State Bank of India v. Shri Chander Kalani and Anr.
In the Telecom Disputes Settlement and Appellate Tribunal
Cyber Appeal 13/2015 (M.A. 282/2017)
Before Mr Shiva Kirti Singh, Chairperson and Mr A.K. Bhargava, Member
Decided on July 31, 2018

Relevancy of the case: Compensation under Section 43A for the bank’s negligence

Statutes & Provisions Involved

• The Information Technology Act, 2000 (Section 57, 46, 43A)

Relevant Facts of the Case

• On 13-12-2013, the respondent, who is a non-resident of India, filed a complaint against the appellant bank. The respondent was using his email ID to direct the bank to create a fixed deposit from the funds of his savings bank account. The respondent used to confirm transactions from his registered phone number. By the end of October 2013, the respondent’s phone was damaged and no alternative number was provided.
• The email of the respondent was hacked and an amount of ₹65 lakhs or £43,300 was credited to a bank in London, where the respondent had no bank account. The appellant bank was only able to restore an amount of £16,710 to the respondent. The respondent filed a case before the Adjudicating Officer submitting all the relevant details on 30-12-2013.
• The Adjudicating Officer held that the appellant should pay 40 lakhs compensation to the respondent.
• The appellant filed an appeal under Section 57 of the Information Technology Act, 2000 in the Telecom Disputes Settlements and Appellate Tribunal.

Prominent Arguments by the Advocates

The appellant’s counsel:

• The respondent did not provide them with an alternative mobile number when his phone got defunct. It was argued that the appellant bank was not negligent for the amount of 43,300 GBP and hence, the appellant is not bound to pay the compensation of 40 lakhs. Further, it was also submitted that Section 43(a)(b) of the Information Technology act, 2000 as raised by the counsel for the respondent is not applicable in the present case.

The respondent’s counsel:

• The appellant bank did not do proper verification before crediting a huge amount to a bank in London. For the transfer of money to a foreign bank, the signature of the respondent was required but no signature was acquired. This transaction was unauthorized

Opinion of the Bench

• The adjudicating officer’s decision was not against the provisions of the Information Technology Act, 2000. The report received from the police assured that the account of the respondent was hacked. The appellant was not successful in showing that they did not authorise the money transfer to the bank in London through emails or the internet. The bank’s negligence was clear in its act of not getting the signature in A-2 form from the respondent and also disclosing the vital information of the respondent’s account through the mail. The court held that Section 43A of the Information Technology Act, 2000 was applicable in the present case.

Final Decision

• The tribunal held that the appellant should pay the compensation awarded the adjudicating officer.
• If the amount is not paid within one month from the day the final decision is pronounced, then an interest of 8% per annum from the date of the order made by the Adjudicating officer till the realization date is to be paid.
• The appellants are also entitled to pay a compensation of ₹25000 which is the consolidated cost of the appeal.

This case summary has been prepared by Afsana Khan, an undergraduate student at Symbiosis Law School, Hyderabad, during her internship with The Cyber Blog India in June/July 2020.