State Bank Of India vs Sat Pal Gupta

C. Viswanath, Presiding Member

This Appeal is filed against the order dated 27.03.2017 of the State Consumer Disputes Redressal Commission, Punjab, Chandigarh (hereinafter referred to as “the State Commission”) in Consumer Complaint No. 201 of 2015.

The Complainant/ Respondent is Non-Resident Indian holding NRE Saving Bank Account No. 10019909034 as well as NRE FD Account No. 32764218886 with the Opposite Party/ Appellant. The Respondent operated his account by sending duly signed written requests through registered e-mail. At the time of opening of the Bank Account, the Respondent specifically informed to send his duly signed written requests through registered e-mail ID to operate his account from abroad. His request for transfer of funds would be confirmed telephonically by the Bank. The Appellant, before making such withdrawal or transfer of funds, had to seek scanned signatures of the Respondent so that signatures. The Respondent was also instructed by the Bank that whenever any such request is made, he would also have to confirm by calling Ms. Aruna Saini, Relationship Manager or to Mr. R.K. Nagpal, Assistant General Manager, Branch Head, to confirm that the request for transaction was authentic.signatures. The Respondent was also instructed by the Bank that whenever any such request is made, he would also have to confirm by calling Ms. Aruna Saini, Relationship Manager or to Mr. R.K. Nagpal, Assistant General Manager, Branch Head, to confirm that the request for transaction was authentic.

The Respondent came to came to know in the end of November, 2013 that an amount of US $26525/- was transferred from his Account on 20.08.2013 and another amount of AU $7500/- was transferred on 30.08.2013 from his FDR Account. It was submitted that the Respondent did not authorize or request the Bank to make any such transfer. The Bank without comparing signatures transferred huge amount outside the country to some account in Malaysia and Australia which were never authorized by the Respondent. On knowing about the two transactions, he immediately wrote a letter dated 09.12.2013 to the Bank. The Bank instead of investigating the matter sought the opinion of their Advocate and replied, vide letter dated 16.12.2013, that the transactions from his account were made in due course and if the Respondent was having any grievance, he may approach the Cyber Crime Branch at Mohali. On receipt of the reply from the Appellant, he again wrote a letter dated 16.12.2013 requesting the Appellant to credit the amount transferred without his authority. The Appellant instead of taking action on his Complaint again replied that the transactions were made in due course and he was again advised by the Bank, that if he had any grievance he may approach Cyber Crime Branch at Mohali, vide its letter dated 10.04.2014. On receipt of the letter, he wrote to Smt. Arundhati Bhattacharya, Chairperson, Board of Directors, State Bank of India, Mumbai. Instead of taking any action on the request of the Respondent, the concerned Bank Branch sent a reply, vide its letter dated 29.04.2014. On not getting a satisfactory reply from the Chairperson of the Bank, the Respondent took his grievance to the Governor, Reserve Bank of India, informing him of the unprofessional conduct of the Appellant. The matter was then referred to the office of Banking Ombudsman. The Banking Ombudsman rejected his Complaint, vide its letter dated 12.06.2014, without informing or even going through his version and without passing any speaking order but only relied upon the version of the bank. The Appellant or their superior officers were trying to save the skin of their employees and not taking any action on the request of the Respondent. He even approached Smt. Gurpreet Deo, IPS, Police NRI Cell, Mohali on 15.09.2014. After conducting Preliminary Investigation, the said office registered an FIR dated 09.12.2014 under Section 420 IPC and Section 66 of the Information Technology Act. On receipt of the copy of the FIR, he lodged a Complaint with the Chairman, NRI Commission, Punjab at Chandigarh. The Commission took cognizance of his Complaint and issued notice to the Bank. The Respondent sent the document collected from the Bank on the basis of which fraudulent transfers were made to a handwriting expert along with his specimen signatures duly supported by notarized affidavit and copy of Passport and other documents, in order to find out whether the signatures made on the requests given to the Bank were genuine or fabricated. The handwriting expert contended that even with naked eyes it could be seen that the signatures, as sent with the request letters for transfer, were not genuine. The handwriting expert report was received on 06.09.2014, whereby the handwriting expert confirmed his version that the signatures did not match with the specimen signatures of the Respondent as held in the record of the Bank. It was stated that the requests which were sent to the Bank for transferring the amount of US $26525/- and AU $7500/- were sent by a hacker through the email ID of the Respondent. The signatures on the request letters given to the Bank were totally different from the signatures held in the records of the Bank. On receipt of information from the handwriting expert he again sent request letters dated 16.08.2013 and 26.08.2013 for reversing the amount. He was given false assurances by the Shri Nagpal, Assistant General Manager of the Bank that his amount would be returned soon as it is under departmental consideration. Due to the deficiency in service by the Appellant, the Respondent suffered huge loss of Rs. 20,00,000/-. On failure to get any relief from the Appellant, the Respondent approached the State Commission seeking return of the amount transferred to unknown person.

The Complaint was resisted by the Opposite Party/ Appellant by filing Written Version, wherein the Appellant took preliminary objection that filing of the Complaint against the Appellant is merely misuse of process of law and transactions whatsoever mentioned in the Complaint were executed on the basis of the directions received from the Respondent, after verification of signatures and e-mail ID of the Respondent was the same as it was given by him in his earlier transactions. The funds were transferred only after receiving a request from the registered e-mail ID and, therefore, the Complaint had been filed on false and frivolous grounds. It was pleaded that it is an established fact from the submissions made by the Respondent as well as from the documents placed on record that there was no deficiency in service on their part. The Respondent is estopped by his own act, conduct and omissions and dragging the Appellant in this Complaint was against the provisions of law and thus, illegal, arbitrary and malafide. There was no cause of action for filing the Complaint. It was stated that the Respondent has not come to this Commission with clean hands and was guilty of suppression of true and material facts.

It was denied by the Appellant that they transferred the fund of US $ 26525/- and AU $7500/- from his Account No.10019909034 and FDR Account respectively without receiving his request and it was submitted that the amount was transferred only after receiving specific request, vide letters dated 20.08.2013 and 30.08.2013, through scanned copies from registered e-mail ID. It was admitted that it received a letter dated 09.12.2013, pertaining to transfer of funds in question. The matter was thoroughly investigated and reply was sent, vide its letter dated 16.12.2013, stating that request with respect to the transactions were received from registered e-mail ID of the Respondent and was made in due course and after verifying his signatures. The Appellant stated that it received an e-mail from the Respondent on 19.11.2013 pertaining 'NOT TO FOLLOW' any instructions from two e-mail IDs used prior to November, 2013 i.e. [email protected]  and [email protected]  which was used by the Respondent. The Appellant, therefore, did not make any mistake before transferring the said funds and also informed the Respondent in this regard. It was submitted that the Respondent lodged an FIR in the concerned Police Station on 09.12.2014 under the Information Technology Act, 2000. As per the contents of the FIR, it was specifically mentioned that the e-mail ID of the Respondent was hacked. It was the responsibility of the Respondent to secure his e-mail ID from the hackers. It was denied by the Appellant that the Respondent had suffered a loss of Rs. 20,00,000/- due to the Appellant. It was submitted that the funds were transferred after verifying the signature of the Respondent according to the request letters received from the registered e-mail ID of the Respondent. The Respondent informed, vide his letter dated 19.11.2013, not to rely on the communications received from the registered email ID and prior to the said e-mail, the Respondent was using the same e-mail ID which was registered with it.

The State Commission after hearing the Learned Counsel for the Parties and carefully perusing the record, allowed the Complaint in the following terms:

“ Sequel to above, we are of the opinion that the Bank has acted in a malafide manner and did not follow the banking Rules and Regulations properly. Accordingly, the complaint filed by the complainant is allowed and opposite party is directed to:

i. refund the amount of Us $26525 and AU $7500/- alongwith interest at the rate of 9% per annum from the respective dates or debit from his account till its realization

ii. to pay compensation of Rs. 2,00,000/- on account of causing mental agony and harassment

iii. to pay a sum of Rs. 20,000/- as litigation costs. ”

Aggrieved by order of the State Commission, the Opposite Party/ Appellant has filed the instant First Appeal with the following prayer:

“ It is therefore most respectfully prayed that this apex consumer disputes redressal commission may be graciously pleased to call for the records of this case, allow the first appeal of the petitioner-bank (SBI) and set aside the impugned Order dated 27.03.2017 passed in Consumer Complaint No. 201 of 2015 by the Ld. State Consumer Disputes Redressal Commission, Punjab.

And make such further orders as this Hon. Commission may deem appropriate to the pass in interest of justice, keeping in view of the facts and circumstances of the case.”

Heard the Learned Counsel for the Parties and carefully perused the record. Learned Counsel for the Appellant submitted that the Respondent directed the Bank to only use his e-mail ID [email protected] as his registered e-mail ID for all purposes. The Respondent gave instructions through the above registered e-mail ID for carrying out various ‘financial transactions- transfer of money’. On 19.11.2013, the Respondent sent an e-mail to the Appellant Bank informing them not to follow any instructions from the email-ID [email protected] and [email protected] . It was in December 2013 that the Respondent objected to the disputed transaction and on 09.12.2013 gave in writing to the Appellant Bank that the transactions dated 20.08.2013 and 30.08.2013 were not authorized by him, carried out on the basis of the instructions dated 16.08.2013 & 26.08.2013. The Appellant, on oral intimation itself, communicated with the beneficiary banks regarding the disputed transactions, but the beneficiary banks did not cooperate with the Appellant Bank because of their own privacy mandate. After going through relevant documents, the Bank responded that the payments were made in due course after receiving instructions from the Respondent. It was submitted that the entire case is based on hacking of personal e-mail ID of the Respondent, however, no finding has been arrived by any competent authority. There was no FIR or Criminal Complaint filed for hacking in Canada by the Respondent, where he was residing. The said transaction were not made hurriedly or in haste by the Bank as the request received by e-mail on 16.08.2013 and 26.08.2013 was only effected on 20.08.2013 & 30.08.2013. It was also submitted that the Respondent did not dispute the above transactions dated 20.08.2013 & 30.08.2013 in his e-mail dated 19.11.2013 and only asked the Appellant Bank not follow any instruction from his registered e-mail ID with the Bank. Also, the Special Investigation Team constituted by the IG of Police, which gave its Report dated 05.05.2017, categorically stated that the allegations against the Bank Employees are not proved and that they are not at fault. The State Commission wrongly held that the Appellant Bank did not take any steps once the alleged fraud was brought to its notice. The Bank not only provided all the documents to the Respondent, but also sent messages to the Foreign Bank (beneficiary) on 03.12.2013/05.12.2013 requesting them to refund the amount wrongly credited to them. The State Commission ought to have appreciated that the Bankers are not ‘handwriting expert’ and do not compare signatures with special tools, thus, have to see the signatures generally and match them in the usual course of daily business. The State Commission should also have appreciated that it was only from December 2013 that the State Bank of India stopped acting on the e-mail instructions in NRI Accounts. The disputed transactions, however, were completed earlier in August 2013. The State Commission also failed to appreciate that once the Respondent made allegations of hacking, forgery & crime, the Consumer Court cannot dive into the arena of complex questions of facts which only a Civil or Criminal court would do. The Consumer Complaint was, thus, not maintainable. It was further submitted that telephonic call is with reference to the verification of the e-mail ID in the first instance. It is not possible to verify each transaction by making international call. A perusal of email communication enclosed with this Appeal would show that the Respondent never sought for confirmation of transactions through phone call and simply said that he be contacted if further information is required. There is no single communication from the Respondent to suggest that each transaction from his verified e-mail ID had to be completed only after telephonically checking with him. Thus, there is no question of any illegality or deficiency in service or unfair trade practice by the Appellant Bank.

Learned Counsel for the Respondent submitted that the Appellant failed in its duty to compare the forged signature of the Respondent with the specimen signatures or follow its own protocol to verify from the Respondent if the disputed transactions was sought to be proceeded with, by following up with a call to the Respondent. It was submitted that special caution should have been exercised for a large transaction particularly involving funds transfer to international beneficiaries. For the second disputed transaction, as the funds in the savings account were insufficient, the Appellant official broke an FDR of the Respondent without asking for the original FDR Warrant/ Receipt. The transactions were not online or internet transactions but were done manually in the Bank Premises using the signed instruction without any verification and in contravention of the protocol. All transactions had the colour of a transaction under Section 89 (3) of the Negotiable Instruments Act, 1881 which stipulates that “any bank or a clearing house which receives a transmitted electronic image of a truncated cheque, shall verify from the party who transmitted the image to it, that the image so transmitted to it and received by it, is exactly the same”. This is the standard procedure that should have been adhered to by the Appellant in verifying the signed instructions of the Respondent even for a disputed transaction. The attempt of the Appellant to focus on hacking/ internet fraud and ignore its deficiency in service, is completely misplaced. This was not an internet-based authentication, but a simple typed email. The Appellant treated it like any other transaction which had to be initiated at the branch in writing with signature of the Respondent; thus, requiring signed instructions. The failure by the Appellant to match the signatures of the Respondent with the specimen signature in the Appellant’s records amounted to negligence and deficiency in service. It was submitted that a Criminal Complaint with the Cyber Cell is an alternative and parallel proceeding and has nothing to do with the deficiency in service by the Appellant under the Consumer Protection Act, 1986. The officers of the Appellant Bank are expected to compare signatures objectively, critically and skillfully before effecting monetary transaction. The defense of the Appellant that bankers are not handwriting expert is, therefore, flimsy.

The Respondent was residing in Canada and operated NRI Account in the Appellant Bank at Jalandhar. At the time of opening of the Bank Account, the Respondent was given certain protocol by the Appellant to operate his Bank Account from abroad, whereby the Respondent was to furnish e-mail address to the Appellant. For any transaction, the Respondent was to send instructions in the form of a letter bearing the signature of Respondent, matching with the specimen signature provided to the Appellant, to be sent as a scanned copy from the registered e-mail ID. Further the signed instruction via e-mail was to be followed up with a telephonic confirmation and verification with the Relationship Manager or the Assistant General Manager/ Branch Head of the Appellant Bank. The dispute in this case relates to two transactions from the Bank Account of the Respondent for an amount of US $ 26,525/- from the Respondent’s Account No. 10019909034 on 20.08.2013 and AU $ 7,500/- by encashing the FDR Account on 30.08.2013. The Respondent, vide letter dated 09.12.2013, informed the Appellant that the transactions dated 20.08.2013 and 30.08.2013 were not authorized by him. The Appellant Bank responded, vide its letter dated 16.12.2013, stating that the payments made by the Bank were in accordance with the instructions given by the Respondent.

This is a case of hacking of an Email account of the Complainant / Respondent and affecting transfer of funds. The Appellant failed in its duty to properly verify the signature of the Respondent with the specimen signature available on record nor took any steps to call the Respondent and verify the authenticity of the request for transfer of funds. The Appellants also broke the FDRs of the Respondent without seeking discharge of the same. This is not a case where a cheque had come in clearing and was to be honoured within a specified time limit. On the other hand, they did have sufficient time and did take a few days before effecting the transactions but did not properly verify the signatures in the Email ID. The Appellant took the plea that since the request was received from registered Email ID of the Respondent, there was no reason to verify the signature. The Appellant has only been harping on the Email ID of the Appellant rather than the authenticity of the signature. The handwriting expert Mr. Arvind Sud on careful examination and comparison of the signatures of the Respondent with the specimen signatures opined that the signatures of the Respondent are forged.

The Opposite Party has not rebutted the handwriting expert report filed by the Respondents as evidence before the State Commission. The State Commission noted that no objection against this report was filed by the Opposite Party. The handwriting expert observed that the signatures on the Email did not match with the signatures held in the record of the Bank. It is admitted by the Appellant that at the time of previous transactions when transfer of funds were made within the country, they took precaution of calling the Complainant in order to confirm the request for transfer of funds. In the instant case, when the Bank received the Email, they did not follow the procedure as adopted on earlier occasions for transferring funds in favour of Ms. Nitu Singhania and payment of cash to Mr. Vidya Rattan. Secondly, without due discharge of the Fixed Deposit Receipt, the Appellant broke the FDR on their own and transferred the amount.

The causal approach of the Bank is evident from its statement “the Appellant Bank had to take reasonable precautions and verify the signatures in due course of business, which it did.” The Appellant contended that in the FIR lodged by the Respondent in the concerned Police Station under the Information Technology Act, it was specifically mentioned that the Email ID of the Respondent was hacked. It was the responsibility of the Respondent to safeguard its Email ID from the hacker and the Appellant could not be held accountable for any loss suffered by the Respondent.

In Punjab National Bank and Anr. v. Leader Valves, II (2020) CPJ 92 (NC) ,it has been observed “if an account is maintained by the Bank, the Bank itself is responsible for its safety and security. Any systemic failure, whether by malfeasance on the part of its functionaries or by any other person (except the consumer/account-holder), is its responsibility, and not of the consumer”.

There was also no internal inquiry conducted by the Appellant on the complaint after receipt of the information of unauthorised transfer of funds as is seen from the letter dated 20.03.2017 written by Assistant General Manager to the Inspector General of Police, NRI and Women Wing, Jalandhar. Para 9 of the said letter reads “No internal enquiry was conducted by the bank, since the transactions were done as per the request of Sh. Satya Pal Gupta through registered Email ID”.

The State Commission held that the Appellant had gone about the matter very casually to protect their staff members who committed the error and did not lodge any police complaint to safeguard the interest of the Bank and its customers. The State Commission rightly arrived at the conclusion that the Bank had acted in a malafide manner and did not follow the Banking Rules and Regulations and allowed the Complaint. The Appellant Bank is entrusted with higher degree of responsibility to ensure safeguarding the accounts of its account holders and the Appellant was clearly deficient in service to its customer.

In view of the above, I am of the view that the State Commission rightly allowed the Complaint by giving a well-reasoned order in the above facts and circumstances. The Appellant failed to point out any illegality or irregularity in the impugned order warranting interference in the Appellate jurisdiction. The Appeal is accordingly dismissed with no order as to costs.