Summary
The Bank was ordered to compensate a school Rs.25 lakh for fraudulent transfers enabled by linking its cheque-operated accounts to the Principal’s personal internet banking without authorisation. Police investigation did not establish the suspected Principal complicity that had led consumer fora to limit relief to Rs.1 lakh. The later Rs.5 lakh loss was excluded because delayed formal reporting may have contributed to it.
Issues
- Whether the Bank’s unauthorised internet-banking linkage justified compensation matching the loss.
- Whether suspected Principal involvement or delayed reporting limited the recoverable amount.
Held
- Without the unauthorised linkage, the fraudulent online withdrawals could not have occurred. The Bank’s deficiency was concurrently established; the police charge sheet identified other accused and did not find the Principal complicit, undermining the reason for limiting compensation. (¶¶ 9, 10, 11)
- The school and Principal could not be held directly or vicariously responsible for the first Rs.25 lakh transferred before discovery. However, uncertainty over immediate verbal notice and delay in the formal complaint meant that contributory negligence may have occasioned the additional Rs.5 lakh withdrawn the next day. (¶ 12)
Result
Appeal allowed to the stated extent. The consumer fora’s orders were modified to require the Bank to compensate the school Rs.25 lakh; compensation for the additional Rs.5 lakh withdrawn after detection was declined.