NCDRC Holds DCB Bank Liable For Withdrawal Of $53,000 From Complainant's Account Due To Fraudulent Hacking And Unauthorized Transactions

The National Consumer Disputes Redressal Commission bench comprising of Justice A P Sahi (President) held DCB Bank liable for the withdrawal of $53,000 from the complainant's account due to fraudulent transactions resulting from hacking.The complainant, a retired Chartered Accountant and his family opened a joint account with DCB Bank Ltd. and got an overdraft facility of Rs. 1.8 crore against their Rs. 2 crore fixed deposit. While abroad they signed blank RTGS forms for monthly transfers to support their son's education in the USA.In January 2015, they were shocked to find two large withdrawals totaling 53,000 USD from their account. The funds were transferred to a fraudulent beneficiary in USA via Standard Chartered Bank in New York. Despite their attempts to recall the money Standard Chartered Bank stated the funds had already been withdrawn and the case was closed. The bank argued that the complainant had signed an undertaking stating that the bank would not be responsible for verifying the authenticity or source of instructions including email instructions.Background FactsThe complainant's account was hacked through a fake email ID which resulted in the withdrawal of $53,000 from the account.The bank denied the allegation stating that the instructions for the transactions came from the complainant's email. Therefore, any loss cannot be reimbursed due to the special terms and conditions agreed to by the complainant for operating the account.Being aggrieved by the bank's denial the complainant filed a complaint before the State Commission. The State Commission through its order dated 11.05.2023, directed ₹1,00,000 compensation to the complainant and held that the bank had failed in its duty to observe due care, resulting in the complainant's account being hacked through fake email instructions.Consequently both the complainant and the bank filed appeals before the NCDRC. The complainant sought total compensation of Rs. 20,00,000 whereas the bank sought to set aside the order passed by the State Commission. The NCDRC clubbed the cross appeals for common adjudication.Observation and Direction by National CommissionThe National Commission observed that the bank manager was negligent in processing the transfers of USD 25,000 and USD 28,000 as they exceeded the standing instructions of USD 2,500 per month. Therefore, Commission held that the bank's handling of the transaction based on fake instructions was careless.National Commission observed that the written undertaking provided by the complainant cannot be interpreted as granting the bank permission to accept obviously fake instructions. Therefore, it held that the undertaking does not waive the complainant's right to sue the bank especially when transactions were fraudulent resulting from account hacking due to the negligence of the bank officials.The National Commission upheld the order of the State Commission and also found that the interest awarded by the State Commission was proportionate. As a result the National Commission dismissed both appeals.Case – DCB Bank Limited Versus Ajoy Kumar Mehta & anrCitation – First Appeal No. 694 of 2023 A/W 1 otherDate – 20.11.24Counsel for DCB Bank – Mr Ashutosh Marathe, Advocate and Mr Nihant Panicker AdvocateCounsel for Complainant - Mr Aman Singh Bakshi, AdvocateClick Here To Read/Download Order

NCDRC Holds DCB Bank Liable For Withdrawal Of $53,000 From Complainant's Account Due To Fraudulent Hacking And Unauthorized Transactions

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NCDRC Holds DCB Bank Liable For Withdrawal Of $53,000 From Complainant's Account Due To Fraudulent Hacking And Unauthorized Transactions

Aryan Raj

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