State Consumer Disputes Redressal Commission
Payu Payments Pvt. Ltd vs N. Nirmal Chander on 4 May, 2023
Cause Title/Judgement-Entry KARNATAKA STATE CONSUMER DISPUTES REDRESSAL COMMISSION BASAVA BHAVAN, BANGALORE. First Appeal No. A/1259/2022 ( Date of Filing : 27 Jun 2022 ) (Arisen out of Order Dated 25/04/2022 in Case No. CC/750/2020 of District Bangalore 3rd Additional) 1. Payu Payments Pvt. Ltd Bestech Business Tower, 9th Floor, Sohna Road, Sector 48, Gurugram-122002, Haryana, Rep by its Authorized Representative Madhur Gupta ...........Appellant(s) Versus 1. N. Nirmal Chander Major by age, No.3, 6th Road, Nandi Durga Extension, Bangalore-560046. 2. Standard Chartered Bank By CEO Mrs. Zarin Daruwala, 19, Raja Salai, Chennai-600001 ...........Respondent(s) BEFORE: HON'BLE MR. JUSTICE Huluvadi G. Ramesh PRESIDENT HON'BLE MR. Krishnamurthy B.Sangannavar JUDICIAL MEMBER HON'BLE MRS. Smt. Divyashree.M MEMBER PRESENT: Dated : 04 May 2023 Final Order / Judgement Date of filing:27.06.2022 Date of Disposal:04.05.2023 BEFORE THE KARNATAKA STATE CONSUMR DISPUTES REDRESSAL COMMISSION, BENGALURU (PRINCIPAL BENCH) DATED: 04th Day of May 2023 PRESENT Mr. K B SANGANNANAVAR: JUDICIAL MEMBER Mrs.M.DIVYASHREE : LADY MEMBER APPEAL NO. 1259/2022 ORDER
BY Mr. K. B. SANGANNANAVAR: Pri. Dist. & Session Judge (R)- JUDICIAL MEMBER This is an appeal filed by OP2 in CC/750/2020 on the file of III Additional District Consumer Disputes Redressal Commission, Bengaluru.
The Commission examined grounds of appeal, impugned order, appeal papers and heard learned counsel for appellant and R1 being party in person. R2 failed to participate in the appeal proceedings though notice of appeal is served. Now we have to decide on the appeal to see whether impugned order does call for interference for the grounds set out in the appeal?
Let us examine as to the facts of the case. One Mr.N.Nirmal Chander, raised a consumer complaint seeking direction to OPs to pay a sum of Rs.55,000/- by settling the claim for the alleged rendered deficiency in service not only on the part of appellant herein and the R2 Standard Chartered Bank. According to complainant he is account holder of Standard Chartered Bank and alleged fraudulent transaction occurred on 29th of April, 2020 at 10:03pm for an amount of Rs.1,50,000/- from his credit card and it was paid to M/s PayU Payment Private Limited namely appellant herein without his knowledge despite non receipt of any OTP either though SMS or mail from OP1 bank. It was occurred during lock down period. On 05th of May, 2020 at 5:40pm, a message was sent from Bank informing him that there is an amount due for payment on 26th of May, 2020 amounting to Rs.1,57,652.79/-. After receipt of such information immediately he informed to the customer cell and enquired that an amount of Rs.1,50,000/- was paid to OP2 and to that effect lodged a complaint alleging occurrence of fraudulent transaction requesting for an investigation and it was also complain to the cyber-crime police. On such facts the appellant and OP2 being service providers to complainant had contested the complaint, categorically denied alleged rendering deficiency in services. They are contending on 29.04.2020 there was a transaction initiated for an amount of Rs.1,50,000/- through credit card towards purchase of Amazon Gift Cards on the merchant URL of www.giftcardsindia.in as such OP2 M/s PayU Payment Pvt. Ltd. namely appellant herein facilitated the payment between the complainant and the merchant thereby settled the amount in favour of GCI Network Pvt. Ltd. While OP1 Standard Chartered Bank had denied the averments contending complainant does not fall within the definition of consumer and his dispute does not fall within the definition of a consumer dispute and after raising dispute by the complainant the credit card was blocked on 05.05.2020 for security purpose.
In view of rival contentions of the parties to the complaint, Commission below held an enquiry and directed OP Nos.1 and 2 being service providers jointly and severally liable to pay a sum of Rs.1,50,000/- along with interest @ 09% p.a. from 29.04.2020 till realization and a sum of Rs.15,000/- towards mental stress and legal fee within 30 days failing which Rs.15,000/- carry interest @ 09% p.a. from the date of order till realization. It is this order being assailed in this appeal contending that the Commission below failed to understand the online transaction process and limited role of the appellant/OP2 is only an intermediary to facilitated the payment between the bank and Merchant GCI Network Pvt. Ltd. after two factor authentication as mandated by RBI and had no control over the alleged transaction except for facilitating the payment has some considerable force. Ld.Counsel for the appellant would contend that Commission below held appellant/OP2 and OP1 Bank are jointly and severally liable to pay is not sustainable is liable to be set aside and to find support placed copy of the Circular dated 06.07.2017 issued by RBI to all Scheduled Commercial Banks and Small Finance Banks and Payments Banks wherein could see Customers Liability is Zero if fraudulent transaction is report within 03 working days from the date of receiving the communication and the bank on being notified by the customer shall credit the amount involved in the unauthorized electronic transaction to the customer's account within 10 working days. The appellant/OP2 also placed copy of bill of supply showing the purchase of the product "Amazon Gift Card" from the merchant GCI Network Pvt. Ltd. and copy of the Amazon Gift Vouchers wherein could see description of product Amazon E Gift Card amount payable at Rs.1,50,000/- which was transferred to OP1 Bank from the account of complainant and enquiry reveals the transaction mentioned had occurred in the credit card ending 2814 held in the name of Mr.N.Nirmal Chander. The complainant being card holder and his liability in disputed transaction, since alleged a fraudulent transaction was reported within 03 days, OP1 Bank is bound to reverse Rs.1,50,000/- to his account as per the guidelines of the RBI and the liability of the complainant is Zero, was rightly appreciated by the Commission below, but facts remained that Commission below failed to appreciate the materials placed on record by OP2, wherein could see the role of OP2 as stated above was limited only to facilitate the merchant and the Banker, yet wrongly held the liability of OP1 and 2 is joint and several. In this regard learned counsel for appellant placed a reliance of the Hon'ble NCDRC in the case of Chariman, Punjab National Bank and others v. Leader Valves Ltd. decided on 13.03.2020 wherein in para-11, 12 & 13 held as follows : -
11. The first fundamental question that arises is whether the Bank is responsible for an unauthorized transfer occasioned by an act of malfeasance on the part of functionaries of the Bank or by an act of malfeasance by any other person (except the complainant/account-holder).The answer, straightaway, is in the affirmative.If an account is maintained by the Bank, the Bank itself is responsible for its safety and security.Any systemic failure, whether by malfeasance on the part of its functionaries or by any other person (except the consumer/account-holder), is its responsibility, and not of the consumer.
12. The second fundamental question that arises is whether the Bank is responsible for an unauthorized transfer due to any virus or hacking in the Bank's computerized system.The answer, straightaway, to this question also is in the affirmative.If an account is maintained by the Bank, the Bank itself is responsible for its safety and security.Any systemic failure, due to any virus or hacking in its computerized system, is its responsibility, and not of the consumer.
13. It is seen that the complainant, on his part, had been diligent and dutiful in bringing the unauthorized transfers to the notice of the Bank without undue delay, he brought the unauthorized transactions to the Bank's notice the same day, in the evening, on checking his accounts.His responsibility ended there, and the bank's responsibility started, it was the Bank's responsibility to identify the systemic failure, remedy the pecuniary loss and injury to the complainant.
And in Appeal No.352/2018 Hon'ble Chandigarh State Consumer Disputes Redressal Commission decided on 26.08.2019 in the case between Manager, Customer Services, SBI Cards & Payment Services Pvt. Ltd. v. Vishal Sabharwal and others in para-3 & 5 held as follows:-
3. On the other hand, respondent no.1 (complainant), who appeared in person, refuted the arguments raised by the counsel for the appellant and submitted that his credit card issued by the appellant was hacked and an amount of Rs.39,999/- was fraudulently transferred from his credit card account to some unknown account by some unknown person by hacking his email ID and credit card details.He argued that as the transaction was a fraudulent one, the appellant offered a reversal of Rs.10,000/- while replying to the legal notice sent by him. He further argued that the Forum rightly allowed his complaint by citing Circular dated 06.07.2017 of Reserve Bank of India whereby detailed instructions with regard to Limiting Liability of Customers in Unauthorized Electronic Banking Transactions have duly been conveyed to All Scheduled Commercial Banks (including RRBs) and all Small Finance Banks and Payments Banks. It was argued that as per said circular, in case of third party breach where deficiency lies neither with the Bank nor with the customer but lies elsewhere in the system and the customer notifies the bank within three working days of receiving the communication from the bank regarding unauthorized transaction, such customer is entitled to zero liability. Lastly, it was argued that the impugned order passed by the Forum be upheld and the appeal of the appellant be dismissed.
So far as the argument raised by the Counsel for the appellant qua complainant being himself negligent in not taking due care of confidential information of the credit card and sharing the said detail with someone else, who did the alleged transactions, is concerned, it may be stated here that argument raised is afterthought as the appellant miserably failed to prove the said fact on record. Not only this, once the credit card was in possession of the complainant, who did not share its confidential details to anyone else, the alleged transaction, whereby an amount of Rs.39,999/- was transferred from his credit card account to some unknown account by some unknown person by hacking confirmed that money was transferred to the Airtel, IDEA and Oxygen Wallet. In is also pertinent to mention here that once any such kind of credit facility by way of credit card is provided to a consumer, the authority issuing such a card is supposed to ensure that its online operational use may not be hacked by any other person with an intent to extract money from credit card account by hacking the confidential information of the card holder or by hacking the email ID on which OTP was sent, which has happened in the case of the complainant. It is also a fact proved on record that immediately after receiving information qua the alleged fraudulent transaction, the complainant lodged a complaint with the Customer Care of the appellant, which was duly registered and also took up the matter with the OPs vide his email dated 30.10.2017. In view of the aforesaid circular, since the deficiency lies neither with the Bank nor with the complainant but lies elsewhere in the system, the complainant is definitely entitled to zero liability and the liability is that of the appellant to reverse the fraudulent transaction. Therefore, in the absence of any cogent and convincing evidence on record qua the transaction being a valid transaction, we endorse the view arrived at by the Forum that the appellant clearly indulged into unfair trade practice and was also deficient in service by not reversing the entry of Rs.39,999/- in his credit card account.
Further the Hon'ble NCDRC in the case of HDFC Bank Limited v. Jesna Jose on decided on 21.12.2020 held in para-11 as thus -
11. The first fundamental question that arises is whether the Bank is responsible for an unauthorized transfer occasioned by an act of malfeasance on the part of functionaries of the Bank or by an act of malfeasance by any other person (except the complainant/account-holder).The answer, straightaway, is in the affirmative.If an account is maintained by the Bank, the Bank itself is responsible for its safety and security.Any systemic failure, whether by malfeasance on the part of its functionaries or by any other person (except the consumer/account-holder), is its responsibility and not of the consumer".
Thus, in view of the above proposition of law laid down in so far as the liability of OP1 Standard Chartered Bank is concerned is well settled and the commission below rightly held it is the bankers responsibility and not of the consumer but in so far as fastening joint liability on the part of OP2/appellant herein has to be held contrary to facts and law, is liable to be set aside. Accordingly, we proceed to allow the appeal in part and set aside the order dated 25.04.2022 passed in CC/750/2020 on the file of III Additional District Consumer Disputes Redressal Commission, Bengaluru in so far as OP2/appellant is concerned and the rest of the order passed by the Commission below is confirmed.
The Amount in deposit is directed to be refund to appellant with proper identification by his advocate.
Send a copy of this Order to the District Commission and parties to the appeal.
Lady Member Judicial Member *GGH* [HON'BLE MR. JUSTICE Huluvadi G. Ramesh] PRESIDENT [HON'BLE MR. Krishnamurthy B.Sangannavar] JUDICIAL MEMBER [HON'BLE MRS. Smt. Divyashree.M] MEMBER