RESEARCH NOTE ON BANK TRANSFER DEFAULT

Introduction
This research note contains answers to the following questions :-
i) Under whom does the client have remedy in case of a bank debit which has not been credited
in the transferee account?
ii) For the present factual matrix, what provisions of law attract charges?

Research Note
i) Under whom does the client have remedy in case of a bank debit which has not been credited
in the transferee account?
a. Reserve Bank-Integrated Ombudsman Scheme (RB-IOS 2021)
As per Clause 9 of RB-IOS, in case of a grievance of ‘deficiency in service’ on the part
of the Regulated Entity (RE) (includes banks), one may make a complaint under “The
Reserve Bank-Integrated Ombudsman Scheme.” Clause 10(2) provides that a complaint
may lie if the complaint given to the RE was rejected wholly or partly by the Regulated
Entity, and the complainant is not satisfied with the reply.

Clause 14 of the Scheme states that the Ombudsman may examine either party to the
complaint and record their statement. Thereafter, RE shall, on receipt of the complaint,
file its written version in reply to the averments enclosing copies of the documents relied
upon within 15 days. If the RE fails to respond in time, proceedings will take place ex
parte based on the evidence available on record and pass appropriate Order or issue an
Award. In case the complaint is not resolved through facilitation, such action as may be
considered appropriate, including a meeting of the complainant with the officials of RE,
for resolution of the complaint by conciliation or mediation may be initiated. Clause
15(3) states that an Award of the Ombudsman shall contain, inter alia, the direction, if
any, to the Regulated Entity for specific performance of its obligations and in addition to
or otherwise, the amount, if any, to be paid by the RE to the complainant by way of
compensation for any loss suffered by the complainant. Clause 15(4) states that the
Ombudsman shall not have the power to pass an Award directing payment by way of
 compensation, which is more than the consequential loss suffered by the complainant or
Rs. 20 lakh, whichever is lower.

Complaints can be filed online on https://cms.rbi.org.in, or through the dedicated e-mail

[email protected] or sent in physical mode to the ‘Centralised Receipt and Processing
Centre’ set up at RBI, 4th Floor, Sector 17, Chandigarh – 160 017 in the format given at
the following- https://rbidocs.rbi.org.in/rdocs/content/pdfs/RBIOS2021_121121_A.pdf.

b. District Consumer Dispute Redressal Forum

Section 2(6) of the Consumer Protecion Act, 2019 (CPA) clarifies that a ‘complaint’ is
one where there is an allegation of the services hired or availed of or agreed to be hired
or availed of, suffer from any deficiency.

In the recent judgment of Arun Bhatiya v HDFC Bank 2022 SCCOnLine SC 1017, the
Supreme Court held that a complaint of deficiency of service against a bank makes the
complainant fall under the bracket of ‘consumer’. Section 2(o) of CPA also provides a
non-exhaustive list of domains to which the term ‘service’ extends, which includes
‘banking’. Therefore, in this case, a consumer complaint can be filed against ICICI Bank
for offering deficient services to client.

According to Section 39(1)(d) of CPA, the District Commission where satisfied that any
of the allegations contained in the complaint about the services are proved, it shall issue
orders ‘to pay such amount as may be awarded by it as compensation to the consumer for
any loss or injury suffered by the consumer due to the negligence of the opposite party.’

‘Complaint’ under Section 2(6) of CPA also includes an allegation against unfair trade
practice adopted by any trader or service provider. Hence, the same forum can be utilized
to file a case against the operator of the fake Patanjali website to recover the remainder of
the lost amount i.e., Rs. 1,20,000, in the form of compensation, on the ground of unfair
trade practice. Under Section 2(47)(vi) of CPA:-
 “ "unfair trade practice" means a trade practice which, for the provision of any service,
adopts any unfair method or unfair or deceptive practice including any of the following
practices, namely:-
....
….
(vi) manufacturing of spurious goods or offering such goods for sale or adopting
deceptive practices in the provision of services.”
Therefore, since the act of the fraudster in this case falls under “unfair trade practice”, it
forms a ground for filing complaint against the person in the consumer forum.

c. Criminal case before Court of Metropolitan Magistrate

A criminal case can be filed on charges under Section 66D of the Information
Technology Act, 2000, Section 103 of Trade Marks Act 1999, Sections 418, 419, 465,
and 468 of Indian Penal Code, 1860. (charges explained in next question)

d. National Cybercrime Reporting Portal

A complaint can be registered under the category of ‘Online Financial Fraud’ under the
sub-category of ‘Internet Banking Related Fraud’. As per the Citizen Manual for Cyber
Financial Frauds, the designated police oficer will thereafter quickly verify the matter
and submit verification report to concerned Bank for blocking the amount and after that
due action as per law will be taken in each case by Police/Bank.

ii) For the present factual matrix, what provisions of law attract charges?
A criminal case can be filed on charges under Section 66D of the Information Technology Act,
2000, Section 103 of Trade Marks Act 1999, Sections 417, 418, 419, 465, and 468 of Indian
Penal Code, 1860. Section 66C will not be applicable as the Client is not a victim of identity
theft. The Client’s identity is not stolen by way of a misuse of any of their unique identity
feature.

However, an offence under Section 66D IT Act, 2000 is made out as there is cheating by
personating Patanjali and staff of Patanjali, and the same was using a computer resource. Section
103 of Trademarks Act 1999 penalizes the act of applying any false trade description to goods or
services ‘Trade Description’ here includes any indication as to the name and address or other
indication of the identity of the manufacturer or of the person providing the services according to
Section 2(1)(za)(v) of the Act. Since the phone number made available on the website for call
purposes identifies itself through WhatsApp profile picture, Truecaller ID Name and Truecaller
profile picture with Baba Ramdev, the website offering services purports to indicate a link with
Patanjali to the reasonable individual.

Section 417 provides punishment for cheating whereas Section 418 and 419 IPC refer to
punishment for offences of cheating with knowledge of wrongful loss, and cheating by
personation respectively. Section 465 i.e. punishment for forgery is also applicable as making a
false document, as per Section 464, refers to making signs, seals or executing a document with
the intention of causing it to be believed that such document was made, signed, sealed by the
authority of a person by whom he knows it was not made. The document signifying details of
Patanjali Yog Gram Bank Account affixes a seal which reads ‘Patanjali Ayurveda’, intending to
deceive the Client of the authenticity of the document. Section 468 provides for punishment for
forgery for the purpose of cheating.