Chandigarh

DF-I

CC/344/2014

WG CDR Sanjiv Kumar Pandey - Complainant(s)

Versus

The Chairman & Managing Director HDFC Bank - Opp.Party(s)

In person

12 Mar 2015

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I,

U.T. CHANDIGARH

========

 

 

                                     

Consumer Complaint No.	:	CC/344/2014
Date of Institution	:	19/05/2014
Date of Decision	:	12/03/2015

 

 

Wg. Cdr. Sanjiv Kumar Pandey s/o Shri S.N. Pandey presently resident of House No.2316, Sector 31C, Chandigarh 160030, permanent resident of Plot No.297, Badanpur, Shaktinagar, Jabalpur, PIN 482001.

 

…..Complainant

V E R S U S

1. The Chairman & Managing Director, HDFC Bank, Ramon House, 169, Backbay Reclamation, HT Parekh Marg, Churchgate, Mumbai 400020.
2. Business Head (Nodal Officer), HDFC Bank Ltd., Bank House 28, Industrial Area, Phase I, Chandigarh.
3. Nodal Officer, HDFC Bank, First India Place, Meharauli Gurgaon Road, DLF, Gurgaon 122001.
4. Principal Nodal Officer, 11^th Floor, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai 400013.
5. Branch Manager, HDFC Bank Limited, A-12, The Shopping Mall, DLF Qutub Enclave, Phase-I, Gurgaon (Haryana) 122002.
6. Rediff.com, Head Office, Mahalaxmi Engineering Estate LJ Road I, Mahim West, Mumbai 400016.
7. Mr. Rajeev Kumar, H Block, Awas Vikas 1, Satyam Vihar, Near Maharana Pratap Education Centre, Kanpur, Uttar Pradesh 208001.

……Opposite Parties

 

 

QUORUM:	P.L.AHUJA	PRESIDENT
	MRS.SURJEET KAUR	MEMBER

               

ARGUED BY	:	Complainant in person
		Sh. Sandeep Suri, Counsel for OPs 1 to 3 & 5
		OP-4 ex-parte
		Sh. Ammish Goel, counsel for OP-6
		OP-7 ex-parte.

                       

                 

PER P.L.AHUJA, PRESIDENT

1.         Wg. Cdr., Sanjiv Kumar, complainant has filed this consumer complaint under Section 12 of the Consumer Protection Act, 1986, against The Chairman & Managing Director, HDFC Bank and others, Opposite Parties (hereinafter called the OPs), alleging that he has a saving account No.00441000130720 with the HDFC Bank Ltd. DLF Gurgaon Branch (OP) and he was also issued a Debit card to undertake ATM and Online transactions.

                According to the complainant, on 26.10.2012 he booked a ticket through www.irctc.co.in but the transaction failed due to some technical reason and the amount of Rs.2,080/- was refunded and credited to his saving account on 29.10.2012.  On the same day, another transaction of Rs.33,050/- also took place in the complainant’s account which was reflected in the statement of account as POS 4386240127285870 REDIFF.COM INDIA. Since it might have taken place after the regular working hours of the bank, its value date was shown as 27.10.2012 and in the absence of mobile bank and net banking facility, the complainant came to know about it on 31.3.2013 only.  The complainant immediately contacted the concerned branch and wrote letter dated 31.3.2013 explaining the details of the fraudulent transaction with the request to investigate the matter and refund the amount of Rs.33,050/-. The complainant sent letter dated 1.4.2013 to Rediff/OP-6 asking details of the beneficiary in the said transaction and also lodged complaint in the Cyber Crime Investigation Cell, Chandigarh. The Rediff/OP-6 vide letter dated 30.10.2013 replied that no payment had been received by them.  It has been averred that after sustained correspondence, the Bank provided the details of the beneficiary vide email dated 1.2.2014. It has been contended that the disputed transaction was a result of either hacking or security lapse in the software system of the bank and the negligence and reluctance of the Bank had added to the difficulty in finding the real culprit behind the fraudulent transaction. Alleging that the aforesaid acts amount to deficiency in service and unfair trade practice on the part of the OPs, the complainant has filed the instant complaint. 

2.         In their joint written reply, OPs 1 to 3 & 5 have taken a number of preliminary objections including that since only allegations in respect of an admitted fraudulent transaction have been levelled, therefore, this Forum does not have the jurisdiction to decide the same and further that this Forum does not have the territorial jurisdiction.  On merits it has been admitted that the complainant is holding the saving account with the branch of the OPs bank situated at Gurgaon. The transaction of 27.10.2012 has not been disputed. However, it has been averred that even subsequent to the same, the complainant has been carrying out transactions in his account and has on 29.10.2012 minute transaction of Rs.28,964.73. Even subsequently, the complainant withdrew money from the ATM on 29.10.2012, 30.10.2012 and 1.11.2012. It has been pleaded that whenever transaction is done on an ATM, the available balance both before and after the same is mentioned and hence it cannot be said that the complainant was not aware of the transaction of Rs.33,050/- having been done on 26.10.2012. It has been contended that after due investigation, the complainant was informed in respect of the details of the beneficiary in terms of the email dated 1.2.2014.  It has been further contended that as the payment was received by OP-4, there was no question of the bank overlooking the fact that OP-4 did not receive any payment from the bank.  It has been denied that the OP Bank is liable to refund any amount to the complainant.  Pleading that there is no deficiency in service or unfair trade practice on their part, prayer for dismissal of the complaint has been made. 
3.         None appeared on behalf of OP-4 despite due service, therefore, vide order dated 8.7.2014 it was proceeded ex-parte.
4.         In its written statement, OP-6 has also taken a number of preliminary objections including that the questions of forgery or fraud cannot be decided under the Consumer Protection Act. It has been averred that Rediff Shopping is an online portal owned and operated by the OP and it is an intermediary facilitating the users to shop for the products and services displayed on the Rediff Shopping site.  It has been averred that once the shopper has selected the product he wants to buy, he is prompted to provide his mail ID to log in to the service for shopping the products.  After log in, the shopper is required to provide the delivery/shipping address where the item/product is to be despatched by the vendor/seller. It has been further averred that once the shopper makes the payment and details are confirmed by the payment gateway upon which the order placed by the shopper gets approved, the order number is generated which is provided to shopper and seller. The details of order approved are provided automatically by the system to the seller who then arranges for despatch of the product through the logistic/courier company and the product is delivered by the representative of the logistic company on the shipping address provided by the shopper.  The receipt of email dated 1.4.2013 from the complainant has been admitted.  It has been contended that through Rediff Shopping using the debit card, an order No.7496577 was placed on 27.10.2012 for 9 gram Gold coin for Rs.33,050/- being sold by the vendor Varahi Diamonds and Finance Limited and the shopper provided his shopping details as Mr. Rajeev Kumar, H Block, Awas Vikas 1 Satyam Vihar near Maharana Pratap Education Centre, Kanpur Uttar Pradesh 208001. The payment/transaction was approved by HDFC Bank through the payment gateway ICICI Bank on 27.10.2012 and as per the information provided by the vendor, the same has been delivered on the shopping address.  It has also been admitted that OP-6 sent reply dated 30.10.2013 that no payment had been received by it.  It has been pleaded that the OP had been providing its services to the customers free of cost. Pleading that there is no deficiency in service or unfair trade practice on its part, OP-6 has prayed for dismissal of the complaint. 
5.         None appeared on behalf of OP-7 despite proclamation by way of publication, therefore, vide order dated 24.12.2014, he was proceeded ex-parte.
6.         In his rejoinder, the complainant has controverted the stand of the OPs and reiterated his own.  It has been averred that the HDFC Bank has failed to safeguard the money deposited in the saving bank account of the complainant held by it.  The Bank has also failed to safeguard the personal information of the complainant as well as breach in the cyber safety through online transaction.  It has been pleaded that the bank has not instituted necessary and sufficient safety measures in their online banking system which can ensure a hassle free and safe banking by its customers. 
7.         Pertinently, alongwith the reply and evidence filed on 2.1.2015, OPs 1 to 3 & 5 filed an application for directions for carrying out proper service of OP-7. The application has been opposed by the complainant by taking certain pleas on the points raised in his rejoinder and written arguments filed on 2.2.2015. It would be relevant to mention here that the complainant is not represented by any advocate. 
8.         The parties led evidence in support of their contentions.
9.         We have scanned the entire evidence, written arguments submitted by the contesting parties and heard the arguments addressed by the complainant and learned Counsel for the contesting parties in the main case as well as the application. 
10.         At the outset, we take up the application dated 2.1.2015 filed by the learned counsel for the OPs 1 to 3 & 5. It has been urged by the learned counsel for the OPs 1 to 3 & 5 that OP-7, Mr. Rajiv Kumar is a necessary party to the present dispute and he has been shown to be a resident of Kanpur, Uttar Pradesh.  He has argued that this Forum directed the substituted service of the said OP in daily Chardhi Kalan, Patiala. The learned counsel for OPs 1 to 3 & 5 has contended that the said newspaper does not have any circulation in the State of Uttar Pradesh and address of   OP-7 mentioned in the complaint is incomplete.  He has argued that the complainant should have been directed to provide the complete address of OP-7 and he could not have been permitted to adopt a roundabout fashion for the service of OP-7 through publication.  The learned counsel for the OPs 1 to 3 & 5 has vehemently argued that since the whole case of the complainant is that OP-7 has committed a fraud and he is also the beneficiary of the alleged fraudulent transaction, therefore, the Forum should reconsider the matter and issue appropriate orders for the purpose of proper service of OP-7. 
11.         We have given our thoughtful consideration to the above arguments but we regret our inability to accept the same.  It is significant to note that the complainant came to know that one Mr. Rajeev Kumar H Block Awas Vikas 1 Satyam Vihar near Maharana Pratap Education Centre, Kanpur Uttar Pradesh 208001 placed an order No.7496577 on 26.10.2012 for 9 grams gold coin through Rediff Shopping using his (complainant) debit card. The said gold coin was being sold by vendor, Varahi Diamonds and Finance Ltd.  The payment/transaction was approved by HDFC Bank through payment gateway ICICI Bank on 26.10.2012.  As per the information provided by the vendor, the gold coin was delivered on the shopping address H Block Awas Vikas 1 Satyam Vihar near Maharana Pratap Education Centre, Kanpur Uttar Pradesh 208001 provided by the shopper. The above address of Mr. Rajeev Kumar is mentioned in the order details of Rediff.com mentioned at Annexure J.  It is important to note that neither rediff.com nor HDFC Bank has furnished any other address of OP-7.  Pertinently, the complainant sent a legal notice dated 18.2.2014 (Annexure I) by registered post to Mr. Rajeev Kumar on the address as furnished above and the photocopy of the envelope shows that the same was received back undelivered.  The affidavit dated 26.9.2014 furnished by the complainant shows that on 17.6.2014 he personally visited Kanpur by Air to verify the correct address of OP-7 and visited the said address but the place of Mr. Rajeev Kumar OP-7 could not be traced out. Even enquiry from various local people could also not lead to any clue of Mr. Rajeev Kumar’s location.  He produced a photocopy of his air ticket and a copy of the bill evidencing purchase of medicine from Ansh Medical Store, Kalyanpur, Kanpur on 17.6.2014 to prove that he personally visited the said address of Mr. Rajeev Kumar and found that Mr. Rajeev Kumar had created fraudulent transaction by using false address.  This Forum also sent a notice to OP-7 on the said address but the same was received with the report incomplete address by the postman on 29.8.2014.  Since no other address of OP-7 was available with the complainant, he filed an application for substituted service on 17.11.2014. After hearing him, the service of OP-7 was ordered to be effected through proclamation by way of publication in daily Chardhi Kalan Patiala for 24.12.2014. On 24.12.2014, since none appeared on behalf of OP-7 despite publication of the proclamation in the said newspaper, therefore, OP-7 was proceeded ex-parte by this Forum.  It was HFDC Bank or rediff.com who could furnish any other address of OP-7, but they failed to do so. Since the complainant was having no other address, except for the address furnished by rediff.com/HDFC Bank, there was no option for him but to get OP-7 served through publication in the newspaper. As far as the contention that the newspaper Chardhi Kalan Patiala does not have any circulation in the State of Uttar Pradesh is concerned, it is worth noting that the said newspaper is in the approved list of publication of court notices by Hon’ble High Court of Punjab and Haryana, Chandigarh.  At any rate, since Mr. Sandeep Suri, learned counsel for OPs 1 to 3 & 5 is not representing OP-7, he cannot plead for the cause of OP-7.  We do not find any reason for issuing any appropriate orders for the purpose of proper service of OP-7 particularly when neither HDFC Bank nor rediff.com is furnishing any other address of OP-7. Hence, the application dated 2.1.2015 seeking directions for carrying out a proper service of OP-7 is devoid of any merit and the same is dismissed.
12.         The next contention of learned counsel for OPs 1 to 3 & 5 is that this Forum has no territorial jurisdiction to try the complaint.  He has argued that at the time of filing of the complaint, the complainant was having an account with HDFC Bank Limited, Gurgaon. He has argued that the nodal office situated at Chandigarh does not deal with Gurgaon office and the mere fact that the complainant is presently posted in Chandigarh shall not entitle him to file a consumer complaint at Chandigarh. He has also urged that if the complainant has been carrying out online bookings through his saving account with the use of debit card at Chandigarh, it would not create jurisdiction at Chandigarh.
13.         We have given our careful consideration to the above arguments of the learned counsel for the OPs 1 to 3 & 5.  It is noteworthy that earlier the learned counsel for OPs 1 to 3 & 5 filed an application for dismissal of the complaint on the ground that this Forum has no territorial jurisdiction and the dispute relates to a fraudulent transaction.  After hearing both the parties at length, this Forum dismissed that application with costs of Rs.500/- on 17.12.2014.  It is true that the complainant who is a Wing Commander in the Air Force was earlier having a saving bank account with HDFC Bank Ltd., Gurgaon because at that time he was posted there. Later on, he was transferred and posted at Chandigarh.  The affidavit of the complainant shows that he was issued a debit card to undertake ATM and online transactions and he has been carrying out his online bookings also through this account with the use of debit card. The affidavit of the complainant coupled with the copy of statement of account Annexure A shows that on 26.10.2012, he booked a ticket through www.irctc.co.in but the transaction failed due to some technical reason and the amount of Rs.2,080/- was duly refunded and credited to his saving bank account on 29.10.2012.  On the same date, another transaction of Rs.33,050/- also took place in the said account which was reflected in the statement of account as POS 4386240127285870 REDIFF.COM INDIA. Since the transaction might have taken place after the regular working hours of the bank, its value date was shown as 27.10.2012 in the statement. According to the complainant, the said transaction is fraudulent.  Since the complainant has been carrying out online bookings through his debit card at Chandigarh and according to him the said fraudulent transaction of Rs.33,050/- took place on 26.10.2012, when he booked a ticket through www.irctc.co.in, therefore, HFDC Bank after tapping information from its computer servers of Chandigarh region could tell where the illegal transaction had taken place.  We may mention that during the pendency of the complaint, the complainant has got changed his address in the record pertaining to saving bank account to Chandigarh. Since according to the complainant the fraudulent transaction of Rs.33,050/- took place on 26.10.2012, on which date he made an online booking with www.irctc.co.in, the carrying out of online booking with the use of debit card at Chandigarh draws an inference that cause of action arose to the complainant at Chandigarh. We may also mention that the complainant also made a complaint regarding misuse of his debit card by someone illegally with the Cyber Crime Investigation Cell, Sector 17, Chandigarh and the said Cyber Crime Investigation Cell vide letter dated 30.8.2013 (Annexure C) asked the Nodal Officer, HDFC Bank, Sector 17, Chandigarh to furnish some information/record. The complainant vide letter dated 31.3.2013 (Annexure B) also intimated the HDFC Bank Ltd., Sector 32, Chandigarh that he was having saving bank account No.00441000130720 with the Gurgaon Branch and when he was posted as an Air Force Officer at Chandigarh, he used to carry out his necessary transactions from his nearest branch at Sector 32 (Chandigarh). He informed about the fraudulent transaction of Rs.33,050/- on 26.10.2012 to the said Bank and also intimated that he had also lodged one mail to customer support with a copy to Grievances Redressal Officer. He made a request to the bank authorities to apprehend the culprits/to make corrective measures and to refund the amount of Rs.33,050/- with interest. It is true that mere sending a letter to HDFC Bank, Sector 32, Chandigarh would not result in conferring jurisdiction on Chandigarh Forum, but at the same time, the allegation of the complainant about carrying out his necessary transactions from nearest branch of HDFC Bank Sector 32, Chandigarh has not been denied by the OPs 1 to 3 & 5.  The complainant has also alleged deficiency in service on the part of the OPs 1 to 3 & 5. According to the complainant, the HDFC Bank has not instituted necessary and sufficient safety measures in their online banking system to protect the customers money kept under the custody of the bank and they have also unreasonably and negligently delayed to provide the details of the merchant to him or Cyber Crime Branch of Chandigarh Police which was necessary to lead to the fraudster. Taking into consideration all these circumstances, we feel that cause of action arose to the complainant at Chandigarh, therefore, this Forum has jurisdiction to try the complaint. 
14.         The next important contention of the learned counsel for the contesting OPs relates to the complicated questions of facts and law involved in the complaint.  It has been urged that the complainant has alleged that the transaction in dispute has been fraudulently made on his debit card and the complainant has also made a complainant with police authorities. It has been contended that the allegations relate to fraud and forgery and in view of the law laid down in Rajeshwar Prasad Vs. Bel Financial Services Ltd.-I (2008) CPJ 121 NC, Oriental Insurance Company Ltd. Vs. Munimahesh Patel-2006 (2) CPC 668 (SC) and Surya Prakash Mahapatra Vs. Controller of Examination-I(2008) CPJ 258 NC, where the complaint involves complicated and complex questions of law and facts, it is appropriate that the parties be relegated to the civil court of competent jurisdiction. 
15.         We have given our anxious consideration to the above arguments and feel that some of the issues raised by the OPs are beyond the purview of the summary adjudication by this Forum.  At the same time, there is definite evidence on one issue which points out towards deficiency in service on the part of OPs 1 to 3 & 5.
16.         The following questions have arisen for consideration in the present complaint :-
    1. Whether the card has been used for the disputed transaction by the complainant himself?
    2. Whether the personal information in respect of the card including the information required to do a transaction was provided by the complainant to a third party?
    3. Whether the card has been fraudulently used by a third person?

In either of these eventualities, an elaborate evidence is required which includes production of documents and cross examination of the witnesses which is beyond the purview of the summary jurisdiction of this Forum.

17.         The complainant has drawn our attention to a research paper on online banking security flaws and one order passed by the adjudicating officer Govt. of Maharashtra in case titled Shri Ramdas Pawar, Pune Vs. ICICI Bank in Complaint No.5 of 2011, and has vehemently argued that more than 75% of the bank websites have at least one design flaw that could lead to theft of the customer information and the flaws are one that even an expert user would find difficult to detect. He has also argued that Electronic Fund Transfer Act of USA dealing with the consumer liability is really loaded in favour of the consumer and it is expected that in India also the banks will not only educate the customers about the precautions to be taken while using net banking or credit/debit/ATM card but also ensure the customers against possible frauds.
18.         We do not dispute the contents of the research paper and the observations in the copy of the order passed by the Adjudicating Officer, produced by the complainant alongwith his written arguments but the contents of the above said two documents do not itself establish that there are various types of flaws in the security of online banking of HDFC Bank. As already mentioned, such kind of inference can be raised only after recording of detailed evidence either in a civil suit or in the proceedings before the Adjudicating Officer under Section 46 of the Information Technology Act, 2000.  Consequently, there is ample force in the contention of the learned counsel for the OPs that a fraudulent transaction cannot be decided within the summary jurisdiction of the Consumer Fora. The allegations of forgery, fraud and cheating and adjudication thereof requires voluminous evidence. Therefore, detailed investigation, meeting the standards of criminal jurisprudence, would be required. At this stage, it would be also pertinent to mention that the complainant also moved an application before the Banking Ombudsman and the order dated 15.10.2013 Annexure D shows that the office of the Banking Ombudsman observed as under :-

“I.     The complainant had used his debit card for online transactions in the past too.

II.     The VBV was reset on 26.10.2012 by using the valid ATM PIN which was confidential and privy to the customer.

III.     The disputed transaction was carried out in a secure mode and was authenticated by using the VBV password which was confidential and known only to the customer.

IV.    Since the transaction was incurred after authenticating customer’s log in ID and VBV but disputed by the complainant, it indicated apparent compromise of personal information by the complainant, either knowingly or unknowingly.

V.     Being an authorised E-Commerce transaction, it did not qualify for compensation under zero liability claims.

VI.    Since, the complainant had disputed the transactions and the bank had asserted about safety and security of their system, it was felt that full facts of the case could be ascertained only through a detailed investigation and the proceedings before the Banking Ombudsman were not appropriate for adjudication of such a complaint.

In view of the above, the complaint was closed under clause 3(c) of the Banking Ombudsman Scheme, 2006.”

19.         Taking into consideration the totality of circumstances and the observations of the Banking Ombudsman, we are of the considered opinion that true facts relating to fraud in this case can be ascertained only through a detailed investigation and the proceedings before this Forum, being summary in nature, are not appropriate for adjudication of the above issues.
20.         Leaving aside the question of fraud and its connected issues mentioned above, we find that there is one clinching piece of evidence of deficiency in service on the part of OPs 1 to 3 & 5/HDFC Bank. The HDFC Bank has claimed that the disputed transaction was verified by VISA password. However, we feel that the bank cannot pass the onus of illegal transaction to the customer merely on the ground that the transaction is duly validated through password.  The copy of the ICICI Bank transaction slip i.e. payment gateway Annexure K shows that against the column CV response there are remarks “Unable to Verify CVN”.  Thus, the remarks “Unable to Verify CVN” indicate that the disputed transaction has taken place without the knowledge of the CV number. Since in the instant case the transaction is not verified for its CV number, HDFC Bank has ignored the basic method of authenticating the genuineness of the transaction.  Had HDFC Bank verified the CV number, it is quite probable that the said fraudulent transaction could not take place.  Therefore, the transaction in question was approved on account of the deficiency in service on the part of HDFC Bank/OPs 1 to 3 & 5.
21.         For the reasons recorded above, we find merit in the complaint only to this extent that the HDFC Bank is guilty of deficiency in service because as per the payment gateway (ICICI Bank) slip Annexure K, the transaction amount of Rs.33,050/- of the card of the complainant was released without verification of CV response code by HDFC Bank.  Consequently, the complaint is allowed partly.  OPs 1 to 3 & 5 are directed as under :-
    1. To make payment of an amount of Rs.25,000/- to the complainant on account of mental agony, physical harassment and deficiency in service on the part of OPs 1 to 3 & 5.
    2. To also make payment of an amount of Rs.10,000/- to the complainant towards litigation expenses.
22.         This order shall be complied with by OPs 1 to 3 & 5 within one month from the date of receipt of its certified copy; thereafter OPs 1 to 3 & 5 shall pay the amount mentioned at Sr.No.(i) above with interest @ 12% per annum from the date of filing of the present complaint, till realization by the complainant, besides payment of litigation costs.   It is made clear that the complainant shall also be at liberty to take recourse to the proceedings in the civil court or other appropriate Forum to prove fraud and other related issues mentioned above. 
23.         The complaint qua the remaining OPs is dismissed with no order as to costs.      
24.         The certified copies of this order be sent to the parties free of charge. The file be consigned.

	Sd/-	Sd/-
12/03/2015	[Surjeet Kaur]	[P. L. Ahuja]
hg	Member	President