Home Judgments & Orders Kerala High Court Banks Cannot Recover Money Lost Due To Fraud From Customers

Banks Cannot Recover Money Lost Due To Fraud From Customers

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Banks Cannot Recover Money Lost Due To Fraud From Customers
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The Kerala High Court on Wednesday said banks cannot recover the money withdrawn through fraudulent online transactions from cash credit and overdraft accounts of customers if it cannot be unequivocally proved that the customer was responsible for such transaction.

Banks will have to approach a civil court to recover the money from the persons responsible, the High Court said.

Justice A Muhamed Mustaque said in the judgment,” Thus, it is clear that the bank cannot claim any amount from the customer when a transaction is shown to be a ‘disputed transaction’. The bank can recover from the customers only when it can unequivocally prove that the customer was responsible for such transaction, independently through the civil court. The RBI guidelines is a clear mandate to exonerate a customer in such ‘disputed transaction’. RBI circular presumes the innocence of the customer in such given circumstances. However, this innocence can be controverted. The onus falls on the bank to prove otherwise.”

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