Zero Liability For Customers If Unauthorized Transactions Occur Without Their Fault: NCDRC Holds Union Bank Of India Liable For Deficiency In Service
Ayushi Rani
11 Dec 2024 5:00 PM IST
The National Consumer Disputes Redressal Commission, presided by AVM J. Rajendra held Union Bank of India liable for deficiency in service owing to occurrence of unauthorized transactions.
Brief Facts of the Case
The complainant, being a partnership firm, had an account with Union Bank of India/bank. Registered mobile number messages informed about two unauthorized transfers of Rs. 4,50,000 each aggregating to Rs. 9,00,000 to two individuals' accounts. The complainant disputed the transactions and filed a police report requesting a refund from the bank. The bank manager assured the complainant of a refund, but no action was taken. The complainant sent a legal notice demanding refund along with 18% interest, compensation of Rs. 10,00,000 and cost of expenses Rs. 15,000. She received no response to that letter. The complainant filed a Consumer Complaint before the District Forum, which dismissed the complaint. Consequently, the complainants filed an appeal before the State Commission of Goa, which allowed the appeal. It directed the bank to pay Rs. 9,00,000 with 7% interest, Rs. 15,000 as compensation and Rs. 10,000 as litigation costs. Hence, the bank filed a revision petition before the National Commission against the State Commission's order.
Contentions of the Bank
The bank disputed the registered mobile number for the account and argued that the OTPs for the disputed transactions were sent to the complainant's registered number. The complainant had requested a SIM replacement for this number before the fraudulent transactions occurred. The bank suggested the complainant might have been involved in the transactions. It claimed no fault or negligence, as procedures were followed, and the OTPs were sent to the correct number. The bank denied any promise of a refund, traced the funds, and asserted there was no deficiency in service, seeking dismissal of the complaint.
Observations by the National Commission
The National Commission observed that the case centered on the bank's liability for unauthorized online transactions. The key issues included whether the bank was negligent, adhered to RBI guidelines, and met the burden of proof regarding transaction authenticity. The complainant claimed the registered mobile number for online banking was different from the one used for the disputed transactions. Alerts about two unauthorized transfers totaling Rs. 9,00,000 were received. The bank argued that the number linked to the transactions was updated following a SIM replacement request and denied negligence, asserting compliance with procedures and tracing the funds to recipients. The complainant disputed this, stating no OTPs were received on their registered number, and promptly filed a police report. The bank argued the complainant was negligent in securing credentials. The commission noted the RBI guidelines mandate zero liability for customers if unauthorized transactions occur without their fault and are reported within three days. The complainant reported the transactions within this period, meeting the guidelines. The commission found the bank deficient in service, as the unauthorized transactions were undisputed, and the bank failed to protect the account effectively. The National Commission upheld the State Commission's decision, except reducing compensation to Rs. 15,000, citing interest already granted. The revision petition was dismissed.
Case Title: Union Bank Of India Vs. M/S Vibhav Real Estate
Case Number: R.P. No. 1551/2023
