Bombay HC Mandates that Bank Of Baroda Reimburse Rs 76 lakh In Cyber Fraud Case

Bombay HC Mandates that Bank Of Baroda Reimburse Rs 76 lakh In Cyber Fraud Case

Bombay HC Mandates that Bank Of Baroda Reimburse Rs 76 lakh In Cyber Fraud Case

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Due to internet fraud, the Bombay High Court mandated that the Bank of Baroda reimburse a corporation for Rs 76 lakh. The verdict underscored how crucial it is for clients to swiftly report fraudulent transactions in accordance with RBI requirements. The banking ombudsman was chastised by the court for inadequately looking into the matter.

14th June 2024

By Khushi Maheshwari

In an important decision that sheds light on the growing problem of cyber theft, the Bombay High Court ordered the Bank of Baroda (BoB) to reimburse a company that had been defrauded online of Rs 76 lakh. This ruling highlights that consumers who report fraudulent transactions within three working days are not liable, and it is based on an RBI circular from July 2017.

The court, which is made up of Justices Girish Kulkarni and F P Poonawalla, cited both the RBI circular and BoB’s own consumer protection policy, according to a TOI report. The guidelines make it very clear that a customer will not be held responsible for any losses if they report a fraudulent online transaction within three working days. This is applicable in cases where unlawful transactions arise due to a breach by a third party, and neither the bank nor the consumer bear any blame, and the customer quickly notifies the bank. 

Three cyber cell reports that the petitioners Jaiprakash Kulkarni and Pharma Search Ayurveda Pvt Ltd, produced showed no misconduct on their or BoB’s behalf. Consequently, the court determined that the petitioners had no obligation and upheld their right to a refund.

The court pointed out that BoB’s policy requires consumers to report fraud within three days of the incident for free, but if they disclose it after seven days, they are liable for 100% of the amount. Despite the fact that the transactions took place on a public holiday, the petitioners, who have had an account with BoB’s Worli branch for almost 20 years, notified the unlawful debits to the police cyber cell within an hour on October 2, 2022. 

The petitioners contended that no notification was sent to their registered phone number or email address throughout the illegal transactions, which amounted to Rs 76 lakh. Siddhesh Bhole, the company’s attorney, drew attention to the fact that BoB had disregarded the 2017 RBI circular mandating consumer repayment under the zero fault policy. The petitioners’ complaint was denied by the banking ombudsman in January, notwithstanding the bank’s claim that there was no service deficit, which was questioned by the High Court. The ombudsman’s investigation into whether the debits were approved by the petitioners was deemed inadequate by the court.