Sent Money to the Wrong Account? Delhi High Court Orders ICICI Bank to Reverse Rs 3.89 Lakh Transfer

Case at a Glance

A business that meant to pay M/s V.K. Enterprises mistakenly sent Rs 3,89,981 to M/s V.K. Traders. When the beneficiary did not return the money and its bank declined to reverse it, the firm moved the Delhi High Court. Justice Jasmeet Singh directed ICICI Bank to reverse the November 2023 transaction, noting that the beneficiary had filed no documents to justify keeping the money for over two years, but declined to award interest because the mistake was the petitioner’s own.

The petitioner, M/s MK Wholesale, intended to pay Rs 3,89,981 to M/s V.K. Enterprises but, by mistake, sent the amount on 23 November 2023 to M/s V.K. Traders, which held an account with ICICI Bank. The petitioner asked V.K. Traders to return the money, and its own bank wrote to ICICI Bank seeking a reversal. The petitioner’s bank also furnished an indemnity bond dated 24 November 2023 in favour of ICICI Bank covering any loss arising from a reversal.

The transaction was not reversed. ICICI Bank told the Court that V.K. Traders had informed it that the payment was correctly made to it. On 18 July 2024 the Court gave V.K. Traders an opportunity to file documents supporting that claim. No documents were ever filed, and nobody appeared for V.K. Traders after that date.

The Key Question Before the Court

Can a writ court direct a bank to reverse a payment that a customer mistakenly sent to a similarly named account, when the recipient produces nothing to justify keeping it?

Unexplained Retention and the Indemnity Bond

The Court’s reasoning was short and fact-based. It recorded: “Despite more than 2 years neither any document has been filed by respondent No. 4”, the beneficiary firm. Combined with the indemnity bond furnished by the petitioner’s own bank, which the Court treated as showing that the claim was genuine and supported by the remitting bank, this was enough to allow the petition.

At the same time, the Court refused the petitioner’s prayer for interest, observing that there was no fault attributable to any of the respondents; the error was an inadvertent mistake by the petitioner. To protect the bank, it recorded that the petitioner and its bank would bear the consequences if the reversal later turned out to be wrong. The text read does not discuss any RBI circular on wrong credits.

What the Court Actually Held

• ICICI Bank was directed to reverse the transaction dated 23.11.2023 for Rs 3,89,981.
• The petitioner and its bank are bound by their undertaking and shall bear the consequences if the amount is wrongly reversed.
• No interest was granted, as no respondent was at fault and the error was the petitioner’s.
• The writ petition was disposed of in these terms.

Why This Judgment Matters

• It gives a practical remedy to customers who send money to the wrong account because of similar names.
• It shows the weight a court may give to a recipient’s failure to justify retention of funds.
• It illustrates how an indemnity from the remitting bank can support a reversal direction.

What Should Advocates Take Away From the Judgment?

For Customers and Businesses

• Notify the recipient and your own bank immediately after a wrong transfer, in writing.
• Ask your bank to issue an indemnity to the beneficiary’s bank to facilitate reversal.
• Expect no interest if the mistake was yours.

For Counsel

• Seek an order calling on the recipient to justify retention; silence can be decisive.
• Plead the UTR, dates and correspondence precisely, as the Court relied on them.

Key Takeaways

Frequently Asked Questions

ICICI Bank, the bank of the recipient firm, was directed to reverse the transaction.

No. The Court said no respondent was at fault and the error was the petitioner’s own.

The order is fact-specific; it rested on the recipient’s failure to file any documents and on the indemnity bond.

Conclusion