No hearing in Rs 2 crore plaint, Bombay HC frowns at RBI ombudsman

MUMBAI: Bombay high court recently pulled up the RBI ombudsman for summarily dismissing a "serious" complaint about Rs 2 crore being siphoned off from an account with a private bank in Khar (West) without granting a hearing. "This complaint could not have been disposed of in a summary manner without even minimum compliance with the principle of natural justice or fair play," said a bench of Justices Mahesh Sonak and Advait Sethna on Oct 17. The court set aside the Jan 15, 2021, order and restored the complaint, directing the ombudsman to hear the petitioner, Kamal Makhija, and IndusInd Bank and dispose of it "in accordance with law." Makhija, a partner in a firm that has had a cash credit account with IndusInd Bank for over 20 years, said his registered mobile number was disconnected on Oct 3, 2020.

With no response from MTNL over the weekend, he later discovered unauthorised debit transactions of Rs 2 crore during the intervening night of Oct 4-5. A cyber police probe revealed that a new SIM card had been issued by MTNL to an unknown person, and the siphoned amount was transferred to accounts across India.

The bank denied any role in the fraud. Makhija lodged a complaint with the banking ombudsman on Nov 6, 2020, but it was dismissed on Jan 15, 2021.

His advocates Harish Pandya and Pankaj Bafna informed the court that no hearing was given and the order was not even communicated; Makhija obtained a copy only through an RTI application. RBI's counsel said the central bank could not confirm whether a hearing was held. While restoring the complaint, the court directed the state to submit before the ombudsman a copy of the chargesheet or cyber report within four weeks.

It also asked the ombudsman to consider Reserve Bank of India's July 2017 circular that limits customer liability if cyberfraud is reported within three days. The high court said banks must adopt a "sensitive approach" in such matters and ensure measures to prevent recurrence. "The bank must cooperate with the ombudsman because such incidents shake the faith of common persons in banking institutions," it said, requesting the ombudsman to decide the case "as expeditiously as possible and within four months."