Case Note & Summary
The case involves a complaint by DAV Public School against Indian Bank for deficiency in service. The school maintained three accounts with the bank, which were not enabled for net banking. However, the bank inadvertently linked these accounts with the personal Customer Information File (CIF) of the school principal, Sanjiva Kumar Sinha, allowing online transactions. Between 2.9.2014 and 9.9.2014, Rs 30,00,000/- was siphoned from the school's accounts through unauthorized transfers. The school alleged that the bank's negligence caused the loss and sought full compensation. The State Commission found gross deficiency on the part of the bank but limited compensation to Rs 1,00,000/-, suspecting the principal's involvement. The NCDRC upheld this decision. The Supreme Court, however, noted that the bank's act of linking accounts without request was a clear deficiency. The court observed that the police chargesheet did not implicate the principal, and the bank's failure to secure the accounts was the primary cause. The court held that the bank must compensate the entire loss of Rs 30,00,000/- with 9% interest from the date of the complaint, as the compensation awarded by the forums was inadequate. The appeal was allowed, setting aside the orders of the lower forums.
Headnote
A) Consumer Law - Deficiency in Service - Bank's Liability - Linking accounts without request - The bank linked the school's accounts with internet banking facility without any request, which constituted gross deficiency in service. The court held that the bank must compensate the full loss suffered by the complainant, as the bank's negligence was the primary cause of the fraud. (Paras 1-12) B) Consumer Law - Compensation - Adequacy - The consumer forums awarded only Rs 1,00,000/- against a loss of Rs 30,00,000/-, which was held to be inadequate. The Supreme Court enhanced the compensation to Rs 30,00,000/- with interest, holding that the bank's deficiency directly caused the loss. (Paras 7-12) C) Evidence - Contributory Negligence - Principal's Role - The forums suspected the principal's complicity, but the court noted that the police chargesheet did not implicate the principal. The bank's failure to secure the accounts was the decisive factor, and the principal's delay in reporting did not absolve the bank of full liability. (Paras 5-11)
Issue of Consideration
Whether the compensation of Rs 1,00,000/- awarded by the consumer forums for the loss of Rs 30,00,000/- due to the bank's deficiency in service is adequate, and whether the bank should be held fully liable for the entire loss.
Final Decision
The Supreme Court allowed the appeal, set aside the orders of the State Commission and NCDRC, and directed the respondent bank to pay Rs 30,00,000/- with interest at 9% per annum from the date of the complaint until realization, along with costs of Rs 10,000/-.
Law Points
- Deficiency in service
- Bank's liability for unauthorized online transfer
- Contributory negligence
- Vicarious liability of employer
- Compensation for loss caused by bank's negligence
