Kerala HC: SMS Alert, not the last resort for unauthorized transactions

The latest order form Kerala HC has made a judgment about the unauthorized transactions, as the case between State Bank of India V. PV George, where the customer’s account withdraw was made without consent/authorization in a foreign nation (Brazil) for which he had made a claim for refund. The bank stated that message alert for withdraw was made, but the customer didn’t respond to same. The High Court said, that message alert is not the last resort for protection of customer’s funds, and it’s a duty of the bank to protect and safeguard the customers funds. The final order was to refund the amount withdrawal unauthorized and make the necessary changes for safer electronic environment.

The court stated “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.”

“Where a bank is providing service to its customer, it owes a duty to exercise reasonable care to protect the interests of the customer. Needless to say that a bank owes a duty to its customers to take necessary steps to prevent unauthorized withdrawals from their 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 ATM cum-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 unauthorized 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 court added.

By,

Priyam Kamra

Student reporter, INBA