The Karnataka High Court has ordered the state-run telecom operator Bharat Sanchar Nigam Limited (BSNL) to pay more than Rs 55 lakh in compensation and damages to a co-operative bank, according to Deccan Herald. The ruling came after the court established clear negligence by the telecom company in a severe case of SIM swap fraud.
According to Deccan Herald, the case involves Sri Basaveshwara Pattana Sahakara Bank Niyamitha, which maintained a current account with Canara Bank. The account was linked to a BSNL mobile number to receive One-Time Passwords (OTPs) for authenticating online transactions. Between February 6th and 7th, 2019, cybercriminals managed to siphon off Rs 87.7 lakh through seven unauthorised online transfers.
Investigations revealed that fraudsters had easily obtained a duplicate SIM card for the registered mobile number from a BSNL office in Bengaluru without any request or verification from the co-operative bank. This allowed the criminals to intercept critical banking OTPs.
Although Rs 30 lakh was later reverse-credited and police recovered Rs 7.12 lakh, the bank was left with an unrecovered loss of Rs 50.5 lakh.
BSNL argued it should not be held responsible because its manager was not criminally charge-sheeted and the bank had received insurance payouts. However, Justice Suraj Govindaraj rejected these arguments. He noted that BSNL had already initiated internal disciplinary action against the official responsible, which served as an institutional acknowledgement 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.
"The verification of subscriber identity before issuing a duplicate or replacement SIM card is not a bureaucratic formality and that every telecom service provider must treat every request for a duplicate SIM card with the gravity it deserves. The verification must be thorough, the documentation must be examined carefully, and where there is any doubt about the identity or authority of the applicant, the request must be declined and the subscriber must be contacted through alternate channels," Justice Suraj Govindaraj said.
The High Court enhanced a minor Rs 5 lakh payout previously ordered by the Permanent Lok Adalat. BSNL must now pay the principal unrecovered loss of Rs 50.5 lakh, alongside Rs 5 lakh in consequential damages for reputational harm and operational disruption. BSNL is also liable to pay 9 per cent interest per annum calculated from the date of the fraud.
