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2025 Supreme(Online)(Mad) 63271
IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. Dhandapani, J
Bhushan Goyal – Appellant
Versus
The Banking Ombudsman C/o.Reserve Bank of India – Respondent
W.P.No.28100 of 2022 | W.M.P.Nos.27377 and 27380 of 2022
For the Appellants/Petitioners: Mr. Surya Narayanan N, Mr. Vishnu Manoharan P for M/s. Rahul Balaji
For the Respondents: M/s. T. Poornam for R1, Mrs. Rita Chandrasekar for R2 for M/s. Aiyar & Dolia
Banks are liable for unauthorized transactions unless negligence by the customer is proven beyond speculation; RBI guidelines establish zero liability for customers under certain conditions.
Headnote:(A) Constitution of India - Article 226 - Unauthorized banking transactions - Customer entitled to seek refund for unauthorized transactions when diligent actions are shown, despite the Bank's argument of customer negligence - Cited case law confirms Bank's obligation to refund unless customer negligence is proven. (Paras 11.1, 20, and 21)
(B) Banking Regulation - Duty of care by banks towards customers - Banks must have robust systems in place to protect customers from fraud; failure to do so exposes them to liability - RBI guidelines mandate zero liability when complaint is lodged within three days. (Paras 14 and 8).
Facts of the case:
Petitioner, a banking customer, discovered that Rs.7,50,085/- was fraudulently transferred from his account while his mobile network was down. He immediately reported to the bank and police but was denied reimbursement. (Paras 2 to 6)
Findings of Court:
The court established the Bank's failure to prove negligence by the petitioner, thereby enforcing liability on the Bank to reimburse the amount. (Paras 16 to 17)
Issues: Whether the petitioner exhibited negligence that would absolve the Bank from compensating for unauthorized transactions, and the applicability of RBI guidelines on customer liability. (Para 9)
Ratio Decidendi: The bank cannot refuse refund based on mere presumption of customer negligence without substantial evidence; if fraud occurs under circumstances implying lack of contributory negligence by the customer, zero liability applies as per RBI mandates. (Paras 20 to 22)
Result: Writ petition allowed; the Bank directed to refund the amount within four weeks.
| Table of Content |
|---|
| 1. petitioner's claim of unauthorized transaction (Para 1 , 2 , 3) |
| 2. arguments regarding bank's liability and negligence (Para 4 , 5 , 6) |
| 3. analysis of similar cases and rbi regulations (Para 8 , 9 , 10 , 11) |
| 4. customer's diligence and bank's accountability (Para 12 , 13 , 14 , 15 , 16) |
| 5. directive for bank to recredit the amount (Para 17 , 18) |
ORDER
This writ petition has been filed seeking issuance of Writ of Certiorarified Mandamus calling for the records of the first respondent dated 25.07.2022 in complaint Number: N202223006007331/2022-23 closing the complaint filed by the petitioner, and quash the same and consequently direct the second respondent to refund the amounts to the tune of Rs.7,50,085/- relating to unauthorized transaction carried out through Current A/c No.859708801, along with interest at SBI rate for cash credits from the date the amounts were withdrawn, 24.02.2016, till the date of credit of the amounts into the account of the petitioner.
2.The learned counsel appearing for the petitioner submitted that the petitioner is the customer of the second respondent Bank holding current account in the name of M/s.Chanda Softy Icecreams bearing a/c no.85978801 and the petitioner is having mobile no.+91 98410 69000 and it is the registered mobile number with the Bank for the purpose of communication. On 23.02.2016, at around 4.00 p.m., his mobile phone lost connectivity abruptly and was unable to send or receive any messages or make or receive any calls. Hence, the petitioner called his network provider Aircel at around 12.10 p.m. on 24.02.2016 to register a complaint after which a new SIM card was issued to the petitioner at around 2.00 p.m. on the same day. After restoration of the petitioner's mobile connectivity, the petitioner found that a sum of Rs.7,50,085/- was fraudulently transferred from his bank account to unknown person's bank account.
3.The learned counsel appearing for the petitioner further submitted that immediately, the petitioner approached the second respondent Bank and informed about the same and also gave a written complaint. Thereafter, the petitioner also lodged a complaint with the Central Crime Branch, Vepery, Chennai and also filed Crl.O.P.No.7116 of 2016 seeking a direction to register his complaint dated 24.02.2016 and the same was allowed by this Court dated 04.04.2016. Thereafter, the petitioner issued legal notice dated 21.04.2016 calling upon the second respondent Bank to credit the aforesaid amount and since there was no response, filed W.P.No.28273 of 2016 and this Court vide order dated 17.02.2020 directed the second respondent Bank to consider the petitioner's complaint dated 24.02.2016 in the light of RBI circulars issued on 06.07.2017 and 04.01.2019 as well as in the light of the decision of the Kerala High Court reported in 2019 SCC Online Ker 5366, pursuant to which the petitioner received the Bank's letter dated 29.03.2022, wherein the Bank refused to grant refund of the amount and aggrieved by the same, the petitioner preferred complaint before the first respondent and the said complaint was closed on 25.07.2022 and challenging the same, the petitioner has filed this writ petition.
4.The learned counsel appearing for the petitioner further submitted that this Court has already considered similar issue in W.P.No.413 of 2024 dated 12.06.2025 [ M/s.Dadha Pharma LLP Rep. by its Authorised Signatory Mr.D.Rahul Bafna Vs. Reserve Bank of India and others ], wherein, this Court issued direction to the third respondent therein to act upon the circular issued by the Reserve Bank of India and restore / recredit the amount which was siphoned from the current account of the petitioner therein. The learned counsel further submitted that the Hon'ble Division Bench of the High Court of Gauhati in the decision reported in 2024 SCC OnLine Gau 1519 [ State Bank of India Vs. Pallabh Bhowmick and others ] has observed that the Banks cannot absolve themselves of the liability toward
