Bombay HC Pulls Up Banks For Denying Cyber Fraud Complaints, Urges Sensitive Approach

Bombay HC Pulls Up Banks For Denying Cyber Fraud Complaints, Urges Sensitive Approach

The Bombay High Court has pulled up banks for adopting an “improper attitude” of outright denial in cases involving siphoning of account holders’ money by cyber fraudsters, and directed them to adopt a more “sensitive approach” while handling such complaints.

Urvi MahajaniUpdated: Monday, October 20, 2025, 09:51 PM IST
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Bombay High Court emphasizes banks’ duty to adopt a sensitive approach in cyber fraud complaints | File pic

Mumbai: The Bombay High Court has pulled up banks for adopting an “improper attitude” of outright denial in cases involving siphoning of account holders’ money by cyber fraudsters, and directed them to adopt a more “sensitive approach” while handling such complaints.

A bench of Justices MS Sonak and Advait Sethna, on October 17, set aside a January 2021 decision of the Banking Ombudsman which had summarily dismissed a businessman’s complaint alleging that nearly Rs 2 crore was fraudulently siphoned from his IndusInd Bank account.

Complaint Dismissal Overturned

“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,” the bench observed. “On the above short ground, we set aside the impugned order and restore the petitioner’s complaint to the Ombudsman.”

The court noted that the Ombudsman had neither heard the petitioner before passing the order nor communicated the decision to him. The businessman’s advocate told the court that his client obtained a copy of the order only through an RTI application.

The Reserve Bank of India’s (RBI) counsel claimed that the order was emailed to the petitioner, but could not confirm whether any hearing had been held before it was issued.

Court Directives on Handling Complaints

Terming the businessman’s grievance a “serious” one, the bench directed the Banking Ombudsman to hear both the petitioner and the bank and dispose of the complaint “in accordance with law” within four months.

The court also directed the state government to file before the Ombudsman a copy of the chargesheet or cyber investigation report within four weeks.

Referring to its previous ruling that held customers have “zero liability” in unauthorised transactions if they notify the bank in time, the bench asked the Ombudsman to consider whether similar relief could be granted to the petitioner.

Banks Urged to Adopt Sensitive Measures

“The bank must also adopt a sensitive approach towards such matters,” the bench observed. “If the amounts are being allegedly siphoned off from account holders, then the banks must see whether any further measures need to be taken to prevent such incidents.”

Criticising banks for their defensive stance, the judges said: “The attitude of simply denying everything and then claiming that the Ombudsman has no jurisdiction to investigate disputed facts is not proper. The bank must cooperate with the Ombudsman because such incidents tend to shake the faith of the common people in our banking institutions.”

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The court further emphasised that “even the Ombudsman should approach this matter from this perspective instead of treating it as a simple dispute between two parties.”

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