Shielding the Victim: Legal Remedies and the "Zero Liability" Doctrine in Credit Card Fraud

Sherry J Thomas 

sherryjthomas@gmail.com

In the digital age, financial fraud has evolved from simple theft to sophisticated "invisible" crimes involving phone cloning and remote-access malware. However, the legal framework in India, anchored by the Reserve Bank of India (RBI) and the Information Technology Act, provides a robust safety net. But we often face lack of speedy and efficacious remedy despite of the guidelines and rules. 

1. Immediate "Golden Hour" Actions

The first 2 hours after a fraud are critical for the possibility of a "lien" (hold) being placed on the stolen funds.

• Call 1930: This is the National Cybercrime Helpline. In Kerala, this connects you to the state’s centralized cybercrime response cell. Provide transaction details (amount, time, and merchant/bank info).

• Block the Card & Account: Use your bank’s mobile app or customer care to permanently block the credit card.

• Deactivate the Cloned SIM: Contact your mobile service provider (e.g., BSNL, Jio, Airtel) to report the unauthorized cloning and block the current SIM.

2. Regulatory & Financial Remedies (RBI Guidelines)

Under the RBI's "Limited Liability of Customers" circular, your financial liability is determined by how quickly you report the incident:

• Zero Liability: If the fraud is due to a third-party breach (like SIM cloning) and you report it within 3 working days, the customer has zero liability. The bank must credit the amount back within 10 working days.

• Limited Liability: If you report within 4 to 7 working days, your liability is capped (usually at ₹10,000 for credit cards, depending on the limit/type).

• Banking Ombudsman: If the bank refuses to reverse the charges despite timely reporting, you can file a complaint with the Reserve Bank Integrated Ombudsman Scheme (RB-IOS) online via the CMS portal.

3. Legal & Police Remedies in Kerala

• Online Reporting: Register the complaint at [https://cybercrime.gov.in/]. This generates a National Crime Reporting Portal (NCRP) acknowledgement, which is necessary for the bank's "Zero Liability" claim.

• Kerala Police Cyberdome: For high-value or complex cloning cases, you can approach the Cyberdome (located in Thiruvananthapuram or Kochi) for technical assistance.

• Adjudicating Officer (IT Act): Under Section 46 of the IT Act, 2000, the Secretary of the IT Department in Kerala acts as the Adjudicator. You can file a petition for compensation (damages) against the bank or telecom provider if "reasonable security practices" were not followed.

The Statutory Shield: RBI’s Zero Liability Framework

The cornerstone of consumer protection in electronic banking is the RBI Circular dated July 6, 2017 (DBR.No.Leg.BC.78/09.07.005/2017-18). This circular shifts the burden of security from the customer to the bank.

• Zero Liability: If a third-party breach occurs (where neither the bank nor the customer is at fault) and the customer reports it within three working days, the customer has Zero Liability.

• The Burden of Proof: Critically, the law does not require the customer to prove they were not negligent. Instead, the onus of proving customer negligence lies solely with the bank.

• Shadow Reversal: Once a fraud is reported, the bank is mandated to credit (shadow reversal) the disputed amount to the customer’s account within 10 working days, pending further investigation.

Sophisticated Malware vs. "Negligence"

A common defense by banks is to claim the customer "shared an OTP." However, modern fraud often utilizes remote access Trojans (RATs) or SIM cloning.

• If a fraudster gains remote access to a device via a malicious link, they can "trace" or "read" OTPs without the customer ever actively "sharing" them.

• As established in SBI v. P.V. George (2019), even a failure to check an SMS notification does not automatically shift liability to the customer. The bank must provide a secure ecosystem that prevents such unauthorized intrusions.

The Remedy of "Zero FIR" and Police Accountability

Under the Bharatiya Nagarik Suraksha Sanhita (BNSS), the concept of jurisdiction should not hinder the registration of a crime.

• Zero FIR: If a victim is stationed in Kochi but the fraud originated in West Bengal, the local police  are duty-bound to register a Zero FIR and subsequently transfer it to the relevant jurisdiction. Refusal to do so is a procedural lapse and amount of dereliction of duty. 

Judicial Precedents: The Kerala High Court’s Stance

The Kerala High Court has been a pioneer in protecting bank customers. In Tony Enterprises v. RBI (2019), the court reinforced that banks cannot unilaterally hold a customer liable for unauthorized transactions.

• Fiduciary Duty: The relationship between a bank and a customer is fiduciary. If the bank's system allows a third party to bypass security (like large transactions without a confirmation call), it constitutes a Breach of Statutory Duty.

• The IT Act: Section 43A of the Information Technology Act mandates that bodies corporate (banks) must implement "reasonable security practices." Failure to prevent a malware-based intrusion is a prima facie failure of these practices.

Remedies 

For a victim facing a payment deadline of a fraudulent transaction, from the credit card billing, the following legal steps are vital:

1. Writ Jurisdiction: Approaching the High Court under Article 226 to seek a stay on the recovery of the disputed amount, citing the  directives issued by RBI, and sought for the compliance of directives. 

2. Banking Ombudsman: Filing a formal complaint with the RBI Ombudsman for non-compliance with the 2017 Circular.

3. Consumer Protection: Approaching the Consumer Disputes Redressal Commission for "deficiency in service."

Conclusion

Credit card fraud is not merely a criminal act by a third party; it is a systemic failure of the banking infrastructure. The law is clear: unless the bank can prove—with hard evidence—that the customer intentionally facilitated the fraud, the bank must bear the loss. For a victim, the primary remedy lies in the immediate reporting of the crime and holding the financial institution strictly to the RBI's "Zero Liability" mandate.

Women’s Reservation and Delimitation of Constituencies

Women’s Reservation and Delimitation of Constituencies

The Constitution of our nation was formed through extensive deliberations spanning two years, eleven months, and seventeen days. Our Constitution is not merely a legal document; it is the enduring foundation of a people's existence. Consequently, it is a fundamental principle that any discussions or amendments pertaining to it must be executed with profound wisdom, caution, and foresight.

Is Reservation in Local Self-Governments Sufficient?

The demand for women’s reservation in legislative bodies has been a long-standing aspiration in our country. Female representation should not be confined solely to local self-government institutions. Despite being delayed for years due to debates over sub-reservations and other logistical hurdles, the Women’s Reservation Bill finally received "in-principle" approval in 2023. However, its practical implementation remained contingent upon specific constitutional prerequisites.

Three Years Since the Notification of Nari Shakti Vandan Adhiniyam

The Constitutional Amendment for women’s reservation was officially notified on September 28, 2023. This followed the passage of the relevant amendment bills in the Lok Sabha on September 20, 2023, and the Rajya Sabha on September 21, 2023. It came to be recognized as the **Constitution (106th Amendment) Act, 2023**.

While this reservation is mandated for a period of 15 years through the insertion of **Article 334A**, a critical proviso exists: the amendment shall come into effect only after the delimitation of constituencies is carried out based on the relevant figures of the first Census conducted after the commencement of the Act. This implies that for women's reservation to be operationalized, a post-2023 Census and a subsequent delimitation exercise are mandatory.

Currently, the allocation of Lok Sabha seats is based on the 1971 Census. The **84th Constitutional Amendment** stipulated that the number of seats shall remain frozen until 2026. This moratorium was intended to ensure that states were not penalized for successfully implementing population control measures, thereby maintaining a balance in national interests.

Objectives of the Proposed Constitutional Amendment

It is within this context that the new Amendment Bill (Bill No. 107 of 2026) was introduced and discussed in the Lok Sabha. As is well known, the Bill failed to pass. Under **Article 82** of the Constitution, delimitation can only be conducted based on the figures of a new Census taken after the year 2026.

The Statement of Objects and Reasons of the failed Bill noted that while the freeze on delimitation until 2026 served a general purpose, significant demographic shifts have since occurred, leading to proportional disparities across various constituencies. Furthermore, the Bill sought to link the implementation of the **Nari Shakti Vandan Adhiniyam (2023)** with this new proposal.

The primary objective was to facilitate delimitation without waiting for the completion of a fresh Census. To achieve this, the amendment sought to omit the phrases **"upon the completion of each census"** and **"every census is completed"** from Article 82. By substituting these with terminology that allowed delimitation regardless of a concluded Census, the Bill effectively attempted to bypass the mandatory Census requirement.

The Nexus Between Seat Increase and Reservation

The proposed amendment also sought to increase the maximum strength of Parliament from 550 members to 850. By coupling the implementation of women's reservation with an accelerated delimitation process (independent of a fresh Census), the government attempted a dual-purpose reform.

However, this created a complex political scenario: by opposing a rushed delimitation before the next general election, the opposition was framed as also opposing the immediate implementation of women’s reservation. The ensuing political discourse will likely hinge on how both the treasury and opposition benches interpret and explain this strategic linkage.

Note:Why should delimitation be inextricably linked to women’s reservation? Let delimitation proceed on its own course following the next Census. If the objective is the swift empowerment of women, **Article 334A(1)** could be amended to remove the clause requiring a post-2023 Census-based delimitation. By implementing the reservation within the existing seat framework, the policy could take effect immediately, leaving no room for principled opposition from any genuine advocate of women's rights.

References:

 1. Article 82, Constitution of India.

 2. Article 334A, Constitution of India (inserted via the 106th Amendment Act, 2023).

 3. Proposed amendments to Articles 82 and 334A in Bill No. 107/2026, defeated in Lok Sabha on April 16, 2026.

 4. The Delimitation Bill 2026, introduced in Lok Sabha on April 16, 2026.