BSNL: A duplicate SIM and ₹87 lakh vanished! Now, BSNL will have to pay a hefty fine..
In a major setback for BSNL, the Karnataka High Court has ordered the company to pay over ₹55 lakh in compensation and damages to a cooperative bank. The court held that BSNL's negligence in issuing a duplicate SIM card enabled cyber fraudsters to siphon off more than ₹87 lakh from the bank's account. The court observed that the duplicate SIM, issued without proper verification, gave criminals access to banking OTPs, allowing them to execute multiple unauthorized online transactions.
How did the ₹87 lakh fraud occur?
The case involves the Sri Basaveshwara Pattana Sahakari Bank Niyamita. The bank held a current account with Canara Bank that was linked to a BSNL mobile number; this number received the OTPs required for internet banking transactions. Between February 6 and 7, 2019, seven unauthorized transactions totaling ₹87.7 lakh were carried out from the bank account via RTGS and NEFT.
An investigation revealed that an unidentified individual had obtained a duplicate SIM for the bank's registered mobile number from a BSNL office in Bengaluru. The bank maintained that it had neither requested nor authorized the issuance of this SIM. Once the fraudsters obtained the duplicate SIM, they began receiving the OTPs and transferred funds out of the bank account.
Although ₹30 lakh was subsequently recovered, and another ₹7.12 lakh was retrieved through police action, the bank still suffered a net loss of ₹50.50 lakh.
Why was BSNL held responsible?
Justice Suraj Govindaraj, presiding over the case, stated that the fact that a duplicate SIM reached a non-customer was clear evidence that the verification process was either not conducted at all or was carried out with gross negligence. The court observed that the responsibility of telecom companies increases significantly when a mobile number is linked to banking OTPs and high-value financial transactions. The court also noted that a BSNL employee was found responsible for issuing a duplicate SIM, and departmental action had been initiated against them. Consequently, BSNL cannot absolve itself of liability simply by acknowledging its employee's error.
**Insurance Argument Rejected**
BSNL argued in court that the bank had already recovered some funds from insurance and other sources, and therefore, should not be awarded additional compensation. Rejecting this argument, the court stated that the fact that an institution acted prudently by obtaining insurance does not absolve the negligent party of its liability.
**What Compensation Must Be Paid?**
Enhancing the previously awarded compensation, the Karnataka High Court ordered BSNL to pay the following amounts:
₹50,50,762 as principal compensation
₹5 lakh as additional damages
Interest at 9% per annum starting from February 7, 2019
Additionally, the court dismissed BSNL's petition challenging the compensation order. This verdict is considered a significant precedent regarding the liability of telecom companies and matters concerning banking security.
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