In the recent Judgement passed by NCDRC on 21st December 2020, NCDRC held the bank liable for the online fraudulent transactions if there is no fault on the customer's part.


In the present case, the Complainant purchased a Pre-paid forex plus Debit card bearing the serial no. 4123310000407245 of a limit of US$ 10,000/-, from the Opposite Party no. 2 (The Manager, HDFC Bank Ltd.). On 19.12.2008, the Complainant's father received a call from Mrs. K Pradeepa claiming to be from the credit card department of the Opposite Party bank located at Chennai, which was a confirmation call in respect of a transaction of US$310 attempted on the aforesaid forex card. After verifying the same with the Complainant, the Complainant's father denied having transacted on the card at all. Thereafter, the account statement was requested by Complainant's father from the Opposite Party.

The Complainant stated that on 20.12.2008, the Complainant's father was informed by the Opposite Party about the transactions to the tune of US$ 6,000/- which were taken place on the aforesaid forex card in the past few days. On 24.12.2008, a criminal case was registered by the Complainant at Burbank police station, Los Angles. On 04.03.2009, charge slips for the disputed transactions were received by the complainant, however, the said charge slips were in respect of 27 out of total 29 transactions. The Complainant contended that the Opposite Party failed to take any action against the fraudulent transactions in spite of having knowledge about the same since 14.12.2008. Furthermore, the Complainant claimed that her signature does not match with the signatures on the charge slips. After that, several representations were made by the Complainant to the Opposite Party for redressal of her grievances, but the Opposite Party took no action. Against this careless behavior of the Opposite Party, a complaint was filed by the Complainant before the District Forum.

The Opposite Parties challenged the maintainability of the complaint before the District Forum on the ground that the Complainant had already filed a complaint before the Banking Ombudsman, which is not yet disposed of. Furthermore, the following contentions were raised by the Opposite Parties:

  • When the large volume of transactions occurred on the forex card of the Complainant, the Opposite Parties tried to contact her, and when they failed in contacting the Complainant, then they contacted the father of the Complainant to inform about the fraudulent transactions. The forex card was put on the "Hot List" immediately after that.
  • SMS alerts facility was not opted by the Complainant due to which the messages for the disputed transactions were not received by the Complainant.
  • The Opposite Parties had taken all the requisite steps and the allegations of deficiency of service are not justifiable.

After hearing both parties, District Forum allowed the complaint, and the Opposite Parties were directed to pay $6110 in Indian Rupees from 16.12.2009 to date of Order with the interest of 12% per annum, Rs 40,000/- as compensation for mental harassment, and Rs 5,000/- as litigation costs. Along with this, the forum held that in case of failure in payment of the above-said amount by the Opposite Parties, the Complainant is entitled to recover the entire amount along with the interest of 3% per annum from the date of order till the date of realization.

Against the above order passed by the District Forum, an Appeal was filed by the Opposite Parties before the State Commission, but the State Commission confirmed the order passed by the District Forum and dismissed the appeal.

Therefore, the present Revision Petition was filed by the Opposite Parties against the order of the State Commission.

Arguments Raised by the Parties

In addition to the arguments raised by the Opposite Parties before the District Forum, the Counsel for the Opposite Parties contended that the bank is not liable to intimate card-holders in case of a suspicious or fraudulent transaction. It was also stated that the bank is not responsible for matching the signature of the customer available with the bank with the signatures on the transaction slips as the entire process is automatic and does not require human intervention. Furthermore, the Counsel for the Opposite Parties brings into the focus of the Commission the terms and conditions for the use of Forex Card. As per Condition 36, "transactions are deemed authorized and complete once EDC terminal generates a sales slip". The production of 27 charge slips by the Complainant is evidence in itself that the disputed transactions were authorized. Reliance was also placed on Condition 22 as per which "the cardholder shall at all time ensure that the card is kept at a safe place. The cardholder shall under no circumstances whatsoever allow the card to be used by the other individual". The Opposite Parties also challenged the maintainability of the Complaint as the same was filed by the Power of Attorney holder.

The Counsel for the Complainant rejected the arguments raised by the Opposite Parties on the ground that the card was in the possession of the Complainant at the time of the transactions and hence, there is no negligence on the part of the Complainant and the transactions might be the result of hacking or forgery. The Counsel further stated to the Complainant that the Opposite Party was aware of the fraudulent transaction on 14.12.2008, but the Opposite Party took no action. Also, the Opposite Parties failed to match the signatures in the charge slips from the specimen available.

Analysis by NCDRC

For dealing with the present question at hand, NCDRC relied on Consumer Education & Research Society and Anr v New India Assurance Co. Ltd. And Ors. I (2008) CPJ 317 (NC), this Commission has held that under the Consumer Protection Act,1986 technicalities are not encouraged and the only procedure is to follow the principles of natural justice. In another case on which NCDRC relied was Shankar Finance and Investments vs. State of Andhra Pradesh and Ors. Criminal Appeal No. 1449 of 2003, in which the Hon'ble Supreme Court has held, in the context of the NegotiableInstruments Act, 1938, that a Complaint may be filed by the Power of Attorney Holder and in doing so the Power of Attorney Holder is acting not in a personal capacity but as an agent on whose behalf the Power of Attorney has been executed. I am, therefore, of the considered view that a Complaint filed by the power of attorney holder is maintainable.

NCDRC concluded that there is no proof that the credit card of the complainant has been stolen and observed that the disputed transactions might be the result of forgery/hacking or some other technical or security lapse in the electronic banking system. Furthermore, NCDRC also observed that the bank cannot rely on arbitrary terms and conditions, and the terms and conditions should be in compliance with the directions issued by the RBI. NCDRC also referred to the case of Punjab National Bank and Anr. V Leader Valves II (2020) CPJ 92 (NC), in which the Commission has held the bank liable for all unauthorized and fraudulent electronic banking transactions.

NCDRC referred the RBI circular bearing No. DBR.No.Leg.BC.78/09.07.005/2017-18dated 6th July 2017, issued to all commercial bank, as per which, the customer has zero liability where an unauthorized transaction occurs due to fraud, negligence on the part of the bank, or any third-party breach. Furthermore, NCDRC held that the jurisdiction of the commission under section 21 (b) is limited and can be exercised only when the forum exercises the jurisdiction wrongly or there is a miscarriage of justice. For this, the reliance was placed by the NCDRC in the case of Mrs. Rubi (Chandra) Dutta Vs. M/s United India Insurance Co. Ltd . (2011) 11 SCC 269 and Lourdes Society Snehanjali Girls Hostel and Ors. Vs. H & R Johnson (India) Ltd. And Ors. (2016 8 SCC 286.

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