STATE BANK OF INDIA vs PROF K P SREENATH
- Court
- Karnataka High Court
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WP No. 20080 of 2026
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 17 DAY OF OCTOBER 2026
PRESENT
THE HON'BLE MR. JUSTICE D K SINGH
AND
THE HON'BLE MR. JUSTICE H.SHANTHI BHUSHAN
WRIT PETITION NO. 20080 OF 2026 (GM-CON)
BETWEEN:
STATE BANK OF INDIA
HAVING ITS BRANCH OFFICE AT
NAGARABHAVI BRANCH, PB1,
JNANABHARTAHI CAMPUS,
BANGALORE UNIVERSITY,
BENGALURU-560 056.
REPRESENTED BY ITS MANAGER
MR. SUDHARSHAN REDDY V J
…PETITIONER
(BY SRI. VIKRAM A.HUILGOL, SNEIOR COUNSEL FOR
SRI. FRANCIS XAVIER, ADVOCATE)
AND:
PROF. K. P. SREENATH,
SON OF LATE K. PARTHANATH,
C/O SRI. SURESH.C
ST
NO. 30, 1 CROSS, VYALIKAVAL,
BENGALURU-560 003.
…RESPONDENT
(BY PROF.K.P. SREENATH,(PARTY IN PERSON))
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO A)
ISSUE A WRIT OF CERTIORARI OR ANY OTHER APPROPRIATE
WRIT, ORDER OR DIRECTION QUASHING THE JUDGEMENT
AND ORDER DATED 15/05/2026 PASSED BY THE NATIONAL
CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
IN REVISION PETITION DAIRY CASE NO.29/2025 ANNEXURE-A
AND B) CONSEQUENTLY, QUASH THE JUDGEMENT DATED
19/09/2024 PASSED BY THE KARNATAKA STATE CONSUMER
DISPUTES REDRESSAL COMMISSION IN APPEAL NO.1333/2022
AND ETC.,
Digitally
signed by
MALA K N
Location:
HIGH COURT
OF
KARNATAKA
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WP No. 20080 of 2026
THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 02.09.2026 AND COMING ON FOR
PRONOUNCEMENT THIS DAY, HON'BLE MR. JUSTICE
H.SHANTHI BHUSHAN PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE D K SINGH
AND
HON'BLE MR. JUSTICE H.SHANTHI BHUSHAN
CAV JUDGMENT
(PER: HON'BLE MR. JUSTICE H.SHANTHI BHUSHAN)
The respondent, a highly qualified and prudent
account holder, was expected to exercise reasonable
care in safeguarding his bank account, banking
particulars and OTP. The disputed transactions occurred
on several dates and substantial amounts were debited,
yet despite receiving SMS alerts, he did not promptly
inform the Bank or the police. It is also the petitioner’s
case that the respondent had shared his Aadhaar
particulars and OTP with an unknown person. In these
circumstances, the entire loss could not have been
fastened upon the Bank, when the respondent’s own
failure to exercise due care contributed to the loss. We
are conscious of the substantial amount lost by the
respondent; nevertheless, having regard to his own
negligence and conduct, we are unable to grant relief in
his favour. Though the consequence may appear harsh,
the Court cannot overlook the respondent’s
responsibility for the loss occasioned by his own failure
to exercise reasonable care and caution.
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WP No. 20080 of 2026
This Writ Petition is directed against the order dated
15.05.2026 passed by the National Consumer Dispute
National Commission
Redressal Commission, New Delhi (‘ ’ for
brevity) in Diary Case No.29/2025.
CASE OF THE RESPONDENT/COMPLAINANT:
2. The respondent, Prof. K.P. Sreenath, states that he
is a retired Professor of Botany, Bangalore University, and had
retired from service in November 2017. After his retirement, an
amount of approximately Rs.25,00,000/- towards gratuity and
DCRG was credited to his savings account maintained with the
petitioner, i.e., State Bank of India, Nagarabhavi Branch. On
11.03.2019, the respondent instructed the petitioner to transfer
the said amount to his account maintained with Syndicate
Bank, Yadavanahalli Branch, Kunigal Taluk, Tumkur District,
and paid the required RTGS charges.
3. According to the respondent, the amount was
neither transferred nor was he informed about the failure of the
transaction. As he was residing in his native place where there
was no proper mobile network, he could not immediately
monitor the transactions in his account. On personally visiting
the petitioner on 30.04.2019, he came to know that between
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WP No. 20080 of 2026
12.04.2019 and 30.04.2019, an amount of Rs.12,93,922/- had
been withdrawn from his account through several unauthorised
transactions. He then brought the matter to the notice of the
petitioner and sought necessary action for recovery of the
amount.
4. The respondent further states that, following the
discovery of the unauthorised withdrawals, he lodged a
complaint before the Jnanabharathi Police Station on
30.04.2019, and thereafter, submitted a complaint before the
Cyber Crime Police Station on 17.05.2019, which was
registered as Crime No.3665/2019. He also addressed a
complaint to the Banking Ombudsman on 07.01.2020 and
subsequently submitted a representation to the Commissioner
of Police, Infantry Road, Bengaluru, on 13.10.2020, seeking
speedy investigation and recovery of the amount.
5. According to the respondent, despite his repeated
complaints and representations, the amount was not recovered,
and he alleged that the petitioner had failed to take effective
steps to safeguard his account and prevent the fraudulent
transactions. He accordingly filed Consumer Complaint
No.329/2021 under Section 35 of the Consumer Protection Act,
2019 ( ‘Act’ ) on 23.07.2021 before the District Consumer
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WP No. 20080 of 2026
Disputes Redressal Commission ( ‘District Commission’ ),
alleging deficiency in service and seeking refund of
Rs.12,93,922/- with interest, apart from Rs.1,00,000/- towards
compensation for mental agony, and other reliefs.
CASE OF THE PETITIONER-BANK:
6. The petitioner, in its objection/version filed before
the District Commission, denied the allegation of deficiency in
service and contended that it had taken all necessary steps to
protect the accounts and funds of its customers. The petitioner
specifically contended that the respondent had failed to
exercise due care in handling his banking credentials and that
the disputed transactions could not be attributed to any
negligence on the part of the Bank. It was stated that the Bank
had been issuing cautionary advertisements in newspapers and
sending SMS alerts to its customers warning them not to
disclose their Aadhaar number, OTP, TOPTP or MPIN to any
person.
7. The petitioner further contended that SMS alerts
relating to the disputed transactions had been sent to the
mobile number registered with the respondent's account, but
that the respondent had failed to take immediate action upon
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WP No. 20080 of 2026
receiving the same. The petitioner therefore maintained that
the loss, if any, could not be fastened upon the Bank merely
because the transactions were subsequently alleged to be
unauthorised.
8. The petitioner further contended that the disputed
transactions commenced on 12.04.2019 and that the
respondent came to know about the transactions only on
30.04.2019, and that there was delay in reporting the same to
the petitioner. The petitioner disputed the respondent's
allegation that the transactions had occurred on account of any
failure of the petitioner’s security system and contended that
there was no material to establish that the petitioner had been
negligent or that the disputed transactions had occurred due to
any technical or security lapse attributable to it.
9. Reliance was also placed upon the RBI Circular
dated 06.07.2017 relating to customer protection and limited
liability in unauthorised electronic banking transactions. On
these grounds, the petitioner maintained that there was no
deficiency in service on its part and sought dismissal of the
complaint.
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WP No. 20080 of 2026
AWARD OF THE DISTRICT COMMISSION:
10. The District Commission, by order dated
27.05.2022, held the petitioner-Bank liable in respect of the
unauthorised withdrawal of Rs.12,93,922/- from the
respondent’s account between 12.04.2019 and 30.04.2019.
The District Commission noted that the respondent came to
know of the transactions on 30.04.2019 and reported the same
to the Bank on 02.05.2019, and rejected the petitioner’s
contention that the respondent’s sharing of Aadhaar details or
receipt of SMS alerts established negligence on his part.
11. Referring to the RBI Circular dated 06.07.2017 on
customer protection and limited liability in unauthorised
electronic banking transactions, the District Commission held
that the respondent was entitled to the benefit of zero liability
and that the petitioner had failed to establish any negligence
attributable to him. Accordingly, the petitioner was directed to
refund Rs.12,93,922/- with applicable SB rate of interest from
the respective dates of debit till payment, besides Rs.25,000/-
towards damages and Rs.10,000/- towards litigation expenses,
within 30 days.
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WP No. 20080 of 2026
ORDER OF THE STATE COMMISSION:
12. Aggrieved by the order dated 27.05.2022, the
petitioner preferred an appeal before the Karnataka State
Consumer Disputes Redressal Commission, Bengaluru ( ‘State
Commission’ ). By order dated 19.09.2024, the State
Commission considered the petitioner’s contention that the
respondent had received SMS alerts but failed to act
immediately and had shared his Aadhaar particulars with an
unknown person. The State Commission, however, noticed that
the respondent was not using SBI YONO/net banking and
ordinarily operated the account through cheque and ATM, while
the disputed transactions were effected through UPI, Paytm
Payment Bank and Airtel Payment Bank.
13. It held that mere sharing of Aadhaar particulars
could not be treated as sharing of banking credentials and
further found that the respondent, having come to know of the
transactions on 30.04.2019, reported the matter to the Bank
on 02.05.2019. Relying upon the RBI Circular dated
06.07.2017, the State Commission held that the respondent
was entitled to the benefit of zero liability, found no error in the
order of the District Commission and accordingly dismissed the
appeal on 19.09.2024.
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WP No. 20080 of 2026
REVISION ORDER OF THE NATIONAL COMMISSION:
14. Aggrieved by the order dated 19.09.2024 passed by
the State Commission, the petitioner preferred a revision
before the National Commission, registered as Revision Petition
in Diary No.29/2025. The National Commission, by order dated
15.05.2026, considered the petitioner’s contention regarding
the respondent’s alleged negligence and the applicability of the
RBI Circular dated 06.07.2017. It noticed that the respondent
had come to know of the disputed transactions on 30.04.2019
and had informed the Bank on 02.05.2019, and held that mere
sharing of Aadhaar particulars could not be treated as sharing
of OTP or MPIN.
15. The Commission found that the petitioner had not
produced cogent material to establish negligence on the part of
the respondent and held that paragraph 6(ii) of the RBI
Circular, relating to zero liability, applied to the case. Finding
no ground to interfere with the concurrent findings of the
District and State Commissions, the National Commission
dismissed the revision on 15.05.2026 and affirmed the
direction fastening liability upon the petitioner.
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WP No. 20080 of 2026
16. Aggrieved by the said order of the National
Commission, the petitioner has challenged the same before this
court on following, among other, grounds.
GROUNDS OF THE PETITIONER’S CHALLENGE:
17. The petitioner contends that the National
Commission, by order dated 15.05.2026, erred in affirming the
orders passed by the State Commission and the District
Commission, without properly appreciating the circumstances in
which the disputed electronic transactions involving
Rs.12,93,922/- were carried out.
18. According to the petitioner, the transactions were
preceded by generation and transmission of OTPs to the mobile
number registered with the respondent’s account, and the
respondent had received SMS alerts but did not immediately
report the transactions to the Bank. It is contended that the
fora below failed to properly consider the respondent’s sharing
of Aadhaar particulars, the use of his registered mobile
number, generation of OTPs and the circumstances leading to
completion of the transactions, while wrongly holding that there
was no negligence on his part merely because there was no
direct evidence of sharing of OTP or MPIN.
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WP No. 20080 of 2026
19. The petitioner further contends that the RBI Circular
dated 06.07.2017, particularly the provisions relating to
customer negligence and zero liability, was not properly
appreciated and that the entire loss could not have been
fastened upon the petitioner without establishing any failure in
its banking or security systems. On these grounds, the
petitioner seeks interference with the order of the National
Commission.
20. We have heard Shri.Vikram A.Huilgol, learned
Senior Counsel on behalf of Shri. Francis Xavier, learned
counsel for the petitioner; Prof. K.P. Sreenath, the respondent,
who has appeared party-in-person; and we have carefully
perused the records placed before us.
POINT FOR CONSIDERATION:
21. The question that arises for our consideration in this
petition is:
“Whether the order passed by the National
Commission calls for interference by this Court?”
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WP No. 20080 of 2026
REASONS AND CONCLUSION:
22. At this juncture, we would place some emphasis on
the stand taken by the petitioner before the fora below. The
petitioner had filed its detailed objections before the District
Commission, from which it is noticed that the respondent had
instructed the petitioner on 11.03.2019 to transfer the
retirement amount of about Rs.25,00,000/- to his other bank
account. The petitioner’s specific case was that the account
number furnished by the respondent for the RTGS transfer did
not exist, and therefore, the amount could not be transferred,
and that the respondent was informed of the same by SMS.
This aspect was not properly considered while examining the
subsequent transactions in the account.
23. The petitioner had also specifically pleaded that the
respondent was repeatedly operating the account and was not
unfamiliar with the banking transactions. The transaction
statement produced by the petitioner shows that on
15.04.2019, the respondent himself effected transactions
including transfer of Rs.1,50,017/- through NEFT to one,
Abhishek Sehrawath, withdrew Rs.1,50,000/- and Rs.80,350/-
under cheque Nos. 034229, 034230 and 034231, respectively.
Therefore, the account was being actively operated by the
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WP No. 20080 of 2026
respondent during the very period when the disputed
transactions were taking place.
24. The petitioner specifically brought on record that
the fraudulent transactions had commenced on 12.04.2019,
initially with a transaction of Re.1/-, and that the respondent
continued to operate the account on 15.04.2019. The
respondent, however, did not report the disputed transactions
to the Bank until his letter dated 02.05.2019. The petitioner
had also placed before the Commission the report of the
Internal Ombudsman, which recorded that the UPI transaction
was preceded by an OTP sent on 12.04.2019 at about 10.21
a.m. to the mobile number registered with the account, and
that after receipt of the OTP the MPIN could be set. The
Internal Ombudsman recorded the possibility that the OTP had
been shared with the fraudster. The same report also noticed
that the respondent had admitted sharing his Aadhaar number
with the person who had contacted him.
25. The petitioner had further specifically relied upon
the respondent's own complaint before the Cyber Crime Police
and his statement regarding the person who had represented
himself as a Bank Manager and sought his Aadhaar particulars.
The respondent had admitted that he furnished the Aadhaar
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WP No. 20080 of 2026
number. This aspect is to be appreciated in the background of
the fact that the petitioner as well as the Government of India
had repeatedly cautioned customers not to disclose their
personal and banking particulars to unknown persons. Despite
the same, the respondent admittedly parted with his Aadhaar
particulars to a person whose identity he did not know.
26. He had also admitted that SMS messages were
received in respect of the transactions. The petitioner produced
the SMS records showing that alerts were sent to the registered
mobile number when the debits took place. The respondent's
explanation that he ignored the messages because he had
confidence in the petitioner-bank cannot, in the circumstances
of the present case, be accepted as sufficient explanation for
the delay.
27. The petitioner had also relied upon the RBI Circular
dated 06.07.2017 titled as “Customer Protection – Limiting
Liability on Customers in Unauthorized Electronic Banking
Transactions” , which contains the circumstances in which the
customer would be completely liable for any loss occurring due
to unauthorized transactions. The National Commission noted
Para 6(ii) of the Circular, which states that the customer will
have zero liability when the unauthorized transaction occurs
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WP No. 20080 of 2026
due to a third party breach, where the deficiency lies neither
with the bank nor with the customer, but lies elsewhere in the
system, and the customer notifies the bank within three
working days of receiving the communication from the bank
regarding the unauthorized transaction. As such, the National
Commission fastened zero liability upon the respondent by
placing reliance upon Para 6(ii). However, we are inclined to
disagree with this finding of the National Commission because
in our considered opinion, the present case falls under Para 7(i)
and not Para 6(ii) of the RBI Circular dated 06.07.2017.
28. Para 7(i) states that if there are losses caused from
unauthorized transactions due to the negligence of the
customer, such as, sharing of the payment credentials, then
the customer shall be liable for the entire amount of such loss
until he reports the unauthorized transaction to the bank.
Further, any loss that has occurred after such reporting shall be
borne by the bank.
29. In our view, facts of the present case squarely fall
under the scenario under Para 7(i), wherein the complete
liability is placed upon the customer. In the circumstances of
the present case, the respondent had ignored the fraudulent
transactions from 12.04.2019 to 30.04.2019, although he had
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WP No. 20080 of 2026
real-time knowledge regarding the same. The respondent
waited until 30.04.2019 to ascertain the position of his account
and thereafter reported the matter to the petitioner on
02.05.2019. The petitioner immediately blocked further
attempts upon receiving the complaint and referred the matter
to the Internal Ombudsman. Thus, the material does not
disclose that the Bank remained inactive after receiving
information of the fraud. The subsequent police complaint
dated 17.05.2019 also cannot retrospectively cure the
respondent's failure to act when the transactions and
corresponding alerts were taking place.
30. The respondent is a retired Professor of Botany and
had been dealing with a substantial amount of his retirement
benefits. Once an SMS was received showing a debit from his
account, nothing prevented him from immediately contacting
the Bank. Even if the first transaction on 12.04.2019 had
escaped his attention, the subsequent transactions and the
SMS alerts continued, and the respondent himself operated the
account on 15.04.2019. The failure to react to the repeated
alerts is therefore a material circumstance, which would depict
that the respondent was himself negligent.
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WP No. 20080 of 2026
31. We have also noted that the respondent had himself
stated, in his complaint before the Cyber Crime Police, that he
had shared his Aadhaar details to an unknown person; and the
Internal Ombudsman’s observation of the possibility that the
respondent had shared the OTP. All these factors considered
together would depict a course of conduct wherein the
respondent had been negligent in safeguarding his own
interest. Having been negligent, it is not open to him to shift
the blame upon the petitioner.
32. These circumstances would go to show that the
present case falls under Para 7(i) of the RBI Circular dated
06.07.2017. The respondent had slept on his right and notified
the bank about the unauthorized transactions only after the
transactions had taken place. As such, in terms of Para 7(i), the
respondent is liable for the entire amount of loss that he has
sustained due to his own negligence.
33. The National Commission, while applying the
provision relating to zero liability, has not properly dealt with
the factual material produced by the Bank regarding the
respondent's conduct and the repeated alerts. The distinction
between zero liability and customer liability on account of
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WP No. 20080 of 2026
negligence or delayed reporting could not have been decided
without examining these facts in their proper sequence.
34. The finding that the respondent was entitled to zero
liability also overlooks the material circumstance wherein the
Internal Ombudsman had observed that the respondent had
shared his Aadhaar number with the unknown person. The fact
that the respondent was thereafter able to receive SMS alerts
on his registered mobile number is also borne out from the
material produced by the petitioner. The respondent cannot, on
the one hand, rely upon the receipt of SMS alerts to say that
the petitioner ought to have protected the account and, on the
other hand, seek to explain away his own failure to act upon
those very alerts by stating that he had confidence in the
petitioner. On the facts of this case, the evidence regarding the
sharing of the Aadhaar particulars, the OTP, the receipt of the
SMS alerts and the failure to immediately report the
transactions required a finding on the respondent's negligence
before the liability could be fastened upon the petitioner.
35. In light of the above, we find that no such
deficiency in service on the part of the petitioner is established.
The material on record shows that the respondent had received
SMS alerts in respect of the disputed transactions, had himself
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operated the account during the period in which the
transactions occurred, and had shared his Aadhaar particulars
with a person whose identity was not known to him. Despite
receiving repeated alerts, the respondent did not immediately
bring the unauthorized transactions to the notice of the
petitioner and reported the same only on 02.05.2019. The
petitioner, on the other hand, has produced the transaction
records and SMS records and, upon receiving the complaint,
took steps to block further transactions and placed the matter
before the Internal Ombudsman. In these circumstances, there
is no material to establish any fault, omission or negligence in
the manner in which the petitioner performed its banking
services so as to constitute “deficiency” within the meaning of
Section 2(11) of the Act.
36. The mere fact that unauthorized transactions
occurred in the respondent's account cannot, by itself, lead to a
conclusion that there was deficiency in service on the part of
the petitioner. The respondent was also required to exercise
reasonable care in safeguarding his banking particulars and
OTP and to promptly report any unauthorized transaction upon
receiving the corresponding alerts. Having regard to his
conduct in the present case, the loss cannot be attributed
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entirely to any act or omission on the part of the petitioner.
Consequently, the finding of deficiency in service recorded by
the District Commission and affirmed by the State Commission
and the National Commission is unsustainable. The petitioner
cannot be held liable for the loss under Section 2(11) of the Act
in the absence of any established fault, omission or negligence
on its part.
Accordingly, we pass the following;
ORDER:
(i) The Writ Petition is allowed;
(ii) The order dated 15.05.2026 passed by the National
Consumer Dispute Redressal Commission, New
Delhi, in Diary Case No.29/2025, is hereby set
aside.
No order as to cost.
Sd/-
(D K SINGH)
JUDGE
Sd/-
(H.SHANTHI BHUSHAN)
JUDGE
KNM