Order Date: 20th November 2024
Order Name: DCB Bank Limited Versus Ajoy Kumar Mehta & anr
Case No.: First Appeal No. 694 of 2023 A/W 1 other
The National Consumer Disputes Redressal Commission (NCDRC) recently made a significant decision involving DCB Bank. The case revolved around a retired Chartered Accountant who, along with his family, opened a joint account with the bank. They secured an overdraft facility of Rs. 1.8 crore against a fixed deposit of Rs. 2 crore. While they were abroad, they signed blank RTGS forms to facilitate monthly transfers for their son’s education in the USA.
In January 2015, the family was shocked to discover two substantial withdrawals from their account, totaling $53,000. The funds were transferred to an unauthorized beneficiary in the USA via Standard Chartered Bank in New York. Attempts to recover the money were unsuccessful as Standard Chartered Bank reported the funds had already been withdrawn.
The bank defended itself by stating that the complainant had signed an undertaking, which mentioned that the bank would not be responsible for verifying the source or authenticity of instructions, including those via email.
The complainant argued that their account was compromised through a fake email, which led to the unauthorized withdrawal. The bank claimed that the instructions came from the complainant’s email, and as per their agreement, the bank was not liable for any loss.
Dissatisfied with the bank’s response, the complainant approached the State Commission. On 11th May 2023, the State Commission ordered the bank to pay Rs. 1,00,000 in compensation, holding that the bank failed in its duty to exercise due care, leading to the account being hacked.
Both parties appealed this decision to the NCDRC. The complainant sought Rs. 20,00,000 in compensation, while the bank aimed to overturn the State Commission’s decision. The NCDRC decided to address both appeals together.
The National Commission found that the bank manager was negligent, as the transactions of USD 25,000 and USD 28,000 far exceeded the standing instructions of just USD 2,500 per month. The Commission emphasized that the written undertaking did not permit the bank to act on evidently fraudulent instructions.
Ultimately, the National Commission upheld the State Commission’s decision, affirming that both the compensation and interest awarded were fair. As a result, both appeals were dismissed.
This judgment underscores the importance of banks adhering to their duty of care, even when customers sign undertakings. It serves as a reminder that banks cannot shirk their responsibility by solely relying on customer agreements, especially in cases of obvious fraud.
