New Delhi: After a legal battle spanning over 11 years, a bank customer has finally been awarded compensation by the Delhi State Consumer Commission in a case involving unauthorised ATM withdrawals from his State Bank of India (SBI) account in 2014.
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The ATM Fraud That Sparked a Long Legal Battle
On January 4, 2014, Mr. Panwar, an SBI account holder, used his SBI debit card at Guwahati Railway Station. His initial transaction of ₹1,000 failed, after which he successfully withdrew ₹1,000 from an Indian Overseas Bank ATM nearby and boarded a train to Delhi.
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Shortly afterward, he received three SMS alerts showing successful withdrawals of ₹1,000, ₹20,000, and another ₹1,000 — all without his consent.
SBI Denied Refund, Prompting Legal Action
Upon reaching Delhi on January 6, 2014, Mr. Panwar lodged a complaint with SBI and was only credited ₹1,000. The ₹20,000 debit was deemed successful by the bank, which refused a refund. Despite his repeated efforts, including complaints to the RBI Banking Ombudsman, he received no redress and finally approached the District Consumer Forum in Delhi.
District Consumer Forum Ruled in Panwar’s Favor
On October 25, 2017, the Delhi District Consumer Commission ordered SBI to:
- Refund ₹20,000 with 10% annual interest from January 4, 2014, until payment.
- Pay ₹5,000 for litigation costs.
- Pay ₹10,000 as compensation for mental distress and harassment.
It also warned that failure to comply within 30 days would attract 12% annual interest.
SBI Appealed But Lost Again in 2025
Rather than comply, SBI filed an appeal with the Delhi State Consumer Commission, which reviewed the matter on May 7, 2025. The commission dismissed the appeal, confirming that:
- Panwar had provided valid bank statements and SMS records.
- SBI had failed to produce evidence, including the death certificate of the former branch manager (used as an excuse for non-appearance in hearings).
- There was no irregularity in the earlier order.
The commission concluded that SBI must pay ₹58,000, which includes principal, interest for 11.5 years, and compensation.
Breakdown of the ₹58,000 Compensation
- ₹20,000 – Fraudulent debit
- ₹23,000 – Interest @10% for 11.5 years
- ₹5,000 – Litigation cost
- ₹10,000 – Mental harassment compensation
Total: ₹58,000
Why This Judgment Is Important for Bank Customers
Legal experts believe this case sets a strong precedent for consumers dealing with unauthorized banking transactions, especially in the digital era.
Key Legal Takeaways:
- Zero Liability Rule: As per RBI guidelines, if an unauthorized transaction is reported within three working days, the customer is not liable for the loss.
- The bank must credit the amount within 10 days under RBI’s “Zero Liability” and “Limited Liability” framework.
Expert Opinions: Strengthening Consumer Rights
Aakanksha Nehra (PSL Advocates):
Swift reporting of fraud is crucial. This case rewards a vigilant consumer who followed the right procedures.
Arpit Gupta (ARCUS Law):
This ruling enforces RBI’s customer protection guidelines, putting pressure on banks to act responsibly.
Shashank Agarwal (Legum Solis):
It reiterates that banks must indemnify consumers in ATM fraud cases if promptly reported.
Kritika Seth (Victoriam Legalis):
The order is a landmark decision ensuring consumer rights are upheld in the growing landscape of cyber-financial crimes.