CONSUMER DISPUTES REDRESSAL COMMISSION – X

                           GOVERNMENT OF N.C.T. OF DELHI

                     Udyog Sadan, C – 22 & 23, Institutional Area

                                       (Behind Qutub Hotel)

                                        New Delhi – 110016

    Case No.:16/2020

1.Mr. Rajeev Sukumaran

S/o Shri K.N.S. Pillai

R/o 218, Pickett District Road

New Milford Connecticut, 06776

Through Power of Attorney Holder Mr.Nakul Jain

2. Mrs. Radhika Jain

W/o Shri. Rajeev Sukumaran

R/o 218, Pickett District Road

New Milford Connecticut, 06776

Also at

B-498 New Friends Colony

New Delhi-110025.

Through Power of Attorney Holer Mr. Nakul Jain

3. Mr. Nakul Jain

S/o Shri Prem Kumar Jain

R/o B-498 New Friends Colony

New Delhi-110025.…..COMPLAINANT

Vs.   

ICICI BANK LTD.

33, Community Centre

New Friends Colony

New Delhi-110025.

Also at Registered office:

ICICI Bank Tower

Near Chakli Tower

Old Padra Road

​Vadodra

Gujrat-390007.

          Date of Institution-17.01.2020

          Date of Order- 18.10.2024

  O R D E R

RITU GARODIA-MEMBER

1. The complaint pertains to deficiency in banking services on part of OP.

2. Facts as stated in the complaint are that the complainant Nos.1 &2 are joint account holders of a Non-resident External Rupee Savings Account bearing no.003501081032 with OP since September 2006.

3. On 04.06.2019, complainant-1 being a resident of United States of America was at the premises of the Young Men Christian Association (YMCA) situated at Brookfield, Connecticut, U.S.A.  At around 5.30 p.m., the complainant’s credit and debit cards were stolen by some unscrupulous elements from the wallet-holder.  The said wallet-holder contained the following four cards-

4. Upon realizing that his wallet had been stolen, the complainant-1 immediately called the concerned banks to report the said theft and get the cards blocked in order to prevent any unauthorized transactions.  The complainant-1 also registered a police complaint.

5. During this short time, while the complainant was ensuring that the stolen cards are not mis-used, the complainant started receiving text messages on his registered mobile number viz.+1-475-218-2020  indicating some unauthorized transactions having taken place through the said stolen credit/debit cards. The JP Morgan Credit Card was blocked posthaste and no unauthorized transaction was reported.  However, unauthorized transactions through the remaining three credit/debit cards were used for following unauthorized transaction-

6. The unauthorized transactions carried out on the Citibank credit card were forthwith reversed by Citibank. 

7. In respect of  the ICICI NRE Debit card number ending in 5092, it was mis-used on 04.06.2019 by making unauthorized purchases from an APPLE Store Merchant Establishment for Rs.1,46,85.19 and the amount was immediately debited from the said NRE account.

8. The complainants immediately reported the un-authorized transaction to OP.  The complainant was told to submit a claim/dispute form.   The complainant-1 also spoke to the Customer Care of the OP, downloaded the ‘Card Member Dispute Form’ and submitted the same.

9. After lapse of four days, OP vide its email dated 09.06.2019 responded, confirming that the complaint raised was under process and the outcome would soon be communicated.  OP in its email dated 10.07.2019 wrote that it was unable to reverse the amount of Rs.1,46,385.19 as the said disputed transaction was not eligible for reimbursement under its ‘Lost Card Policy’. Multiple emails were exchanged between the parties, but to no avail.

10. In one of the email, OP raised the issue of no purchase from the card within 90 days of the disputed transaction rendering the claim of the complainant ineligible.  The complainant informed OP that he had purchased flowers on 17.05.2019 for Rs.600/- using the said debit card. 

11. OP refused to restore/reimburse the unauthorized transaction charges in contravention of the RBI Circular dated 06.07.2017 bearing DBR No, Leg.BC.78/09.07.005/2017-18 titled ‘Customer Protection-Limit Liability of Customers in Unauthorized Electronic Banking Transaction.’

12. The complainant prays for refund of Rs.1,46,385.19 with interest@18%  and Rs.10,00,000/- towards harassment and mental agony with interest @18%.

13. OP in its reply admits that complainant-1 &2 are maintaining substantial funds in the said NRE account. OP on receiving a report from the complainant about the stolen debit card, immediately blocked the card.  It is imputed by OP that the said transaction was PIN based and a person without the knowledge of PIN cannot proceed with the transaction.

14. OP could not reverse the transaction as the said transaction involved a third party merchant.  OP further submits that the transaction was PIN generated, due to which it appeared to be a legit transaction. OP further requested time from the complaint to do a thorough investigation. It is further alleged that the disputed transaction was not eligible for the reimbursement under the ‘Lost card policy’. OP has relied on the terms and conditions.

15. The complainant was told to submit a claim/dispute form.  A Card member Dispute Form was also filled out and submitted by the complainant. As per VISA screenshot, the transaction occurred on 04.06.2019.  It is stated that 05.06.2019 was Ramazan and the banks were closed on that day. The system of the bank shows the transaction posting date as 06.06.2019.

16. The complainant in its rejoinder re-iterated the averments made in the complaint.

17. The complainant has filed his evidence by way of affidavit and exhibited the following documents:-

1. Copy of police complaint is exhibited as CW-3/1.
2. Copy of card statements is exhibited as CW-3/2.
3. Copy of card member dispute form is exhibited as CW-3/3.
4. Copy of email is exhibited as CW-3/4-6, and CW 3/8-13.
5. Copy of bank statement is exhibited as CW-3/7.
6. Copy of complaints’ communications and postal receipt is exhibited as CW-3/14.
7. Copy of RBI circular is exhibited as CW-3/15.
8. Copy of terms and condition of debit card is exhibited as CW-3/16.

18. Right to file evidence by OP was closed vide order dated 09.01.2021.

19. The Commission has considered the material and documents on record. It is admitted that the complainant is an NRE account holder of OP bank maintaining substantial funds in the said account.  It is also admitted that the complainant No.1 informed OP about the theft of NRE debit card.  It is also admitted that OP immediately blocked the card.

20. It is undisputed that on 04.06.2019, a transaction was made regarding some purchases from Apple Store for Rs.1,46,385.19.  The complainant has filed a police complaint in Brookfield Police Department on 05.06.2019.  The incident reported is as follows:

‘Credit card was stolen while party was at YMCA.’

21. It is undisputed that Card Member Dispute Form was submitted to OP. It is undisputed that OP failed to reverse the amount used in unauthorized transaction under Lost Card Policy. OP has not provided any details of the policy which prevented them to reverse the transactions in its refusal to reverse the transaction.

22. Both the parties have relied on the terms and conditions of the policy.  OP has stated that the card requires PIN (Personal Identification Number) for any transaction.  Relevant terms and the conditions are as follows:

‘The card is for electronic use only as in the case of the charge slip/sales slip printed electronically from the POS terminal.The Cardholder must sign a sales slip whenever the card is used at a Merchant Establishment and should retain his copy.The bank at an additional charge may furnish copies of the sales slip.Any sales slip not personally signed by the cardholder, but which can be proved as being authorized by the cardholder will be his liability.The card is operable with the help of the cardholder’s signature or the PIN at POS terminals installed at Merchant locations depending on the functionality of the POS Terminal.’

23. Hon’ble National Commission in State Bank of India V/s J.C.S. Kataky III(2018) CPJ193(NC) has observed:

The OP Bank has consistently taken stand in their written reply as well as in the oral arguments before us that unless the particulars of the card number, PIN, expiry date and the Card Verification Value (CVV) are divulged to a third person, the card cannot be misused. It is a matter of common experience that when some payment is made from a credit/debit card on some website, the details like the card number, the expiry date, the CVV number etc. are required. In addition, a one-time password (OTP) is generated and is sent to the mobile number of the consumer and such OTP is entered before the said transaction is complete. However, for making transaction in a merchant establishment (ME), the card is handed over to the staff of such establishment and the same is put into POS and a transaction takes place after simply recording the PIN, which is valid for the ATM machine as well. It is worthwhile to mention here that the practice of entering the PIN on the POS terminal has been started only a couple of years back or so and before that, there was no requirement of entering the PIN as well. It is very clear, therefore, that the transaction on a POS terminal could be made by simply providing the card to the personnel of the merchant establishment and there was no need of sharing the other details etc. with that establishment. It was, therefore, necessary for the Bank to have carried out suitable investigation into the alleged transactions.

24. It is evident from the terms and conditions that the card can be used at POS terminals either through the entry of a PIN or by the complainant's signature on the sales slip. The use of a PIN is not mandatory. Therefore, it was incumbent upon the bank to conduct a proper investigation. OP had also requested additional time for this investigation. However, neither the details nor the results of said investigation have been provided to the complainant or placed on record.

25. Relevant portion of RBI Circular dated 06.07.2017 bearing DBR No, Leg.BC.78/09.07.005/ 2017-18 titled ‘Customer Protection-Limiting Liability of Customers in Unauthorized Electronic Banking Transaction” is as follows:
26.  

1. /Zero Liability of a customer

6. A customer’s entitlement to zero liability shall arise where the unauthorized transaction occurs in a following events:

i) Contributory fraud/negligence/deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer).

ii)Third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorized transaction.’

26. Hon’ble Bombay High Court in Jaiprakash Kulkarni Vs The Banking Ombudsman and others vide RP No.1150/2023 decided on 13.06.2024    has observed:

Both as per the said RBI Circular and the said Policy of Respondent No.2, a customer has zero liability when the unauthorized transactions occur due to a third-party breach where the deficiency lies neither with the bank nor with the customer but elsewhere in the system and the customer notifies the bank regarding the unauthorized transactions within a certain time frame. Therefore, both as per the RBI Circular and the said Policy of Respondent No.2, the liability of the Petitioners in respect of the said unauthorized transactions would be zero as the unauthorized transactions have taken place due to a third party breach where the deficiency lies neither with Respondent No.2 nor with the Petitioners, as already held hereinabove on the basis of the said three Cyber Cell reports. In these circumstances, as per the RBI Circular and as per the Policy of Respondent No.2, the Petitioner is entitled to refund of the said amount from Respondent No.2. In this context, it is also important to note that, as per paragraph 12 of the RBI Circular, the burden of proving customer liability in case of unauthorized electronic bank transactions lies on the bank.

27. In the present complaint, OP has filed written submission but failed to substantiate it with evidence by way of affidavit.  Hon’ble National Commission in Life Insurance Corpn. Of India & Anr. v/s Ashok Manocha vide RP No.10/2007 decided on 26.05.2011 has observed”

These apart from filing the written statement of H.K. Chaudhary, an officer of the Petitioner/Insurance Company in support of its case, Petitioner/Insurance Company did not lead any other evidence in support of the contentions made in this statement. Counsel for Petitioner has contended that since the written statement was made in affidavit form, it should be taken as evidence which we are afraid, we cannot do. Written statements cannot be taken as evidence since the Respondent did not get an opportunity to cross-examine or challenge the same. It is well settled that pleadings cannot be held as evidence and in the absence of any evidence in support of the case set up, the certificate produced by the Petitioner from the hospital is of no help to the Petitioner because as stated above the Petitioner took no steps to prove the same; production of a document is different from proof of the same.

In view of the above facts, we uphold the orders of the fora below that the insuree died as a result of an accident for which he was covered under the insurance policy. Therefore, the revision petitions are dismissed accordingly.

28.  It is evident that the disputed transaction was a POS transaction conducted after the complainant’s debit card had been stolen. In POS transactions, the use of a PIN is not necessarily required. OP bank has failed to furnish any investigation report regarding the incident. In fact, it is unclear whether the OP bank conducted any investigation at all. The other bank involved, Citibank, had already reversed the unauthorized transaction made with the stolen card.

29. The RBI circular is unequivocal in stating that in cases of third-party breaches, where neither the bank nor the customer is at fault, and if the customer provides notification within three working days, the liability rests with the bank. In this case, the complainant had duly informed the bank on the same day the unauthorized transactions took place but the OP bank failed to reverse the transaction.

30. Hence, we find OP guilty of deficiency in service and direct it to refund Rs.1,46,385.19 with 7% interest from date of transaction till payment.  We also direct OP to pay Rs.50,000/- towards compensation and Rs.10,000/- towards litigation expense.