Bombay High Court Orders Bank To Refund Rs 76 Lakh, Says Account Holder Not Liable For Unauthorized Transactions Due To Third Party Breach

The Bombay High Court directed Bank of Baroda to refund Rs. 76,90,017 to Pharma Search Ayurveda Private Ltd and its director after a cyber fraud incident involving unauthorized electronic transactions without OTP verification. \r

The court cited the RBI Circular and the bank's policy, which mandates zero liability for customers in such cases if reported within three days. The petitioners reported the fraud promptly, and the Cyber Cell investigation confirmed no SMS or email notifications were received, indicating no negligence on the petitioners' part. \r

The court quashed the Banking Ombudsman's rejection of their complaint and ordered the bank to refund the amount with interest and compensation.