the customer shall have no liability at all in the case of third-party breach
where the deficiency lies neither with the bank nor with the customer but
lies elsewhere in the system. The only obligation which casts on the
customers of the bank in terms of the circular is that the unauthorised
transactions shall be brought to the notice of the bank forthwith so as to
enable the bank to block the account. The circular aforesaid only
reminds the banks, their obligations and responsibilities and it does not
create any new rights or obligations. In short, there is also no difficulty in
holding that if a customer suffers loss in connection with the transactions
made without his junction by fraudsters, it has to be presumed that it is
on account of the failure on the part of the bank to put in place a system
which prevents such withdrawals, and the banks are, therefore, liable for
the loss caused to their customers. All over the world, the courts are
adopting the aforesaid approach to protect the interests of the customers
of electronic banking. Reverting to the facts of the case on hand, though
it was contended by the defendant in the written statement filed in the
suit that the disputed withdrawals cannot be said to be withdrawals
without the junction of the plaintiff, in the light of the facts established by
evidence, such a contention was not pressed into service by the
defendant in the second appeal. Instead, as noted, the main contention
pressed into service by the defendant in the second appeal is that the
defendant is not liable for the unauthorised withdrawals made from the
account of the plaintiff by fraudsters abroad. As the second contention
was found against, the question is answered against the appellant.
11. Question (ii): Various services are being provided by
banks to their customers. In fact, banks are soliciting business by
advertising the various services provided by them to their customers in
connection with different accounts. SMS alerts is one of the facility
extended by most of the banks to their customers in connection with the
savings bank accounts having electronic banking facilities including ATMcum-
Debit Card facilities. Such facilities are provided not only to those
who specifically request for the same, but also to those who do not ask
for such facilities. Could such a facility voluntarily given by banks to their
customers determine the rights of parties, is the question. According to
me, only if there exists a specific term in the contract between a bank
and its customer to the effect that the bank would be exonerated from
the liability in connection with the unauthorised transactions if the
customer does not respond to the SMS alerts, SMS alerts cannot be the
basis for determining the liability of the customer, for, there would be
account holders who may not be in the habit of checking SMS alerts at
regular intervals and account holders like the plaintiff in the instant case
who is working in an offshore oil rig, who may not be able to access their
mobile phones for several days having regard to the peculiarity of their
avocation. The defendant has no case that there is a contract between
them and the plaintiff to the effect that if the plaintiff does not respond
to the SMS alerts given by them regarding the withdrawals from his
accounts, they would not be liable for the loss, if any, caused to the
plaintiff.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
MR. JUSTICE P.B.SURESH KUMAR
09TH DAY OF JANUARY 2019.
RSA.No. 1087 of 2018
STATE BANK OF INDIA, Vs P.V.GEORGE
