TaxTMI 
TaxTMI 
2019 (10) TMI 1610
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....w them to dispense with their physical presence for banking transactions. The growth of the banking sector by use of technology has also given rise to a new form of fraud using counter technologies against the bank. Technology provides services without boundaries. Geographical location is no longer a constraint due to the onset of the use of technology. The convenience of service without boundaries and access to service from anywhere is the aim of any business. Criminals and fraudsters also have grown at the same pace as that of the growth of technology. Criminals are also now able to disguise their location and operate from anywhere in the world. The use of technology has resulted in the dissemination of personal data. Data can no longer be stored as done in a brick and mortar system. Data is bound to be exposed in different forms depending upon the nature of the service provided. Technology has its own set of advantages and pitfalls. Data theft in Cyber Law means stealing another person's confidential or personal information without his consent or authority. The online banking service of a customer is linked with his email and mobile number. This is essentially used to authen....
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....ere linked to the mobile number of the first petitioner who is also the Managing Partner of the second petitioner-firm. On 28th April 2017, Mr.Cherian came to realize that a total amount of Rs. 23,00,000/- had been unauthorizedly transferred from the accounts of the petitioners by way of online transactions effected through the respective online banking apps of the Bank. Mr.Cherian's registered mobile number had become dysfunctional on 25th April 2017 and he had approached the service provider, M/s BSNL Telecom on 27th April 2017 to enquire regarding the same. He was told by the representative of M/s BSNL Telecom that his number had become dysfunctional as a duplicate SIM card had been issued in respect of the number on 25th June 2017 upon the request of a person who had fraudulently represented himself as Mr.Cherian by furnishing ID proofs belonging to him. Upon subsequent restoration of network services after re-issuance of a duplicate SIM, he realized that such amounts had been unduly transferred to several accounts from the bank accounts of the petitioners. 4. The petitioners in both these writ petitions approached this Court with similar prayers. They seek a declaration t....
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....t the amounts had been transferred to several bank accounts in West Bengal and Maharashtra by fraudsters based in West Bengal. The reports of the investigating officer were made available before this Court. It is stated therein that the investigating officer registered a crime against persons hailing from West Bengal. He has also stated in his reports that the fraudsters followed the same modus operandi in the case of accounts of both the petitioners to transfer the amounts by acquiring duplicate SIM cards belonging to Mr.Tony Davies and Mr.Cherian by means of fraudulent misrepresentation and using it to generate OTPs which would give them unauthorized access into the petitioners' online banking facilities. By verifying the IP address of the accused, the Detective Officer came to the conclusion that the accused illegally logged into the bank account of the complainants and transferred the amount from the complainants' accounts. It is also stated that the transferred amounts were immediately withdrawn from the beneficiary accounts at West Bengal and Maharashtra. The investigation reveals a case of SIM swapping and identity theft. 9. For deciding the issue in hand, this Cour....
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....iling an appeal against the action taken by the Bank. Before the enactment of the securitisation act, the Bank would assert claims only through the adjudication process of the civil court. The civil court can very well address all issues including the fraudulent transactions or unauthorised transactions. 11. Enforcement of security interest as referable under the SARFAESI Act would arise only when a borrower is under the liability to a secured creditor under a security agreement and when he makes default in repayment of any such secured debt (See Section 13.2 of the SARFAESI Act). This liability clearly refers to liability under a contract. It is based on such contractual obligation that a borrower is deemed to be proceeded against when a default is committed in repaying the loan amount. In a matter covered under the contractual obligation, the onus to disprove the liability under the SARFAESI Act as adverted above is on the borrower by means of challenging the action under Section 17 of the SARFAESI Act. However, in cases that contain allegations of fraud, the matter goes out of bounds of the SARFAESI Act. The Bank, therefore, is liable to prove its claim against the persons who ....
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.... are phishing, trojans, session hijacking, key logger, etc. The public WiFi is the easiest target for hackers. NORTON, a leading cyber security provider in its web page refers to the risk of using public WiFi. The unencrypted network in public WiFi allows hackers to collect data easily. WiFi snooping(2) using software allows hackers to access everything online while the user is active in online. The possibilities of fetching data relating to the banking account while the customer using online transaction, by the hackers, cannot be overruled in banking transaction. The bank can identify fraud risk and also devise mechanisms to protect customers. There are counter technologies to identify location behaviour of operators also. It is for the bank to secure the safety of online banking transactions. 14. Defining a 'disputed transaction': A 'disputed transaction' in this context has to be understood as a transaction prima facie tainted by fraud. Classifying transaction as such would depend upon the nature of allegations and investigation carried out in this regard. "No man is bound by a bargain into which he has been induced by fraud to enter, because assent is necessa....
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....ion value or Rs.10,000/- per transaction, whichever is lower iii.Beyond seven days# As per the Board approved policy of the PPI issuer (c) In cases where the loss is due to negligence by a customer, such as where he / she has shared the payment credentials, the customer will bear the entire loss until he / she reports the unauthorised transaction to the PPI issuer. Any loss occurring after the reporting of the unauthorised transaction shall be borne by the PPI issuer. (d) PPI issuers may also, at their discretion, decide to waive off any customer liability in case of unauthorised electronic payment transactions even in cases of customer negligence. # The number of days mentioned above shall be counted excluding the date of receiving the communication from the PPI issuer. The above shall be clearly communicated to all PPI holders." The circular as above does not foreclose the remedy of the bank to proceed against the fraudsters and also against customers or any other persons or entity involved. It also does not prevent a customer from proceeding against the bank through a civil suit if he was unable to lodge complaint within the time as provided in the circular. Civil righ....
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....authorised person and encashed by him, the bank might have had a good defence. If the signatures on the cheque or at least that of one of the joint signatories to the cheque are not or is not genuine, there is no mandate on the bank to pay and the question of any negligence on the part of the customer, such as, leaving the cheque book carelessly so that a third party could easily get hold of it would afford no defence to the bank..." 18. The Apex Court in Canara Bank vs Canara Sales Corporation & Ors [AIR 1987 SC 1603], after referring to the judgments in Macmillan's case (supra) as well the judgment of the Apex Court in Bank of Bihar [AIR 1967 SC 389] at para 42 held as follows: "42. We adopt the reasoning indicated above with great respect. Unless the bank is able to satisfy the Court of either an express condition in the contract with its customer or an unequivocal ratification it will not be possible to save the bank from its liability. The banks do business for their benefit. Customers also get some benefit. If banks are to insist upon extreme care by the customers in minutely looking into the pass book and the statements sent by them, no bank perhaps can do profitable ....