The case pertains to Sri Basaveshwara Pattana Sahakara Bank Niyamitha, which maintained a current account with Canara Bank. The account was linked to a BSNL mobile number used for receiving One-Time Passwords (OTPs) required to authenticate online banking transactions.
According to court records, cybercriminals siphoned off Rs 87.7 lakh through seven unauthorised online transfers carried out between February 6 and February 7, 2019. Investigations later revealed that the fraud was made possible after a duplicate SIM card linked to the bank’s registered mobile number was issued from a BSNL office in Bengaluru without any request, authorisation, or verification from the co-operative bank.
The duplicate SIM enabled the fraudsters to intercept critical banking OTPs, allowing them to execute the unauthorised transactions. Although Rs 30 lakh was subsequently reverse-credited and law enforcement authorities recovered an additional Rs 7.12 lakh, the bank suffered an unrecovered financial loss of Rs 50.5 lakh.
BSNL contended before the court that it should not be held liable because its manager had not been charge-sheeted in the criminal investigation and because the bank had received insurance payouts. However, Justice Suraj Govindaraj rejected both arguments.
The court observed that BSNL had already initiated internal disciplinary proceedings against the official responsible for issuing the duplicate SIM card, which amounted to an institutional acknowledgment of wrongdoing.
“The financial consequences of issuing a duplicate SIM to a fraudster can be catastrophic for the victim and, as this judgment demonstrates, equally consequential for the telecom service provider in civil law,” Justice Suraj Govindaraj said.
Emphasising the responsibilities of telecom operators, the judge further stated that verification of subscriber identity before issuing a duplicate or replacement SIM card is not a mere procedural formality. He stressed that every telecom service provider must treat requests for duplicate SIM cards with utmost seriousness, carefully examine documentation, conduct thorough verification, and decline requests whenever doubts arise regarding the identity or authority of the applicant. The court also underscored the need to contact subscribers through alternate channels in such situations.
The High Court significantly enhanced the relief granted earlier by the Permanent Lok Adalat, which had awarded only Rs 5 lakh. Under the latest order, BSNL must pay the unrecovered principal loss of Rs 50.5 lakh along with Rs 5 lakh in consequential damages for reputational harm and operational disruption suffered by the bank.
In addition to the compensation, the telecom operator has been directed to pay interest at the rate of 9 per cent per annum, calculated from the date the fraud occurred.
The judgment stands as a landmark reminder of the legal and financial consequences telecom service providers may face when identity verification procedures are ignored. By holding BSNL accountable for the fraudulent issuance of a duplicate SIM card, the Karnataka High Court has reinforced the critical importance of strict subscriber verification in preventing cybercrime and protecting financial institutions from devastating losses.
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