TDSAT Upholds Order Requiring PNB To Pay ₹16.34 Lakh Lost In Net-Banking Fraud After BSNL Issued Duplicate SIM Without Due Diligence

Green Environmental Technology maintained a current account with Punjab National Bank (PNB) and used internet banking linked to a BSNL mobile number.

After the SIM ceased working, unauthorised parties accessed the account and transferred ₹16,34,000 through online banking between 9 and 10 April 2019.

The Adjudicating Officer directed PNB to pay the withdrawn sum with interest and directed PNB and BSNL to share equally a further ₹1.50 lakh for mental agony and expenses.

PNB appealed; it deposited the decretal amount pursuant to an interim order.

BSNL did not file a reply or appear at the appeal hearing.

The complaint and decision were considered under Sections 43 and 43A of the Information Technology Act, 2000, concerning unauthorised access and compensation for failure to maintain reasonable security practices in handling sensitive personal data or information; Section 79 was considered in relation to an intermediary’s exemption from liability, which depends on compliance with due diligence requirements.

The Adjudicating Officer also relied on the applicable Department of Telecommunications procedures for duplicate SIM issuance, requiring verification of the subscriber’s documents against the original proof of identity on record.

The Tribunal applied the RBI circular dated 6 July 2017, under which the bank was required, in the circumstances identified by the Adjudicating Officer, to credit the disputed amount within ten working days of receiving notice of the fraudulent transactions.

The Tribunal upheld the finding that BSNL had issued a duplicate SIM without following the required verification procedure, and noted that BSNL had not appealed that finding.

It also accepted the finding that the unauthorised withdrawals were undisputed and that the bank had failed to comply with the RBI circular’s reversal timeline after being notified of the transactions.

The Tribunal considered the security of internet-banking credentials, beneficiary additions and transaction procedures to fall within the bank’s domain, and found no basis to disturb the direction requiring PNB to repay the full amount withdrawn.

It also upheld the allocation of half the award for mental agony and expenses to BSNL and half to PNB.

The amount deposited by PNB, together with accrued interest, was directed to be paid to Green Environmental Technology.

The Tribunal stated that execution of BSNL’s liability would be pursued before the appropriate forum.