter to the bank manager, filed a complaint with the police leading to an FIR, and also escalated the issue to the RBI and banking ombudsman. Despite these actions and requests for CCTV footage of the transactions, the bank allegedly credited the deducted amount only after RBI intervention but did not allow the Complainant to withdraw it. Feeling aggrieved, the Complainant approached the District Consumer Dispute Redressal Commission-V, North-West Delhi (“District Commission”) and filed a consumer complaint against the bank.

The Complainant contended that the RBI guidelines mandated the return of unauthorized amounts if reported within 15 days, which he claimed to have done promptly. Despite this, the bank allegedly withheld the funds arbitrarily and denied the Complainant access to his money. The Complainant argued that the bank's actions constituted a deficiency in service under the Consumer Protection Act, given its failure to comply with the RBI guidelines and its arbitrary withholding of the credited amount.

The bank didn't appear before the District Commission for the proceedings.

Observations by the District Commission:

The District Commission noted that the bank acknowledged that the Complainant lodged a complaint regarding ten unauthorized withdrawals from his account. In its letter, the bank admitted to escalating the matter with the ATM back office in Mumbai and contacting other banks involved in the alleged fraudulent transactions to resolve the issue. However, despite these efforts, the other banks only provided SMS details of the transactions but failed to furnish CCTV footage or initiate chargebacks for refunding the money. Consequently, the bank withheld the credited shadow balance of Rs. 46,000/- pending the outcome of its investigation. Additionally, the RBI ombudsman closed the Complainant's case without issuing any decision.

The District Commission held that the bank's response indicated a failure to adequately investigate the disputed transactions. Moreover, the bank's argument that it would further escalate the complaint suggested prolongation of the resolution process rather than expeditious action.

The District Commission noted that the Complainant diligently followed RBI guidelines by approaching the bank, law enforcement, and the banking ombudsman. While the bank initially credited the disputed amount following RBI guidelines, it subsequently withheld it without conducting a thorough investigation.

Therefore, the District Commission held that the bank was liable for a deficiency in service. Consequently, the District Commission instructed the bank to refund the Complainant Rs. 46,000/- along with 6% interest per annum. The bank was also directed to pay Rs. 15,000/- to the Complainant as compensation for the pain, mental agony, and litigation costs incurred.

Case Title: Parmatma Prasad vs Allahabad Bank

Case Number: CC/352/2022