The central legal point established was the significance of matching beneficiary names with account holder names in electronic fund transfers to prevent digital payment inefficiency and returns.

JUDGMENT

Prathiba M. Singh (Oral)

1. This hearing has been done through hybrid mode.

2. These matters relate to domain names being registered by unknown third parties infringing trademark right of various brand owners and implementation of court orders by the Domain Name Registrars (`DNR'). From time to time, various directions have been passed by this Court in respect of blocking and locking of the infringing domain names, and implementation of court orders by various DNRs which may or may not be located in India.

3. During the hearing in the present batch of cases, it was brought to the attention of the Court that in various cases there was a mismatch between the name of the bank account holder and name given in the billing details. It was submitted before the Court that for validating a financial transaction, only the account number is matched and the name of the account holder and the prospective recipient are not matched. In view of this submission, the Court had impleaded Reserve Bank of India as Defendant No.38 in CS (COMM)- 350/2022 titled Gujarat Cooperative Milk Marketing Federation Ltd. v. Amul-Franchise.in.

4. RBI had vide affidavit dated 9th February, 2023 placed its stand on record to the following effect:

"10. It is submitted that Immediate Payment Service (IMPS), one of the modes of electronic fund transfer is operated by National Payments Corporation of India (NPCI). NPCI has enabled the banks to offer beneficiary account validation functionality to confirm the beneficiary account name (as per bank CBS) and account status before making the transaction. Banks need to ensure that they are equipped for providing this functionality and also necessary changes in their Bank application (net banking/mobile banking) User Interface (UI)/User Experience (UX) to enable this functionality to their customers in the transaction process flow. Unified Payments Interface (UPI) which is also operated by NPCI offers the functionality wherein the customer can verify the beneficiary UPI ID/Virtual Payment Address (VPA) from the app thus providing a layer of protection to the remitter."

5. In view of the above stand of the RBI, the Court on 10th February, 2023 directed the RBI to seek instructions on whether RBI can issue guidelines to make it mandatory for banks to match the beneficiary's name in the billing details with the details of the account holder's name.

6. The stand of RBI was placed before the Court vide affidavit 27th March, 2023 which was captured in order dated 27th March, 2023. The same reads as under:

"6. The RBI's affidavit which is sworn by Mr. Ajay Abrol, Assistant General Manager, Department of Supervision (Banking), RBI states that in view of the manner in which names of account holders can be spelt, there can be mismatch of spellings in the names and, as a result a large number of transactions could get rejected, if the matching of beneficiary name with the account number is mandated. However, the affidavit adds as under:

"6. It is further submitted that Digital Payment products provides beneficiary name verification services which the originator can use to verify the name of the account to which funds are being transferred prior to initiating transfer. At present, the facility of beneficiary name lookup at the time of origination of transaction is available for UPI. RBI is exploring the feasibility for introduction of the aforesaid facility in other payment products such as RTGS, NEFT, IMPS etc both in online and off-line i.e. at the bank branch modes, and steps would be taken by RBI after taking into account technology, data privacy and other related issues.

7. It is submitted that issuing guidelines making it mandatory for banks to match the beneficiary's name in the billing details with the account holder's name before passing on credit will make digital payments inefficient and result in a large number of returns. In view of the submissions made herein above, RBI is not in favour of issuing any guidelin