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KERALA HIGH COURT
P.B. Suresh Kumar, J.
State Bank of India —Appellant
versus
P.V. George —Respondent
RSA No.1087 of 2018
Decided on 9.1.2019
For the Appellant:Sri. T. Sethumadhavan, (Sr.) Sri. Kodoth Pushparajan and Sri. K. Jayesh Mohankumar, Advocates
IMPORTANT POINT
Bank owes duty to its customers to take necessary steps to prevent unauthorised withdrawals from their accounts.
Headnote:Civil Procedure Code, 1908—Order 37 Rule 1—Money suit—Suit decreed by lower appellate court—Unauthorised withdrawal from Bank account of respondent/defendant—Where bank is providing service to its customer, it owes duty to exercise reasonable care to protect interests of customer—Bank owes duty to its customers to take necessary steps to prevent unauthorised withdrawals from their accounts—If a customer suffers loss on account of transactions not authorised by him, bank is liable to customer for said loss—If a customer suffers loss in connection with transactions made without his junction by fraudsters, it has to be presumed that it is on account of failure on part of bank to put in place a system which prevents such withdrawals and banks are liable for loss caused to their customers—Only if there exists a specific term in contract between a bank and its customer to the effect that bank would be exonerated from liability in connection with unauthorised transactions if customer does not respond to SMS alerts, SMS alerts cannot be basis for determining liability of customer—Appeal dismissed. (Paras 9 to 11)
Result: Appeal dismissed.
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P.B. Suresh Kumar, J.—The defendant in a suit for realization of money is the appellant in the second appeal.
2. The plaintiff belongs to Pala in Kottayam District. He is working in a South American country, namely, Brazil. The defendant is a bank. The plaintiff is maintaining a NRE (Non-Resident External) account with the defendant. The defendant has provided net banking and Automated Teller Machine (ATM) services to the plaintiff for operating the said account. As the plaintiff is working in an offshore rig in Brazil, he used to be in India for 28 days after every 28 working days. The plaintiff was in India from 04.03.2012 to 27.03.2012. It is stated by the plaintiff that on 26.03.2012 he noticed that a sum of Rs.2,40,910.36 has been withdrawn from his account though the ATMs located at different places in Brazil between 22.03.2012 and 26.03.2012. The matter was informed by the plaintiff to the defendant forthwith and the ATM card issued to the plaintiff was consequently blocked by the defendant on 26.03.2012 itself. It is also stated by the plaintiff that though complaints have been lodged by him on 27.03.2012 and on 30.03.2012 stating that the withdrawals are unauthorized and requesting the defendant to refund the said amounts, no action, whatsoever, has been taken by the defendant on those complaints. According to the plaintiff, as the withdrawals made from his account were unauthorised, the defendant is liable to refund the amounts involved with interest. The suit is, therefore, for realisation of the said amounts with interest and costs.
3. The defendant contested the suit contending that withdrawals are not possible from the account of the plaintiff without the knowledge of the plaintiff and the defendant is, therefore, not liable for the loss caused to the plaintiff. It was also contended by the defendant that at any rate, since the loss caused to the plaintiff is not due to any action or inaction on the part of the defendant, even if the withdrawals are made fraudulently by third parties without the knowledge of the plaintiff, the bank is not liable for the same. It was, however, admitted by the defendant in their written statement that 14 withdrawals amounting to Rs.2,40,910.36 were made from the account of the plaintiff between 22.03.2012 and 26.03.2012 through the ATMs located at different places in Brazil.
4. The trial court dismissed the suit. However, in appeal, the appellate court reversed the decision of the trial court and decreed the suit. The defendant is aggrieved by the decision of the appellate court.
5. Heard the learned senior counsel for the appellant.
6. The fact that a total sum of Rs.2,40,910.36 was withdrawn from the account of the plaintiff between 22.03.2012 and 26.03.2012 through the ATMs at different places in Brazil has not been disputed by the defendant. Likewise, the fact that the plaintiff was in India from 4.03.2012 to 27.03.2012 is also not disputed by the defendant. The defendant has admitted, by producing Ext.B1 statement of transactions that the plaintiff has withdrawn money from the very same account using the ATM card issued to him from Pala while he was in India on 07.03.2012 and 09.03.2012. Likewise, the fact that the plaintiff has returned the ATM card issued to him by the defendant on 26.03.2012 itself is also not disputed by the defendant. The stand of the defendant all throughout was that money could be withdrawn from the account of the plaintiff only using the ATM card issued by the defendant and the pin number known only to the plaintiff. The case of the plaintiff is that the disputed withdrawals are unauthorised and made without his junction and therefore, the defendant is bound to refund the amounts involved to the plaintiff. The view taken by the appellate court is that in so far as it is established that the disputed withdrawals were unauthorized and made by third parties without using the debit card issued to the plaintiff, that too, through the ATMs in a fore
