Why Karnataka HC has fined BSNL over ₹55L
Why Karnataka HC has fined BSNL over ₹55L
The Karnataka High Court has directed Bharat Sanchar Nigam Limited (BSNL) to pay over ₹55 lakh in compensation and damages.
The ruling comes after a co-operative bank suffered a loss of over ₹87 lakh due to a SIM swap fraud.
The court held BSNL responsible for the unauthorized issuance of a duplicate SIM card that allowed fraudsters to access OTPs and execute fraudulent transactions.
Principal compensation, consequential damages
Justice Suraj Govindaraj of the Karnataka High Court ordered BSNL to pay ₹50.5 lakh as principal compensation, along with ₹5 lakh as consequential damages.
The court also ordered an interest of 9% per annum from February 7, 2019, the date of the last fraudulent transaction.
The case involved Sri Basaveshwara Pattana Sahakara Bank Niyamitha which had a current account with Canara Bank linked to a BSNL mobile number for OTPs needed for online banking transactions.
Fraudsters accessed OTPs via duplicate SIM
Between February 6-7, 2019, seven unauthorized RTGS and NEFT transactions totaling ₹87.7 lakh were made from the bank account.
An investigation revealed that an unknown person had procured a duplicate SIM card linked to the bank's registered mobile number from a BSNL office in Bengaluru.
The fraudsters used OTPs sent to this duplicate SIM to carry out the transactions.
While ₹30 lakh was reverse-credited and ₹7.12 lakh recovered through police action, there remained an unrecovered loss of ₹50.5 lakh for the bank.
Court emphasizes need for telecom operators to be careful
The HC observed that the circumstances clearly indicated negligence in SIM issuance.
It emphasized that telecom operators must be more careful with numbers linked to banking services, especially when it is a banking institution using the mobile number for OTP-based authentication of high-value financial transactions.
The court also noted a BSNL official responsible for issuing the duplicate SIM and against whom departmental proceedings had been initiated.
Court rejects BSNL's argument
BSNL argued that the co-operative bank had already recovered a significant amount through insurance claims and other recoveries, so no further compensation should be given.
However, the court dismissed this argument.
It said it would be "deeply unjust" to let BSNL escape liability because of the bank's prudent insurance measures.
The court added that compensation received from an insurer does not absolve one from negligence-related liabilities.