ATM frauds: Banks liable to compensate for loss, says HC
ATM frauds are nowadays common. If any customer loses money from his bank account due to frauds, the bank is liable to compensate the customer, the Kerala High Court ruled.
P V George, a resident of Pala, Kottayam, working abroad lost nearly Rs 2.40 lakhs from his bank account when somebody resorted to fraud. It happened six years back. George contented that the withdrawals were unauthorised and done without his knowledge and that SBI is liable to refund the amount he had lost. While the bank took the stand that withdrawals are not possible without his knowledge as the ATM pin is known to him only, hence it is not liable for the loss and that refund cannot be made.
Since the bank did not refund the amount, George approached the Munsif court. His petition was dismissed but the district court allowed it and directed the bank to refund. The bank then challenged the order in the High Court.
The High Court after evaluating the situation held that the bank owes a duty to its customer to take necessary steps to prevent unauthorised withdrawals. As a corollary, if a customer suffers loss on account of a transaction not authorised by him, then the bank is liable to the customer for the loss.