Lucknow: In a significant ruling reinforcing consumer rights in the banking sector, the Uttar Pradesh State Consumer Disputes Redressal Commission has directed Punjab National Bank (PNB) to refund ₹6.6 lakh to a customer whose savings were allegedly siphoned off through unauthorised withdrawals linked to a bank employee. The Commission observed that a financial institution cannot escape responsibility when a customer suffers loss due to the wrongful acts of its own staff.
The case relates to Lucknow resident Mohammad Laiq Quarasi, who alleged that ₹6.6 lakh was withdrawn from his savings account without his consent. According to records presented before the consumer forum, the disputed amount had been deposited in multiple transactions during 2010 and 2011. The customer later discovered that the money had been withdrawn despite not authorising any such transactions.
Quarasi claimed that the withdrawals were facilitated by the then branch manager and that repeated requests to the bank for restoration of the funds yielded no relief. After failing to recover the money through internal representations, he approached the consumer forum seeking compensation and recovery of the amount.
The dispute was first examined by the district consumer commission in Lucknow, which in April 2019 ruled in favour of the customer. The district forum directed the bank to refund ₹6.6 lakh along with interest and litigation expenses. Challenging that order, Punjab National Bank filed an appeal before the state consumer commission, arguing that the district forum had erred in its assessment of facts and evidence and that the bank should not be held liable in the manner determined by the lower forum.
Upholding Bank Accountability
However, after reviewing the case records and hearing submissions from both sides, the state commission found no reason to interfere with the finding that the customer had suffered financial loss attributable to actions within the bank’s own system. The Commission held that the institution remained accountable for the conduct of its employees when such conduct resulted in harm to a customer.
While upholding the bank’s liability, the commission made a limited modification to the interest component awarded by the district forum. It directed PNB to refund ₹6.6 lakh within 45 days, along with interest at 7 percent per annum and ₹5,000 towards litigation costs. The order further stated that if the payment is not made within the stipulated period, the amount would thereafter attract interest at 9 percent per annum.
Supreme Court Precedent and Expert Views
A key aspect of the ruling was the commission’s reliance on a recent Supreme Court precedent concerning institutional responsibility for employee misconduct. Referring to the apex court’s observations, the commission noted that banks and similar public service institutions can be held liable for fraud or wrongful acts committed by their employees during the course of service. Consumers, it said, cannot be denied relief merely because the wrongdoing was carried out by an individual employee rather than the institution itself.
Legal and banking experts view the decision as an important reaffirmation of customer protection principles. The relationship between a bank and its customers is built on trust, and financial institutions are expected to maintain robust internal controls to safeguard deposits. When those safeguards fail, experts argue, accountability must rest with the institution rather than the customer.
Renowned cyber crime expert and former IPS officer Prof. Triveni Singh said that strong internal monitoring systems are essential for preventing financial fraud within banking networks. According to him, digital transaction trails and account records often play a crucial role in identifying irregular withdrawals and establishing responsibility. He also advised customers to regularly review account statements and immediately report any suspicious activity to the bank and relevant authorities.
The ruling is being seen as an important precedent for consumer rights in banking disputes. By affirming institutional accountability, the commission has sent a clear message that customers cannot be left to bear losses arising from alleged wrongdoing within a bank’s own system. The decision underscores that protecting depositors’ funds remains a fundamental responsibility of every financial institution.
