The High Court of Madras passed a judgment on  28 April 2023 stating that The RBI has taken action against PayTM under Sec.35-A of the Banking Regulation Act 1949 . Section 35A states about the power of the Reserve Bank to give directions.It was stated in the case of  Dr.R.Pavithra V. The Commissioner of Police (P.6789/2021) which was passed by the single judge bench comprising of HONOURABLE JUSTICE R.N.MANJULA



The petitioner was a post graduate at the SRM Medical College at Trichy. During her post-graduation, the petitioner was serving as a resident doctor to attend the patients affected with COVID-19. She was being paid with a stipend of Rs.25,000/- per month by SRM Medical College, Trichy and the amount would be credited to her bank account with the The Assistant General Manager,City Union Bank.

 Out of the said earnings, she had saved a sum of Rs. 3,20,000/- and was planning to utilise the same to meet her final year fees during April2021. On 10.02.2021 the petitioner returned to Chennai as she was not well. On 09.02.2021 an attempt was made by some miscreant to hack into her savings account, bearing No.500101011835967 with the bank. 2.1.The said fact was known to her through an alert SMS. She noticed the said message only on 11.02.2021, on which date she received another SMS alert at 14:15 hrs and 22:15 hrs. She immediately sent a message at 22.59 hours to the Bank asking them to block the account. She was under the impression that the account had been blocked pursuant to her request. Once again, on 13.02.2021, she received another SMS informing her that there had been an attempt to break into her savings account.

The petitioner sent another message to the bank along with her registered mobile number, requesting the bank to block her account.  In fact, she had issued messages to block her account only as she had been instructed through the alert messages. Again, on 15.02.2021 at 12.33 p.m., she received an SMS informing her that someone had hacked her account. Within a few minutes, there was an unauthorised debit from her account for a sum of Rs.50,000/- followed by another sum of Rs.1,00,000/- at 12.43 pm and yet another sum of Rs.50,000/- at 12.44 pm and one more Rs.1,00,000/- at 12.45 pm.

The miscreants had hacked her account and stolen her money. The petitioner called the 7 th respondent bank (The City Union Bank) at 12.43 pm itself and asked them to block her account. However, her money had been illegally siphoned off; no OTP for withdrawal has been received on her mobile phone and she has not shared her bank details or personal details with anyone. Thereafter, she rushed to the City Union Bank at Aminjikarai branch and lodged a written complaint. The petitioner has filed this petition seeking a Writ of Certiorari Mandamus to quash the impugned proceedings of the Bank and further directions


it is stated by the RBI that such an action has been taken based on certain materials connecting to supervising concerns observed by the bank itself. So the system audit is required for the IT system adopted by the PayTM Mobil Solutions Private Limited, which is vulnerable to fraudulent activities. The petitioner is one among the several users and hence the 10th respondent (PayTM Mobil Solutions Private Limited) is liable to make out the loss suffered by the petitioner. As it has been stated already that the complaint has been made by the customer to her banker, and the banker has kept in touch with PayTM, PayTM can not disown its. Since the RBI has been issuing directions to PayTM, as already cited, it is essential to issue one such direction to the PayTM Mobil Solutions Private Limited to settle the loss suffered by the petitioner within the next two weeks.

 It is emphasised that the PayTM Mobil Solutions Private Limitedhad failed to establish the liability on the part of the customer within 90 days as prescribed in the guidelines of the RBI, and hence the PayTM Mobil Solutions Private Limited cannot state that the matter in issue involves a lot of facts to be gone into. The violations are crystal clear, and the bank has got the obligation to intervene when to the knowledge of the bank , the PayTM Mobil Solutions Private Limited continues to violate the RBI guidelines and adopts an unfriendly attitude towards its users.

In the result, this Writ Petition is allowed. However, the relief is modified to the effect that the bank is directed to issue directions to the PayTM Mobil Solutions Private Limited to make good the loss suffered by the petitioner without any other reduction, except the reduction of the amount, if any already reversed to the account of the petitioner in pursuant to the earlier order of this Court, within a period of two weeks

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