The Hobie Bombay High Court recently in the case of Jaiprakash Kulkami v. The Banking Ombudsman and Ors exemplified the complexities involved in banking disputes, clarifying the role of Banking Ombudsman in addressing these grievances and upheld zero liability of customers in unauthorized electronic banking transactions.
Several fraudulent debit transactions were done from Petitioner's (Pharma Search Ayurveda Private Ltd & its director Jaiprakash Kulkarni bank account maintained with Bank of Baroda's Worli Branch to the tune of INR 76.90.017/-without their authorization (beneficiaries added to their account, without OTP to registered mobile number and email.)
The said unauthorized electronic banking transactions were immediately reported to the Cyber Cell at Worli Police Station within an hour and a formal complaint was registered on behalf of the Petitioners with the Cyber Crime Police Station under relevant sections of Indian Penal Code 1850 and the Information Technology Act. 2000.
Petitioners simultaneously reported said incident to the bank manager of Bank of Baroda requesting that an investigation be carried out and a refund be initiated in favour of the Petitioners as per the Circular dated July 6. 2017, of Reserve Bank of India. This Circular outlined the conditions for "zero liability of customers in unauthorized electronic banking transactions" stipulating that in case of unauthorized transactions, owing to fraud/neglect of a third party, where neither bank nor customer is at fault. customers are entitled to "zero liability provided, the said unauthorized transaction (s) is reported by the customer in three (3) working days.
Upon rejection of complaint by the Banking Ombudsman on the ground of absence of deficiency of service and non- receipt of refund from the Bank, Petitioners approached the Bombay High Court on the ground that the Banking Ombudsman failed to follow the RBI Circular dated July 6. 2017, which ensued in fraudulent unauthorized transactions from Petitioners bank account.
The Bombay High Court ordered a detailed Cyber Cell Investigation, and it was found that the Petitioners were the victims of cyber fraud and no intimations in the form of OTP or email were received by the Petitioners. The Bombay High Court further observed that the Bank's Consumer Protection Policy aligned with RBI Circular thus, the order of the Banking Ombudsman was quashed and ordered the Bank to refund the unauthorized debited money to the Petitioners.
Thus, it can be concluded that in an era of embryonic rapid digital set-up and technology-driven solutions, citizens of India are being unceasingly exposed, across sectors, to various kinds of cyber threats and banking frauds, despite robust cybersecurity measures. It can be safely concluded that the existing loopholes and cyber unawareness have owing to several loopholes afforded easy access for cybercriminals resulting in not only staggering financial losses but loss of livelihood, reputation and at times loss of life! Therefore, it is imperative to have robust mechanisms in place to ensure critical evaluation of banking grievance redressal processes, resolution of customer challenges in an efficient and fair manner. Hence, the Bombay High Court's decision in the case of Jaiprakash Kulkarni v The Banking Ombudsman and Ors highlights not only highlights the procedural and utilitarian aspects of banking regulations and customer service but also sets a landmark precedent and reinforces the trust of customers in the banking system.
Practice Area News
Court must rely on the Statements of Witnesses and Educational Background of the Accused Women to Determine prima facie Involvement. On July 1, 2024, the Delhi High Court, in case of Kalvakuntla Kavitha Vs. CBI held that given the material collected, accused was one of the key conspirators in the Delhi Excise Policy & rejected the argument that statements from approvers under Section 164 of CrPC and Section 50 of the PMLA were unreliable, noting that during arrest and remand stages, only witness statements and corroborating evidence are considered. It was highlighted that while courts should be sensitive to vulnerable groups, educated and well-placed women involved in illegal activities are not considered vulnerable
Detention of the Accused as an Under-Trial Prisoner is Not Warranted once their Properties are Attached. On July 2, 2024, the Bombay High Court, in case of Amod Vasantrao Mhetar Vs. State of Maharashtra held that once the properties of accused are attached, investigating agency can invoke their powers under the law to secure interest of the investors and the interest of the investors can be secured by imposing suitable conditions
Previous Instances of the Accused Misrepresenting Facts can Impede their Ability to Apply for Bail On July 1, 2024, the Delhi High Court, in the case of Zeeshan Haider v Directorate of Enforcement, held that while Section 45 of the PMLA Act restricts bail, it does not impose an absolute restraint. The court's discretion is judicial, guided by legal principles
Application for Stay of Trial in the PMLA Case will Not Be Granted just Because an Appeal Against the Corruption Conviction is Yet to Be Resolved. On July 1, 2024, the Delhi High Court in the case of Shri Anand Kumar Kapur vs UOI held that money laundering under the PMLA is distinct and unrelated to the scheduled offense under the Prevention of Corruption Act, 1988 Act and does not amount to double jeopardy.
In the Firm
Title Awards
- Zoeb S. Cutlerywala has been recognized as "India's Future Legal Leaders 2024" by India Business Law Journal
- Ranked in Chambers and Partners Asia Pacific 2023-2024
- Recommended firm by Benchmark Litigation 2023
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.