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what is the liability of Banks in Unauthorized and Fraudulent Online transactions

Online transactions are a new normal as the government is pushing for online transactions. Banks are also providing big discounts on online sale and purchase of products through credit and debit cards.
But sometimes people the infrastructure of the
On 21st December, 2020 in National consumer Disputes Redressal Commission (NCDRC), the Hon’ble Presiding Member, Mr. C Viswanath dismissed the Revision Petition  filed under Section 21 (b) of the Consumer Protection Act, 1986 in 1 HDFC Bank Ltd. & Anr. versus Jesna Jose R.P. N. 3333 of 2013 by HDFC Bank and held that the bank will be liable to pay to its customers in case of unauthorized transactions. Thus, the banks must compensate to its account holders in case of fraudulent transactions in the absence of any evidence to substantiate its stand that the fault was on the part of the account holder and in today’s digital age, the possibility that the credit card was hacked or forged cannot be ruled out.

Brief facts of the matter:

The vcitims purchased a pre-paid Forex Plus Debit from the bank in 2007 and the fraud took place in 2008. The victim’s father got a call from the Credit Card Division of bank for confirming the transaction attempted by the victim’s card. but after verifying the same from the victim, it came to the attention of both  that no such transaction was done by the victim/card holder and thereafter a complaint was registered in the police station, Los Angeles. The victim also received the chargeslips and came to know  that the signatures on the charge slip didn’t match the victim’s signatures

Victim filed a consumer complaint on the facts that the credit card was in her possession when the transaction took place and thus there is a possibility that her card could have been hacked or forged by some third party for which the petitioner is liable or some other technical and/or security lapse in the electronic banking system through which the transactions had taken place as the transaction took place several miles away from the actual place of the respondent.

The matter went on to the Hon’ble NCDRC wherein it was held that since the petitioner bank has failed to produce any evidence to substantiate that the fraudulent transaction took place because of the account holder’s fault hence, the petitioner will be liable for the same and the bank cannot rely on arbitrary terms and conditions to wriggle out of its liability towards customers and any such terms and conditions must be in conformity with the directions issued by the RBI which is responsible for safekeeping of the banking systems and maintaining checks and balances in the same.

The Hon’ble NCDRC also relied upon the  RBI circular dated 6th July, 2017 dealing with Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions wherein it stated:-

“6. A customer’s entitlement to zero liability shall arise where the unauthorised transaction occurs in the following events:

Contributory fraud/ negligence/ deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer).

Third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorized transaction.”

Time taken to report the fraudulent transaction from the date of receiving the communication

Customer’s liability

Within three working days –    Zero liability

Within four to seven working days –  The transaction value or the amount or the maximum liability of the customer ranges from ? 5,000 to ? 25,000, depending on the type of account whichever is lower

Beyond seven working days – As per bank’s Board approved policy

The Hon’ble NCDRC has observed as under:

“11. The first fundamental question that arises is whether the Bank is responsible for an unauthorized transfer occasioned by an act of malfeasance on the part of functionaries of the Bank or by an act of malfeasance by any other person (except the Complainant/account-holder). The answer, straightaway, is in the affirmative. If an account is maintained by the Bank, the Bank itself is responsible for its safety and security. Any systemic failure, whether by malfeasance on the part of its functionaries or by any other person (except the consumer/account-holder), is its responsibility, and not of the consumer.”

The Reserve bank of India (RBI) on 6th July 2017 amid the national drive toward digital transactions and rising incidents of fraud, had notified the norms in order to fix the liability in cases if a person loses money through an unauthorized electronic banking transaction like cyber attack on the bank or hacking of account.

The order passed by the Hon’ble NCDRC is going to help millions of people who fell victims to such frauds and unauthorised transactions because In today’s time with an increase in digital and net-banking transactions, the threat of fraud in online transactions and hacking are also on the rise.

Sexual Harassment of Women at Work Place in Virtual ERA

Sexual Harassment of Women at Work Place in Virtual World 

In this pandemic time due to COVID-19, work from home is slowly but steadily becoming the new normal. The pre COVID-19 era saw working from home as an exception to the general rule in most sectors. However, the prevalent situation has compelled most sectors to give serious consideration to the option of working from home on a long term basis. With lockdown orders in place and uncertainty looming large, companies have started evaluating implementation of work from home for a large proportion of their employees.  

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 

The Actwas the country’s first legislation that aimed to provide protection to women against sexual harassment at their workplace and provide a mechanism for redressal of complaints of sexual harassment. Section 3 of the Act provides that no woman shall be subjected to sexual harassment at any ‘workplace’. 

It is apparent that an important facet that requires determination is the scope of what comprises a ‘workplace’ under the Act. Any misconduct in question that may qualify as sexual harassment in terms of the Act, but which occurs outside the workplace, may not typically attract the provisions of the Act. 

The definition of ‘workplace’ under Section 2(o) of the Act, is an inclusive and non-exhaustive definition and includes any place visited by the employee arising out of or during the course of employment, including a dwelling place or a house. This allows discretion to the relevant adjudicating authority to determine the exact scope of the ‘workplace’ in the facts and circumstances of each case, as and when such determination becomes necessary. 

Given the nature of the legislation and the protection it seeks to extend to women, it may reasonably be assumed that the scope of ‘workplace’ shall usually be construed liberally and not in a restrictive manner. 

Even otherwise, as a socially benevolent legislation intended to extend protection to women at workplaces, the Act would attract the application of the principle of ‘notional extension’, a principle of law that has been used by courts time and again in the interpretation of beneficial legislation, to serve the objective of the legislation. 

Notional extension of ‘workplace’ under employment laws 

On a perusal of available literature and judicial precedents, it appears that the theory of ‘notional extension’ has been used by courts while interpreting laws governing compensation to be awarded to employees or workmen in case they sustain injuries during the course of their employment. A prerequisite under the applicable laws governing the award of compensation to employees/workmen by an employer was that the incident must have arisen “in” or “out of” the course of employment. 

Therefore, the question that often arose in such cases, to determine the liability of an employer, was whether or not such causal relationship between such incident and the employment could be established. Such determination required, in some cases, the examination of what constituted a workplace for the purpose of employment or engagement of the employee or workman. 

In this context, in the landmark case of Saurashtra Salt Manufacturing Co. v. Bai Valu Raja & Ors., the Supreme Court opined on the applicability of the theory of ‘notional extension’ of the employer’s premises. It was held that the theory of notional extension was applicable to an employer’s premises so as to include an area which the workman passes and re-passes in going to and in leaving the actual place of work. 

The Supreme Court also clearly set out that the scope of such extension of workplace would have to be determined in the facts and circumstances of each case. However, it can be reasonably concluded that an employer’s premises were not restricted to the strict perimeters of the office space and could be extended beyond such physical territory. 

Similarly, in the case ofSadgunaben Amrutlal and Ors. v. The Employees’ State Insurance Corporation, Ahmedabad, while discussing a claim under the Employees’ State Insurance Act, 1948, the High Court of Gujarat observed that recourse may be had to the notional extension theory in order to extend both ‘time’ and ‘place’, in a reasonable manner, in order to ascertain whether an accident to a workman may be regarded as in the course of employment and to effectuate the intention of the Legislature. 

Notional extension of ‘workplace’ under the Act 

Pertinently, the phrase “out of or during the course of employment” has also been included in the definition of ‘workplace’ under the Act. 

In the case of Saurabh Kumar Mallick v. Comptroller & Auditor General of India, the Delhi High Court observed that the aim and objective of formulating the Vishaka Guidelines [propounded in Vishaka v. State of Rajasthan] was to ensure that sexual harassment of working women is prevented and any person guilty of such an act is dealt with sternly. 

Keeping in view the objective of the judgment, a narrow and pedantic approach cannot be taken in defining the term ‘workplace’ by confining the meaning to the commonly understood expression ‘office’. 

It is imperative to take into consideration the recent trend which has emerged with the advent of computer and internet technology and advancement of information technology. A person can interact or do business conference with other person while sitting in some other country by means of video-conferencing…In a case like, this if such an officer indulges into an act of sexual harassment with an employee, say, his private secretary, it would not be open for him to say that he had not committed the act at workplace, but at his residence and get away with the same.” 

Noting the above, the High Court observed that the following factors would have bearing on determining whether the act has occurred in the ‘workplace’: 

(a) proximity from the place of work; 

(b) control of the management over such a place/residence where the working woman is residing; and 

(c) such a residence has to be an extension or contiguous part of the working place. 

Similarly, in its decision in Jaya Kodate v. Rashtrasant Tukdoji Maharaj Nagpur University, when the issue of the scope of workplace arose, the Bombay High Court deemed it necessary to interpret the scope of workplace to be beyond the literal physical workplace. In this background, it was held that the mode and manner in which the basic concepts are exploited by it, leave no manner of doubt that the design of the Parliament is to provide safety and security to women at all workplaces. When the intention of the Parliament is very clear, it becomes even more evident that the definition of workplace under the Act is inclusive and again deliberately kept wide to ensure that any area where women may be subjected to sexual harassment is not left unattended or unprovoked for. 

Hence, any woman at her workplace cannot be disrespected by anybody. Similarly, she cannot also be disrespected when she is at the workplace of the accused. This is further corroborated by Section 19 of the Act, which mandates that every employer has to provide a safe working environment for a woman at the workplace which includes even safety from the third persons coming into contact with her at the workplace. 

In fact, in addition to the decision of the Delhi High Court in Saurabh Kumar Mallick, it would appear that the courts have given an expansive interpretation to what would constitute workplace as and when the need arose to extend its ambit in the interest of protection of women in their workplace, even before the Act came into force. 

For instance, in the case of Ayesha Khatun v. The State of West Bengal & others, the Calcutta High Court had recognized that even though workplace had not been defined either in the Vishakha guidelines or in the Vishakha judgment, a logical meaning should be given to the expression ‘workplace’ so that the purpose for which those guidelines have been framed, is not made unworkable. 

“Workplace, in my view, cannot be given a restricted meaning so as to restrict the application of the said guidelines within the short and narrow campus of the school compound. Workplace should be given a broader and wider meaning so that the said guidelines can be applied where its application is needed even beyond the compound of the workplace for removal of the obstacle of like nature which prevents a working woman from attending her place of work and also for providing a suitable and congenial atmosphere to her in her place of work where she can continue her service with honour and dignity.” 

With the concept of virtual offices and work from home taking precedence in light of the lockdown orders and with the aid of applications like Zoom, Microsoft Teams and Skype etc, working in physical spaces and proximity has taken a backseat. This raises the question of whether our homes or virtual reality space qualifies the test to be recognised as a ‘workplace’ keeping in mind the spirit of the Act. 

Our understanding is that any act of sexual harassment effected virtually in a home working space can be included in the notional definition of a ‘workplace’. The definition of workplace under the Act, itself envisages the concept of notional extension, and such legislative intent has also expressly been recognized by the Courts. 

While the decision of the Delhi High Court in Saurabh Kumar Mallick pre-dates the existence of the Act, the same concept has been imported to be specifically included under the Act through the use of phrases such as “any workplace” in Section 3 and “out of or during the course of employment” in Section 2(o) of the Act. 

In the virtual world, there is a thin line between such harassment that may occur in the course of work or employment and that which may be perceived as harassment while operating outside the physical workplace. Having said that, the scrutiny of facts and circumstances of any complaint arising in case of employees who are working from home would be necessary to determine whether or not such complaint falls under the purview of the Act, keeping in mind the dynamic scope of ‘workplace’. 

Rise of Domestic Violence cases during Lockdown

Due to lockdown in India domestic violence cases has increase rapidly. Lockdown increases the risk of domestic violence within the home. Domestic Violence includes a physical, sexual, financial, psychological and emotional abuse against the women in house which is safest place for any person. During lockdown lot of women suffers with the act of assault, threats, humiliation and intimidation by the husband or other family members. Disconnection from outside or parental home support is one of the biggest reason for rise in domestic violence during lockdown. Due to lockdown victim of domestic violence not able the leave the place and continue to suffer the violence and can face physical and mental health difficulties. Another reason for rise in domestic violence is mental stress, insecurity of job, financial stress, future of business and other futuristic emotions of the person which led the violence. Another reason for rise in domestic violence is act of victim in most of the cases victims always blame themselves for violence instead of retaliation. Acceptance of violence increases the cycle of abuse and it should not be acceptable. Victims should always report the domestic abuse to the police and also informed about the violence to friends, family and neighbors. There are helplines number for the victim of domestic violence provided by the government. When the victim report to police, she has to elaborate entire incidents which were happened and should give a written complaint and ask for security from the police. If the violence physically hurt the victim, then she has to ask for medical examination (MLC) from the police. In such situations police called the abuser and send them to the counselors to resolve their family issues. Victim can adopt other legal options against the domestic violence such as she can report to the Woman Commission if police officer is not ready to assist the victim or Victim can directly file the Complaint against the abusers by filing a case under section 12 of DV ACT.