Andhra Pradesh High Court - Amravati
The Chief Manager, State Bank Of India vs Shaik Abdul Saheed on 28 August, 2019
Author: C.Praveen Kumar
Bench: C.Praveen Kumar, M.Satyanarayana Murthy
1
HON'BLE THE ACTING CHIEF JUSTICE C.PRAVEEN KUMAR
AND
HON'BLE SRI JUSTICE M.SATYANARAYANA MURTHY
Writ Petition No.7039 of 2019
ORDER:(per Hon'ble the Acting Chief Justice C.Praveen Kumar) Assailing the order passed by thePermanent LokAdalat for Public Utility Services, Kadapa, dated 3.4.2019 in PLAC No.349 of 2018, wherein respondents 1 and 2 therein were directed to pay an amount of Rs.1,00,000/- each to the petitioner therein as compensation, the present Writ Petition is filed under Article 226 of the Constitution of India.
2. In order to appreciate the rival contentions advanced, it would be useful to refer to the facts in issue, which are as under :
3. The writ petitioner herein is a Chief Manager, State Bank of India, Bazar Branch, Kadapa. The 1st respondent herein was a customer of the petitioner- bank having a saving bank account. He made an application under Section 22C of Andhra Pradesh Legal Services Authority Act seeking an award for Rs.1,00,000/- towards compensation for the fraudulent withdrawal of amount in connection with usage of his credit card and also another sum of Rs.1,00,000/- towards compensation for mental agony which he has undergone. In other words, his case is that as directed by one, Anand, staff of the petitioner-bank (disputed), he produced copies of Aadhar Card and other documents for obtaining credit card. In the month of December, 2017, the 1st respondent herein received the credit card. In the month of January, 2018, the 1st respondent withdrew an amount of Rs.3,000/- using the said credit card. Later received a message as if an amount of Rs.1,00,000/- was withdrawn. Immediately, he lodged a report with the petitioner-bank and the Nodal Officer, who is the2nd respondent herein. As his grievance was not 2 addressed to, he filed a complaint before the Permanent LokAdalat for Public Utility Services, Kadapa. By its Award, dated 3.4.2019, the application of the 1st respondent herein was allowed and an amount of Rs.1,00,000/- each was directed to be paid by the petitioner as well as the 2nd respondent. Assailing the same as illegal, improper and incorrect, the present writ petition is filed by the Bank.
4. Sri Srinivasa Baba, learned counsel for the petitioner, mainly submits that the petitioner-bank herein has nothing to do with the credit card division and if the 1st respondent has any grievance, he has to make a claim against the credit card division and not against the bank.He further submits that the said Anand, who is said to have obtained copies of Aadhar card and other documents from the 1st respondent, has nothing to do with the bank. He disputes the said Anand as an employee of the State Bank. In other words, his plea appears to be that the State Bank of India or its employees has no role to play in functioning of SBI credit card division, which is a separate entity by itself. He pleads that merely because SBI is a nominal shareholder in SBI credit card division and SBI life and since the said agencies are using the emblem of SBI, having regard to its vast network, one cannot fasten liability on the bank division. He took us through the procedure adopted in getting a credit card, to show that the regular bank has no role either in processing the application for credit card or in forwarding the same. He further submits that since the credit card is protected by a password, usage of the same by a third person is highly improbable.
5. A counter came to be filed by the 1st respondent disputing the very averments made in the affidavit filed in support of the writ petition. According to him, he is eking out his livelihood by doing petty business in old tyres, earning Rs.200/- or Rs.300/- per day. He is an account holder of SBI bearing account No.10437350320 in SBI Bazar Branch, Kadapa, for the last 15 years and utilizing the bank whenever necessary for drawing the amount. According 3 to him, one, Anand, who is an employee of SBI, Bazar Branch, Kadapa, called him through his cellphone No.7670996424 informing him that he would get allotted a credit card in his name for which he asked the writ petitioner to furnish xerox copies of aadhar card and SBI account book. Though the 1st respondent herein refused for a card, his persuasion made him to accept his request. When he expressed his ignorance about the procedure to be adopted for obtaining credit card, the said Anand assured necessary help in filling the form and obtaining the credit card. Believing the representation made, the 1st respondent handed over the aadhar card and xerox copy of SBI account book to Anand, who got issued a new credit card to the 1st respondent herein. Using the same, the 1st respondent herein withdrew an amount of Rs.3,000/- on 9.1.2018 and on the same day, he withdrew another sum of Rs.3,000/- at 9.42 PM. Surprisingly, he received a message to his cellphone about withdrawal of a sum of Rs.1,00,000/- by the 1st respondent in Mumbai on 4.1.2018. Alleging fraud by the bank employees, he brought the same to the notice of SBI, Bazar Branch, Kadapa and also to the higher officials by way of sending message. He further states in the counter that in the month of September, 2018 he received threatening calls from officials of the SBI vide cellphone Nos.9113802181 and 4446132512, wherein they demanded to pay Rs.50,000/- out of Rs.1,00,000/- and settle the issue once for all. He also claims to have issued a notice to the bank for which he received a reply on 11.2.2018 requesting him to wait up to 17.4.2018, but there is no response from the bank till date. The details of the threatening calls are enclosed along with the counter. Having regard to the fact that the Permanent LokAdalat has arrived at a conclusion, after considering the entire material on record, including the oral and documentary evidence, pleads that there are no merits in the writ petition and the same is liable to be dismissed. He further pleads that though Award was passed in the month of April, 2019 and no steps have been taken to challenge the same till he filed E.P. for recovery of the amount. 4 In view of the above circumstances, he pleads that there are no merits in the writ petition and the same is liable to be rejected.
6. Both the counsel,at the time of arguments, reiterated the contents of the affidavit and counter.
7. The short point that arises for consideration is,"Whether the Permanent LokAdalatforPublic Utility Services, Kadapa, was justified in awarding a sum of Rs.1,00,000/- each to be paid by the respondents therein?"
8. As seen from the record, the said complaint was taken on file under Section 22A(b)of the Act and since no settlementwas reached to pass an award by conciliation, the LokAdalat proceeded to decide the matter on merits. During the course of enquiry, the 1st respondent herein examined himself as P.W.1 and got marked Exs.A1 to A5. The undisputed fact is that the 1st respondent herein was allotted SBI card No.4726427580386787 on 9.11.2017 with a credit card limit of Rs.1,00,000/-. The fact that the credit card was issued by SBI in the month of December, 2017 in favour of the 1st respondent is not in dispute. The appellant herein i.e., the Bank is not disputing the genuineness or otherwise of the card. It is also not in dispute that by using the credit card the 1st respondent herein was allowed to transact on 9.1.2018. Strangely, in the month of January, 2018, he received a message about usage of card for Rs.1,00,000/- and that too in Mumbai. Immediately thereafter, the 1st respondent herein made hectic efforts and brought to the notice of the concerned i.e., the petitioner-bank stating that he never used the bank card for the said amount, more so, in Mumbai.On 23.1.2018 the 1st respondent herein sent a letter to the Manger, State Bank of India, Bazaar Branch, Kadapa, informing him about the fraudulent transaction which took place and that he need not pay Rs.1,00,000/- as demanded by the branch. On the very same day he also sent a letter to the Manager, Customer Correspondence Unit, Haryana, informing him about the fraudulent 5 transaction and the demand made by them as baseless. On 31.1.2018, he received a reply from the writ petitioner bank directing the 1st respondent herein to take up this issue with SBI CARD or call the toll free No.1860 180 1290 to resolve the said issue. He was also directed not to disclose his bank card number in future. As nothing materialized, he got issued a legal notice to the Branch Manager calling upon him to enquire into the matter immediately and stop issuing notices to him showing the statement of transaction of Rs.1,00,000/-. In the month of April, 2018, the petitioner also addressed a letter to the Head Customer Service, Haryana to enquire into the matter and stop issuing notices for payment of due for the credit card transaction of Rs.1,00,000/-.
9. At this stage, it would be useful to refer to the written version filed by the 2nd respondent before the Permanent LokAdalat, wherein it is stated that the issuance of credit card and all other business transactions in respect of credit card are done only by the 1st respondent i.e., the 1st respondent before Permanent LokAdalat i.e., the Nodal Officer and the 2nd respondent therein has no active role in credit card transaction between petitioner therein and the respondent No.1 therein. It will be appropriate to extract the said version which is as under :
"It is submitted that the petitioner was holding his SB account No.10437350320 in the respondent's bank branch at Kadapa. At present the said account is already closed. It is false to say that through one Bank employee a Credit Card allotted to the petitioner. The issuance of Credit Card and all other business transactions in respect of credit card are done only by the respondent No.1. This respondent has no active role in credit card transactions took place in between the petitioner and the respondent No.1."
10. From the above it is clear that the Nodal Officer, Customer Correspondence Unit, Gurgaon, is responsible for the transaction done in respect of credit card. Before the Lok Adalat, the Nodal Officer disputes the same stating that only to have unlawful gain, the 1st respondent herein has 6 made bald allegations against the respondents therein and the petition has to be dismissed in limine. Nothing more has been stated in the written statement.
11. In spite of service of notice, there is no representation on behalf of the Nodal Officer before this court. From the two versions, which are stated before the Permanent LokAdalat, it appears that the bank is throwing the blame on the Nodal Officer while stand of the Nodal officer is that a false claim made by the customer. When the issuance of the credit card is not in dispute and when the transaction of withholding an amount of Rs.1,00,000/- in Mumbai by a stranger is established beyond doubt, the only question would be whether the Permanent LokAdalat was right in directing both the respondents therein to pay an amount of Rs.1,00,000/- each. The material on record, more particularly the letter dated 11.2.2018issued by the SBI credit card divisionshows that though they have received complaint of the customer with regard the misuse of the credit card, except assuring him that suitable action will be taken by the representative of their customer service, nothing more seems to have been done.On the other hand, it says that if the 1st respondent herein does not receive response within eight working days from the customer care service, he can write to Head Customer Service, Tower C, 10thfloor, DLF Infinity Tower, Gurgaon, Haryana, which the petitioner has done and there was no response except denying the transaction. It is to be noted here that transactions of this nature have become quite common and agents are being appointed by the bank giving them commission to get customers for the credit cards. In the instant case, though the petitioner claims that one, Anand is an employee of the bank, no efforts have been made by the bank to take action against the said Anand by giving an appropriate report before the Police so as to avoid transactions of this nature. Except denying that he is not an employee of the bank, the bank never initiated any action by lodging a criminal report before the police so as to prevent transactions of this nature. When the issuance of credit card and the transaction being not in dispute, liability has to 7 be fixed on the authority who is responsible for the same. As observed by us earlier on one hand, the bank states that it is the responsibility of the Nodal Officer in dealing with the transactions of this nature, while Nodal Officer disputes the very transaction itself without any basis. The oral evidence of P.W.1, which remained unimpeached, coupled with the documents filed evidence the transaction made, and the complaints given, for which there is no reply. Further, it is to be noted that the Nodal Officer, who was also directed to pay the amount, never challenged the award passed by the Permanent Lok Adalat, Kadapa.
12. The High Court of Kerala in State Bank of India v. P.V.George (9th January 2019, RSA 1087 of 2018) held as follows :
"Coming to electronic banking regime, it is the obligation of the banks providing such services, to create a safe electronic banking environment to combat all forms of malicious conducts resulting in loss to their customers. The basis of the said obligation is the implied term in the contracts entered into by the banks with their customers to exercise care to protect their money from transactions not authorised by them. In developed countries, in the light of the said obligation, statutes are put in place to protect the interests of the customers of the bank by defining the liabilities and providing enforcement mechanism. The law that governs the area in this connection in the United States of America is Electronic Funds Transfer Act. The said statute provides that a consumer is liable for any unauthorised electronic fund transfer involving his account only if the card or other means of access utilised for such transfer is an accepted card or other means of access and if the issuer of such card or other means of access has provided a means whereby the user of such card or other means could be identified as the person authorised to use it such as by signature, photograph or fingerprint or by electronic or mechanical confirmation. In Canada, electronic banking consumers and card users are protected under the Canadian Code of Practice for Consumer Debit Card Services. Under the said Code, consumers are not liable for losses arising from unauthorised usage of a card. In the absence of any statutory provision in India, the Reserve Bank of India, excercising control over the banks has issued directions to the banks from time to time indicating the various steps to be taken as part of the duties owed by them to their customers. Considering the recent surge in customer grievances relating to unauthorised transactions in the accounts of the customers enjoying electronic banking facilities like ATM-cum-Debit Cards, net banking etc, in terms of circular 8 No. RBI/2017-18/15 dated 6/07/2017, the Reserve Bank of India has directed all banks, among others, to put in place, appropriate systems and procedures to ensure safety and security of electronic banking transactions carried out by customers; robust and dynamic fraud detection and prevention mechanism; mechanism to assess the risks resulting from unauthorised transactions and measure the liabilities arising out of such events; appropriate measures to mitigate the risks and protect the banks against liabilities arising therefrom and a system of continually and repeatedly advising customers on how to protect themselves from electronic banking and payment related frauds. It is clarified in the said circular that the customer shall have no liability at all in the case of third-party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system. The only obligation which casts on the customers of the bank in terms of the circular is that the unauthorised transactions shall be brought to the notice of the bank forthwith so as to enable the bank to block the account. The circular aforesaid only reminds the banks, their obligations and responsibilities and it does not create any new rights or obligations. In short, there is also no difficulty in holding that if a customer suffers loss in connection with the transactions made without his junction by fraudsters, it has to be presumed that it is on account of the failure on the part of the bank to put in place a system which prevents such withdrawals, and the banks are, therefore, liable for the loss caused to their customers. All over the world, the courts are adopting the aforesaid approach to protect the interests of the customers of electronic banking. Reverting to the facts of the case on hand, though it was contended by the defendant in the written statement filed in the suit that the disputed withdrawals cannot be said to be withdrawals without the junction of the plaintiff, in the light of the facts established by evidence, such a contention was not pressed into service by the defendant in the second appeal. Instead, as noted, the main contention pressed into service by the defendant in the second appeal is that the defendant is not liable for the unauthorised withdrawals made from the account of the plaintiff by fraudsters abroad. As the second contention was found against, the question is answered against the appellant."
13. Having failed to create a safe electronic banking environment to combat all fraudulent and malicious transactions resulting in loss to the customers, the Appellant as well as the Nodal Officer are now turning around and pointing out the negligence on the part of the customers in not protecting their One Time Password properly. They failed to produce any material from the service provider confirming the fact of sending One Time Password to the cellphone of the 1st respondent and disputed the transaction of Rs.1,00,000/- was by using 9 the OTP number at Mumbai. No material has been produced probablising the communication of such OTP number from the 1st respondent to the person who availed the withdrawal of Rs.1,00,000/- at Mumbai. The 1st respondent herein gave complaints about the alleged transaction in the month of January, 2018 to the writ petitioner and the Nodal Officer, but they never responded to such complaints, except dragging the matter till September, 2018. None of the respondents before the PLAC took minimum responsibilityto verify the facts and take steps for addressing the grievance of the customer. Though so much of interest is shown by the banks while opening the account, taking fixed deposit and at the time of issuance of credit cards, but when it comes to attending the complaints given by their customers, none would come forward to address the grievance, even the Manager of the Bank tries to avoid meeting the customer on one pretext or the other. It is also observed that though the customers are asked to address their complaints by way of mails or by other electronic services, hardly one gets any response from them. One does not know whether such complaints reach them. Even toll free numbers which are given are not properly answered, except asking the customers to hang on with a recorded message stating that it would be forwarded to the customer service. These are all practical issues which one faces day-to-day. Even in the instant case, the material on record would show that the 1st respondent herein faced such problems and being vexed with their attitude, approached Permanent Lok Adalat expressing his anguish and grievance over the banking authorities. The petitioner herein has not only suffered financial loss, but the continuous threatening calls demanding him to pay an amount of Rs.1,00,000/- must have definitely caused lot of mental agony.
14. Further, since the entire transaction took place with the emblem of SBI, it makes a common man believe that the SBI is the promotee of the same. Even otherwise,the credit card division is only an entity of SBI and it cannot be treated as a totally different entity when the emblem of State Bank of India has 10 been used even by the credit card division, which is evident from the correspondence made by the credit card division.Having regard to the aboveand taking into consideration the admitted facts and the stand of the Nodal Officer, we feel that the order under challenge warrants no interference. However, the Appellant bank is permitted to recover the amount awarded from the Nodal Officer in view of its stand.
15. Accordingly, the Writ Petition is dismissed. No order as to costs.
Consequently, miscellaneous petitions pending, if any, shall stand closed.
________________________________________________ ACTING CHIEF JUSTICE C. PRAVEEN KUMAR __________________________________________ JUSTICE M. SATYANARAYANA MURTHY Date: 28.08.2019 SKMR