KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

VAZHUTHACAUD, THIRUVANANTHAPURAM

C.C. No. 109/2014

JUDGMENT DATED: 17.08.2023

PRESENT:

SRI. AJITH KUMAR D.                                                    : JUDICIAL MEMBER

SMT. BEENA KUMARY. A                                              : MEMBER

SRI. RADHAKRISHNAN K.R.                                        : MEMBER

COMPLAINANT:

Anil Abraham, S/o K.K. Abraham, Kunnil House, Maramon P.O., Pathanamthitta-689549 represented by his Power of Attorney Holder Sri. K.K. Geevarghese, Plot No. 1, MKK Nair Nagar, Palliparambu Kavu Road, Tripunithura, Kochi-682 031.

                             (By Adv. Ashok B. Shenoy)

                                                Vs.

OPPOSITE PARTY:

State Bank of India, Kozhencherry Branch, Government Hospital Road, Kozhencherry-689 641 represented by its Manager.

               (By Adv. R. Ram Mohan)

JUDGMENT

SRI. AJITH KUMAR D.: JUDICIAL MEMBER

This is a complaint filed by One Anil Abraham under section 12 r/w 18 of the Consumer Protection Act, 1986 against the State Bank of India, Kozhencherry branch alleging deficiency of service.

2.  The facts contained in the complaint in short are stated as under:-

Complainant is a non-resident Indian working in Abu Dhabi.  He had a Non-Resident External (NRE) Savings Deposit Account No.30847539183 with the opposite party.  The account was opened in 2009 for the purpose of depositing his savings and income derived from abroad and he had never made any money transfer from the account to persons outside India. On 20.06.2013 the complainant had issued a cheque for Rs. 2,14,299/- to M/s. Skyline Builders.  The cheque was dishonoured owing to insufficiency of funds. When the complainant contacted the opposite party over telephone it was informed that the opposite party had transferred a sum equivalent to 15,000 US Dollars on 11.06.2013 to Account No.030155075487800 of West Pac Bank at Auckland in New Zealand as per a request over Email purportedly made to the opposite party by someone claiming to be the complainant.

3.  The complainant had never made any request for transfer of funds to the Bank.  He could not comprehend the fact that the opposite party had made unauthorized transfer of such a huge amount without any signed written mandate or cheque from the Account holder.  But he came to know that without exercising due care and caution and without contacting the complainant over phone or fax money was transferred from his account to the account of a person at Auckland.  On 08.07.2013 and 09.07.2013 the complainant had sent Email to the opposite party and the Regional Manager of the bank to know about his cash in the account.  On 12.07.2013 the complainant came to India and met the opposite party in the presence of the Chief Manager -Administration and sought for their explanation.

4.  According to the opposite party, on receiving the Email the opposite party had advised the unknown person who sought for money transfer to provide certain details like overseas account No., name of the beneficiary etc. and the overseas destination bank had transmitted certain forms to the above individual for processing the proposed money transfer.  After receiving the scanned copies of the filled up forms from the person at the other end the above request was routed by email ID of the complainant after hacking the Email account of the complainant.

5.  The bank had no explanation as to why amount was transferred to an outsider merely on the basis of an Email.  The act of the opposite party is in gross violation of the policy on Depositors rights evolved and publicized by the opposite party on their website which stipulates that withdrawals from account can be made only by way of cheques, withdrawal forms, through Automatic Teller Machines, by means of electronic transfer through internet, by using biometric cards, by giving standing instructions to the bank and ECS instructions through other means which may come into usage after giving due notice on the bank's website.  The opposite party never made reverse of the amount or compensate the complainant for the loss caused on account of the illegal act of the Bank which too is in total violation of the compensation policy evolved and publicized by the opposite party on their website. The complainant would seek for refund of Rs. 8,80,088/- which was debited unauthorizedly along with interest @ 18% per annum from 11.06.2013 till realization.  The interest till the date of filing of the complaint is worked out as Rs. 1,71,617/- and hence the sum is adjudged as Rs. 10,51,705/- (wrongly shown as Rs. 20,51,705/-) with future interest @18% per annum till the date of payment.  Complainant would claim Rs. 10,00,000/- being compensation for the injury/loss suffered along with future interest @18% per annum and costs.

6.  Complaint was admitted and notice issued to the opposite party who appeared and filed version with the following pleadings:-

The complaint is not maintainable being barred by res-judicata as the complaint filed by the complainant on the same incident was dismissed by the Banking Ombudsman which fact is deliberately suppressed in the complaint.  Complainant has raised false allegations and therefore the complaint may be dismissed as per S.26 of the Consumer Protection Act.  The complainant has failed to set out any case for deficiency of service.  The opposite party had taken adequate care and the entire action taken by the bank was in the best interest of the complainant and there is no fault on the part of the opposite party.  The allegations narrated in the complaint are outside the scope of Consumer Protection Act as required in Section 2 (1) (c).

7.  The complainant, on various occasions had sent Email requests to the bank for communications related to financial transactions from the same email ID.  No disputes or allegations were raised by the complainant with respect to such transactions.  On 23.05.2013 the opposite party had received Email from the complainant’s email ID for confirmation of remittance of Rs. 10 Lakhs to the complainant’s account and the opposite party had confirmed the same on 27.05.2013.  On 03.06.2013 the opposite party received an email from the same email ID of the complainant requesting for transfer of USD 15000 to another account with WEST-PAC Bank in New Zealand. When the aforesaid email was received the Bank had forwarded soft copies of the prescribed forms required for confirming and effecting the transfer and requested to send the same duly filled up and signed.  On 06.06.2013 the opposite party received the scanned copies of the form duly filled up and signed by the complainant.  The signature of the complainant was duly verified by the opposite party with the specimen signature on record and found the same completely matching and genuine.  There was no occasion for the opposite party to cast any doubt about the email or the forms received.  The branch forwarded the form received to the Thiruvalla Branch of the opposite party for considering remittance as requested by the complainant.  Thus the transfer of USD Dollars 15,000 was effected by the branch on 11.06.2013.

8.  The above decision was taken in the best interest of the complainant.  There were no lapses on the part of the opposite party and the transfer of funds was effected in good faith and without any negligence.  The complainant has admitted that the e-mail supposedly sent from the email ID of the complainant “anilkunnil@gmail.com” was after successfully hacking complainant's email account.  This itself reveals that the email message received by the branch was from the email ID of the complainant.  Hence the opposite party is not bound to refund the amount.  Elaborate evidence with the help of the Cyber Cell Authorities and numerous numbers of documents are required for disproving the allegations in the complaint and hence this Commission lacks jurisdiction to entertain the complaint.  Opposite party would seek for dismissal of the complaint.

9.  On the side of the complainant PW1 was examined and Exhibits A1 to A17, X1& X2 marked.  RWs 1 & 2 were examined by the opposite party and Exts. D1 to D9 marked.

10.  Heard both sides.  Perused the case records.

11.  Now the following points are raised for discussion:

1. Whether the complaint is barred by res judicata?
2. Is there any deficiency of service on the part of the opposite party in transferring the amount from the account of the complainant?
3. Reliefs and costs?

12.  Point No. (i):-The plea of res judicata is raised by the opposite party stating that the complainant had approached the Banking Ombudsman in respect of the same issue and the petition was dismissed.  According to the opposite party this complaint is barred on that ground.  Exts. A10 & A11 are the relevant documents in this regard.  Ext. A10 is the letter dated 27.09.2013 by the banking Ombudsman to the complainant that the adjudication involved in the matter require elaborate documentary evidence and hence the said authority found it inappropriate to adjudicate the dispute and hence the complaint filed by the complainant was closed by resorting to section 13(c) of the Banking Ombudsman Scheme 2006.

13.  Being aggrieved, the complainant had filed a Writ petition before the Hon’ble High Court as WP(C) No.9416/2014(B).  Ext. A11 is the judgment in the said writ petition dated 01.04.2014.  The High Court took a view that Ombudsman cannot be directed to conduct adjudication as the complainant has got other avenues to agitate by approaching the Consumer Forum, the Civil Court or Criminal Court.  On the basis of the observation in Ext. A11 the complaint was filed.  Res Judicata would come in to operation only if the dispute is finally decided.  Exts. A10 & A11 would prove that no adjudication is so far done in the matter by the Banking Ombudsman or the Hon’ble High Court.  The counsel for the complainant placed reliance upon the ruling of the Apex court reported in 2021(4) KLT 796 in "Sreehari Hanumandas Totala Vs Hemant Vittal Kamath & others "to support the case of the complainant that the basic requisite to attract Sec. 11 is that there should be finality to litigation. Here no final adjudication has taken place.  So, there is no bar in seeking an adjudication before this Commission.  Point (i) is found in favour of the complainant.

14.  Points (ii) & (iii): Complainant had given evidence as PW1 in support of the pleadings in the complaint.  Ext. A1 is the copy of the power of attorney executed by the complainant in favour of his father-in-law to initiate proceedings before the Banking Ombudsman against the Bank in respect of the unauthorized transfer of funds merely on receipt of an Email.  The unauthorized transfer had come to the notice of the complainant when his cheque was bounced for the reason of insufficiency of funds.  Ext. A2 is the intimation issued by the Branch Manager, Thiruvalla branch of SBI dated 29.06.2013.  Ext. A3 is the statement of account from 01.01.2013 to 15.07.2013 with respect to the account of the Complainant.  As per Ext. A3, it could be seen that on 29.06.2013 the cheque bearing No. 329568 was returned as intimated in Ext.  A2.  When Ext. A2 was received the complainant came to know about the unauthorized transfer of funds.  Ext. A3 would show that on 11.06.2013 Rs. 8,80,088/- was transferred from his account as equivalent amount to 15000 US Dollars.On getting information about it the complainant had issued a letter to the Regional Manager of SBI.  Ext. A4 is the copy of the above letter.  On 17.07.2013 the complainant had issued a letter to the Manager, Kozhencherry branch, the Chief Manager -Administration, DGM Vigilance and the Chief General Manager SBI requesting them to reimburse the funds which was unauthorizedly transferred.  Copy of the letter and the postal receipts affixed is seen marked as Ext.A5. Ext. A6 is the letter dated 19.07.2013 by the Regional Manager SBI stating that a detailed investigation is required with an  advice to lodge a criminal complaint to the Cyber Cell. Ext.A7 is the copy of the petition filed by the complainant before the Sub Inspector of Police, Aranmula Police Station.  Exts. A8 & A9 are the lawyer’s notice issued on behalf of the complainant and the reply notice.  Ext. A12 is the Policy on depositors’ rights and Ext. A13 is the Compensation policy which are the print outs taken from the website of SBI.  The complainant had also filed the notarized copy of his passport, the itinerary and visa to prove that he had been working abroad and exhibited them as A14 to A16.

15.  According to the complainant he had to face financial crisis on account of this unauthorized transfer of funds and he was constrained to avail a loan for Rs. Five Lakhs from the Kozhencherry Branch of Vijaya Bank.  Ext. A17 is the certificate issued by the said Manager in this regard.  The complainant had also caused production of the copy of the FIR in Crime No.945/2013 registered by the police on his petition and a letter issued by the Deputy General Manager, SBI dated 09.08.2014 to the Inspector of Police, Kozhencherry stating that from the internal investigation conducted by the Bank it was found out that the instructions for making third party remittance received from the customers on email to verify with the customer using other alternate means like telephone or fax were not resorted to by the then manager Sri. Rajan Thambi who had authorized the remittance and he was punished for this lapse.

16.  The complainant had narrated the events that took place in chronological order.  His testimony is supported with documentary evidence.  No branch manager is authorized to transfer funds from the account of a customer on the basis of email communication.  It is also significant to note that the then manager was not examined to offer any explanation regarding the unlawful transfer.  The best evidence has been suppressed by the Bank.  The inconsistent stand taken by the bank is clear from Ext. X2. The recital contained in Ext. X2 would show that the Bank was fully aware about the fault on the part of their employee in transferring funds on an E-mail without contacting the customer through alternate means such as telephone or fax.

17.  The Bank had examined the subsequent manager as RW1.  Ext. D1 is the annexure to the Account Opening Form submitted by the complainant at the time of opening the account.  Ext. D2 is the reply email sent to the complainant regarding the transfer of Rs. 10,00,000/-.  Ext. D3 is the copy of the mail received from the email of the complainant requesting for transfer of 15000 US Dollars.  Ext. D4 is the duly filled up signed scanned copy of the documents received by the manager.  Ext. D5 is the copy of the letter dated 09.07.2013 issued by the Branch Manager, SBI Kozhencherry to the Chief manager stating that USD 15000 was transferred on 11.06.2013 to Account No. 030155075487800 of Garry Albert Fraser and the account holder has requested that since he has never requested for such a transfer, steps may be taken to block the amount.  Ext. D6 is the letter issued by the Inspector, Kozhencherry Police Station directing the Bank manager to cause production of the account opening form for the purpose of investigation.  Ext. D7 is the report by the investigation officer that the above crime is under investigation and the culprit is not located.  Ext. D8 is the Account statement of the complainant.  Ext. D9 is a Certificate as contemplated under Sec. 65 B of the Evidence Act.  The complainant would attribute grave negligence on the part of the then manager in not making verification by alternative modes such as telephone or fax.  The report filed by the bank to the investigation officer, marked as Ext. X2 is an acceptable item of evidence that the Bank is fully aware about the irresponsible conduct of their manager in not complying with the instructions in this connection by not making any alternate mode through telephone or fax to check the veracity of the email.  The evidence adduced by the subsequent manger would prove that the Bank was provided with the address of the complainant in Abu Dhabi and also his phone number.  The Manager had deposed that the then manager had attempted to contact the mother of the complainant who spoke that the complainant was on tour.  But the evidence of this witness is only hearsay as spoken to by his predecessor in office.  If any call was made the Bank could have caused production of the call list of the phone.  No such steps are seen taken by the Bank.  The manager who made the transfer of funds was not examined.  Non-examination of the concerned manager is a circumstance which would work out against the Bank that the said person was not examined for the reason that his examination would bring the real facts transpired.  So an adverse inference has to be drawn against the Bank that the Bank had deliberately kept the concerned manager away so as to escape from the culpable negligence on the part of the Bank official.

18.  The inconsistent stand taken by the Bank in justifying the irresponsible conduct of their Manager in transferring the fund on an email communication without adhering to the instructions that the account holder should be contacted through alternative modes by phone or fax is a clear proof to show that the fault committed by the Bank was attempted to be hidden.  No one can expect such an act from a Nationalized and reputed financial institution like SBI.  If such a mistake is done by the employee of the Bank it is obligatory for the bank to recoup the amount to the customer and to realize the said amount from the erring official of the bank.

19.  The policy published in the website of the Bank does not approve a transfer of funds on the basis of email.  The compensatory policy of the Bank would also assure immediate reversal of funds in such situations.  It is also important to state that the Bank never showed the courtesy to report the matter to the Police and the complainant was asked to file the criminal case.  The complainant had placed emphasis on a RBI circular bearing number RBI/2017/18/15 DBR number Leg. BC 78/0907005/2017-18' dated 06.07.2017 under the caption “Customer's Protection -Limiting Liability of Customers In Unauthorized Electronic Banking Transactions” wherein it is made clear that the burden of proving customers liability in cases of unauthorized Banking transactions shall lie on the Bank.  It also stipulates that being notified by the customer the Bank shall credit the amount to the customer's account within 10 days.  Opposite party had violated the aforesaid circulars. In this connection the following precedents were also cited by the counsel for the complainant:

(1)  Canara bank Vs Canara Sales Corporation and others 1987(2) KLT SC 666 to canvas a position that even if there is long inaction on the part of the account holder it does not absolve the bank from the liability.

(2)  Pallabha Bowmick Vs Ombudsman, Reserve Bank of India and others reported in 2022 SCC Online Gauhati 1454 that the bank has to abide with the circulars and recoup the funds to the account of the customer if the customer notifies the unauthorized transfer of funds.

(3) Kerala State Co-operative Marketing Federation Vs SBI.2004 (1) KLT 1117SC.

(4)  Dav Public School Vs Senior Manager Indian Bank 2019(20) SCC31.

(5) State of Rajasthan Vs Klayan Sundaram Industries Ltd 1996 KHC458.

Basing upon the above precedents the counsel for the complainant would submit that there is gross negligence on the part of the bank in making an unauthorized transfer fund on the basis of an e-mail and the refusal to re credit the funds even after the complainant notifies the fact.  In normal case when fraud is detected the concerned financial institution will immediately move the Police so as to get the criminals caught without delay. If the Bank had proceeded in that way there was chance to book the criminals who cheated the complainant and Bank.  But the culprits still remain outside the net.

20.  The learned counsel for the opposite party had placed reliance upon a ruling of the Apex Court in Civil Appeal No.7289/2009 dated 27.03.23 in “The Chairman & Managing Director, City Union Bank LTD & another Vs Chandramohan” and argued that the complaints involving highly disputed questions of facts or the cases involving tortious acts or criminality like fraud or cheating could not be decided by the Consumer Forum.  It was a case where there was total absence of evidence of any fault and imperfection, shortcomings or inadequacy in the performance, which is required to be maintained by the bank.  There was also conflict of interest among the account holders.  Here the situation is entirely different.  There is convincing evidence on record to come to a conclusion that the irresponsible conduct of the manager in not making verification through alternate modes over phone or fax with the account holder before acting with the email in transferring funds had caused such a transfer of money.  There is also suppression of best evidence by the Bank in not examining the manager concerned and hiding his irresponsible conduct and the punishment imposed on him as seen reported in X2.

21.  On consideration of the aforesaid facts and circumstances we are fully convinced that there is deficiency of service on the part of the Branch Manager in transferring funds without contacting the account holder only on the basis of email communications.  There is also deficiency of service on the part of the Bank in ensuring transactions as per the direction and desire of the account holder. The Bank, even after finding out the fault of its Manager suppressed that fact and set up a case attributing fault on the complainant.  Since the complainant had lost funds on account of the fault of the Manager the Bank is liable to refund the amount with interest at the rate of 8% per annum from the date of transfer till the amount is fully realized.

22.  The complainant, who was working abroad, had to suffer much hardship and he was constrained to approach different authorities in his native place to redress his grievance.  The documents filed before us show that the complainant had to avail loan for his requirements after the unauthorized transfer of his money.  The interesting part is that the fault was committed by one of the leading nationalized Banks of our country, who is expected to keep the customers safe.

23.  Having due regard to the inconvenience and hardships caused to the complainant it is found that the complainant is entitled to get Rs. 2,00,000/- as compensation with interest @ 8% per annum on it from the date of the complaint till realization.  The complainant is also entitled to get Rs. 10,000/- as costs of the litigation.

In the result, the complaint is allowed as follows:

(a) Opposite party is directed to pay Rs. 8,80,088/- (Rupees Eight Lakhs Eighty Thousand and Eighty Eight only) along with interest @ 8% per annum from 11.06.2013, the date on which the amount was unauthorizedly transferred till the date of payment.

(b) Opposite party is directed to pay Rs. 2,00,000/- (Rupees Two Lakhs only) as compensation with interest @ 8% per annum from the date of filing of the complaint i.e; from 20.10.2014 till the date of payment.

(c) Opposite party is further directed to pay Rs. 10,000/- (Rupees Ten Thousand only) as costs of the litigation.

(d) The opposite party shall pay the above amounts within 30 days from the date of receipt of the copy of this judgment failing which the opposite party shall pay interest for the entire amount @ 9% per annum.

AJITH KUMARD.: JUDICIAL MEMBER

                                                                        BEENA KUMARY. A         : MEMBER

                                                                        RADHAKRISHNAN K.R.  : MEMBER

jb

APPENDIX

I         COMPLAINANT’S WITNESS :

II       COMPLAINANT’S DOCUMENTS :

III      OPPOSITE PARTY’S WITNESS :

IV      OPPOSTE PARTY’S DOCUMENTS :

V       COURT EXHIBIT :

AJITH KUMARD.: JUDICIAL MEMBER

                                                                        BEENA KUMARY. A         : MEMBER

jb                                                                     RADHAKRISHNAN K.R.  : MEMBER