Lost Rs 38k to fraud in 2019, Bank of Baroda told to refund and pay Rs 15k compensation

AI generated image used for representative purposeNEW DELHI: The West Delhi district consumer commission has held Bank of Baroda guilty of deficiency in service after it failed to establish a customer’s role in unauthorised transactions worth Rs 38,649 from his bank account. The commission directed the bank to refund the amount and pay Rs 15,000 as compensation.In its October 21, 2026, order, the commission said the bank had failed to produce investigation records or establish who received the money withdrawn from the customer’s account.Money withdrawn through four transactionsAccording to the commission order, Arun Kumar, a resident of Shiv Vihar in west Delhi, maintained a bank account with Bank of Baroda’s Vikas Puri branch. He alleged that unauthorised transactions took place from his account on July 15, 2019, without his consent.Kumar said he had not received any one-time password (OTP) or SMS alert on his registered mobile number for the transactions. The complaint listed four transactions through Paytm, involving Rs 9,999, Rs 10,690, Rs 11,680 and Rs 6,280, taking the total to Rs 38,649.He said he lodged a police complaint on July 16, 2019, soon after learning about the withdrawals. According to the complaint, Paytm froze the relevant wallet after receiving his request, but he was dissatisfied with the assistance provided by the opposite parties in tracing the money and addressing the transactions.After repeated reminders failed to resolve the matter, Kumar approached the consumer commission in September 2020. He sought a refund of Rs 38,649 and Rs 1 lakh in compensation.What did the bank and Paytm say?Bank of Baroda did not appear before the commission despite service of notice and was proceeded against ex parte in October 2023.Paytm, in its reply, argued that it was not responsible for the disputed withdrawals because the money had been debited directly from Kumar’s bank account. It said the transactions had been approved through the bank’s system and contended that the bank was responsible for the final approval.Paytm also claimed that it had blocked the relevant wallets and reported the transactions to the beneficiary bank as fraudulent. It argued that no specific relief had been sought against it and sought dismissal of the complaint against the platform.During the final hearing, Paytm maintained that it had no substantive role in the dispute. The commission noted that Kumar also accepted that the case was essentially against the bank.Commission’s findingThe bench comprising president Sonica Mehrotra and members Richa Jindal and Anil Kumar Koushal examined the complaint, evidence and submissions. It found that the bank had not produced records of any investigation into the disputed withdrawals or disclosed the accounts into which the money had allegedly been transferred.“The OP 1 Bank who is alleged to be responsible for not preventing and unearthing the withdrawal of money episodes, have not provide any documentary evidence to the complainant in the form of any inquiry conducted by them to reveal the truth behind such withdrawals. They also have not provide the details as to in whose account the money was allegedly deposited after getting withdrawn from the account of complainant,” the commission observed.The commission also noted that Kumar had reported the transactions within three working days of learning about them. It referred to the Reserve Bank of India’s July 6, 2017, circular on customer liability in unauthorised electronic banking transactions, under which a customer can have zero liability in specified circumstances, including certain third-party breaches reported within the prescribed period.“The burden of proving customer liability in case of unauthorized electronic banking transactions shall lie on the bank,” the commission quoted from the RBI notification.It said the bank had failed to establish that Kumar was responsible for the transactions or had colluded with the fraudsters. The commission also relied on judicial precedents holding that banks are responsible for the safety and security of customers’ accounts and cannot shift liability to customers when unauthorised transfers result from a failure in the banking system.“Based on the foregoing discussion, we are of the view that the case of complainant is squarely covered by the guidelines issued by the RBI vide their circular dated 06.07.2017 quoted above and is well supported by the aforequoted judicial pronouncements of higher echelons,” the commission held.It added that the bank could potentially have recovered some of the money had it acted vigilantly after receiving information about the fraudulent transactions. The bank, however, had not established through an investigation who had received the withdrawn amount.The commission concluded that the bank was deficient in service. It absolved Paytm, observing that the platform had no contractual relationship with the complainant and had no role that made it liable for the outcome of the proceedings.Final orderThe commission allowed the complaint against Bank of Baroda and directed it to:Refund Rs 38,649 to Kumar.Pay Rs 15,000 as compensation.The bank was directed to comply within 30 days of receiving a copy of the order.