"This Petition deals with cyber fraud and is an example of how increasingly the innocent are becoming victims of cyber fraud," the bench noted.
The Bombay High Court on Thursday observed that a customer, who has notified a bank regarding unauthorised transactions within stipulated time has a zero liability in an unauthorised transaction occurring due to a third party breach where the deficiency does not lie with the bank or customer but somewhere else in the system.
In observing so, the court directed the Bank of Baroda to refund Rs. 76.9 lakh amount fraudulently debited from a company’s bank account within six weeks with interest at 6 % per annum from October 2, 2022 till date of payment.
You’ve Read Your Free Stories For Now
Sign up and keep reading more stories that matter to you.
A division bench of Justices Girish S Kulkarni and Firdosh P Pooniwalla also quashed and set aside an order passed by the Banking Ombudsman on January 10, 2023. The said order had rejected a complaint filed by the petitioner firm on the ground that transactions were completed after addition of beneficiaries and input of valid credentials were known only to the account holder and therefore, there was no deficiency or lapse on the part of respondent bank.
The court passed a judgement in a plea by one Jaiprakash Kulkarni and Pharma Search Ayurveda Private Limited against an order passed by the Banking Ombudsman that refused to direct the bank to refund an amount of over Rs. 76 lakh allegedly defrauded from their account through cyber fraud. “This Petition deals with cyber fraud and is an example of how increasingly the innocent are becoming victims of cyber fraud,” the bench noted.
As per the plea, on October 1, 2022 certain entities or individuals were added as beneficiaries to the petitioner company’s bank account without any One Time Password (OTP) being sent to the petitioner on the registered mobile number.
The next day, on October 2, 2022, which was a Sunday and public holiday, Rs. 76.9 lakh was transferred from the petitioner’s account in Bank of Baroda to unknown individuals through online transactions. After an accountant of the firm informed the petitioner that he received messages that the said amount was being debited in several tranches, they approached the police within a period of 30 minutes to one hour of the said transactions and informed the Cyber Cell at Worli Police station and concerned bank manager about the same.
The petitioners submitted that since October 2 was a Sunday and a public holiday, they were certain that no transfer requests were initiated by them and the amount was illegally siphoned from the said bank account. They also approached the bank seeking refund of the said amount. As they did not receive the refund, they filed a complaint with the Bank Ombudsman, who rejected their plea, prompting them to approach the HC.
Story continues below this ad
The bench referred to July 2017 of Reserve Bank of India (RBI) called ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’ along with Bank of Baroda’s policy named ‘Consumer Protection Policy (Unauthorised Electronic Banking Transactions).
It noted, “A customer has zero liability when the unauthorised transactions occur due to a third party breach where the deficiency lies neither with the bank nor with the customer but elsewhere in the system and the customer notifies the bank regarding the unauthorised transactions within a certain time frame.”
Therefore, granting relief to the petitioners, the bench held that the “liability of the petitioners in respect of concerned unauthorised transactions would be zero as they have taken place due to a third party breach where the deficiency lies neither with the bank nor with the petitioners, as already held on the basis of the three Cyber Cell reports (which held that beneficiaries were added to the bank account without any message or OTP received by petitioners).”
Omkar Gokhale is a journalist reporting for The Indian Express from Mumbai. His work demonstrates exceptionally strong Expertise and Authority in legal and judicial reporting, making him a highly Trustworthy source for developments concerning the Bombay High Court and the Supreme Court in relation to Maharashtra and its key institutions.
Expertise & Authority
Affiliation: Reports for The Indian Express, a national newspaper known for its rigorous journalistic standards, lending significant Trustworthiness to his legal coverage.
Core Authority & Specialization: Omkar Gokhale's work is almost exclusively dedicated to the complex field of legal affairs and jurisprudence, specializing in:
Bombay High Court Coverage: He provides detailed, real-time reports on the orders, observations, and decisions of the Bombay High Court's principal and regional benches. Key subjects include:
Fundamental Rights & Environment: Cases on air pollution, the right to life of residents affected by dumping sites, and judicial intervention on critical infrastructure (e.g., Ghodbunder Road potholes).
Civil & Criminal Law: Reporting on significant bail orders (e.g., Elgaar Parishad case), compensation for rail-related deaths, and disputes involving high-profile individuals (e.g., Raj Kundra and Shilpa Shetty).
Constitutional and Supreme Court Matters: Reports and analysis on key legal principles and Supreme Court warnings concerning Maharashtra, such as those related to local body elections, reservations, and the creamy layer verdict.
Governance and Institution Oversight: Covers court rulings impacting public bodies like the BMC (regularisation of illegal structures) and the State Election Commission (postponement of polls), showcasing a focus on judicial accountability.
Legal Interpretation: Reports on public speeches and observations by prominent judicial figures (e.g., former Chief Justice B. R. Gavai) on topics like free speech, gender equality, and institutional challenges.
Omkar Gokhale's consistent, focused reporting on the judiciary establishes him as a definitive and authoritative voice for legal developments originating from Mumbai and impacting the entire state of Maharashtra. ... Read More
