Retired Professor Must Bear ₹12.94 Lakh Fraud Loss After Ignoring Bank Alerts, Sharing Aadhaar Details: Karnataka HC

The respondent, a retired professor, alleged that ₹12,93,922 was withdrawn from his SBI account through unauthorised transactions between 12 and 30 April 2019.

He reported the transactions to the Bank on 2 May 2019, after discovering them on 30 April.

The District Commission directed the Bank to refund the amount with interest and compensation; the State Commission and National Commission affirmed that decision, applying the RBI’s customer-protection circular and finding no established customer negligence.

The Bank challenged the National Commission’s order under Articles 226 and 227, contending that the respondent had received transaction alerts, shared his Aadhaar details with an unknown person, and failed to report the transactions promptly.

The Court considered Section 2(11) of the Consumer Protection Act, 2019, under which deficiency in service requires an established fault, omission or negligence in the service provider’s performance.

It applied the RBI Circular dated 6 July 2017 on customer protection in unauthorised electronic banking transactions: paragraph 6(ii) provides for zero customer liability in specified third-party breach circumstances where the customer notifies the bank within three working days of receiving communication of the unauthorised transaction; paragraph 7(i) makes the customer liable for the loss until reporting where the unauthorised transaction resulted from the customer’s negligence, including sharing payment credentials.

The Court concluded that paragraph 7(i), rather than paragraph 6(ii), applied.

It relied on the respondent’s receipt of repeated SMS alerts, his operation of the account during the period of the disputed transactions, his admission that he had shared his Aadhaar details with an unknown person, and the Internal Ombudsman’s observation that the OTP might also have been shared.

The respondent did not report the transactions until 2 May, while the Bank blocked further attempts after receiving his complaint.

On these facts, the Court found customer negligence and no established fault, omission or negligence by the Bank constituting deficiency in service.

It allowed the writ petition and set aside the National Commission’s order dated 15 May 2026; it made no order as to costs.