Case Note & Summary
The High Court of Karnataka heard two connected writ petitions filed under Articles 226 and 227 of the Constitution, challenging the order of the Permanent Lok Adalat, Dakshina Kannada, dated 09.08.2024 in PLD No.64/2021. The dispute arose from unauthorised online transactions totaling Rs.87,70,000 that occurred on 06.02.2019 and 07.02.2019 from the current account of a co-operative bank maintained with Canara Bank. The bank had availed internet banking and registered a BSNL mobile number for receiving OTPs. The fraud was allegedly enabled by unknown persons who obtained a duplicate SIM of that number from BSNL without the bank's consent, thereby accessing OTPs and effecting the RTGS/NEFT transfers. A sum of Rs.30,00,000 was reverse-credited and Rs.7,12,238 was recovered by the Cyber Crime Police, leaving an unrecovered amount of Rs.50,50,762. The bank issued legal notice on 28.01.2021 and thereafter initiated proceedings before the Permanent Lok Adalat under Section 22C of the Legal Services Authorities Act, 1987, seeking recovery of the loss and compensation. BSNL challenged the Lok Adalat's jurisdiction, contending that the dispute did not pertain to a public utility service but to criminal acts, and that adjudication was impermissible. After failed conciliation, the Lok Adalat adjudicated and partly allowed the claim, directing BSNL to pay Rs.5,00,000 with 6% interest, while dismissing the claim against Canara Bank. Aggrieved by this, BSNL filed WP No.4674/2025 seeking to set aside the order, and the co-operative bank filed WP No.16104/2025 seeking enhancement of compensation and a fresh enquiry. The writ petitions were reserved for orders on 25.02.2026, and the judgment was pronounced on 01.06.2026. The court considered the jurisdictional challenge based on the definition of public utility service under Section 22A(b) and the scope of adjudication under Section 22C, but the provided text ends during the arguments, without the court's analysis and final decision.
Issue of Consideration
Whether the Permanent Lok Adalat had jurisdiction under the Legal Services Authorities Act, 1987 to adjudicate a dispute involving allegations of fraud and criminal misconduct against a public utility service provider; and whether the compensation awarded was adequate.
Law Points
- Jurisdiction of Permanent Lok Adalat under Section 22C of Legal Services Authorities Act
- 1987
- definition of public utility service under Section 22A(b)
- adjudicatory power of Lok Adalat in fraud-related disputes
- adequacy of compensation for unauthorised online banking fraud enabled by duplicate SIM issuance
Case Details
2026 LawText (KAR) (06) 55
W.P. No. 16104 of 2025 c/w W.P. No. 4674 of 2025 (GM-RES)
Mahesh R. Uppin, M. Mohan Rao, Gangadharaiah A.N., Mahantesh Shetter
Basaveshwara Pattana Sahakara Bank Niyamitha (in WP 16104/2025); General Manager and CPIO/DGM, BSNL (in WP 4674/2025)
Canara Bank, General Manager Telecom District, CPIO/DGM BSNL (in WP 16104/2025); Canara Bank, Basaveshwara Pattana Sahakara Bank Niyamitha, State of Karnataka (in WP 4674/2025)
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Nature of Litigation
Writ petitions under Articles 226 and 227 of the Constitution challenging the order of the Permanent Lok Adalat dated 09.08.2024 in PLD No.64/2021.
Remedy Sought
BSNL seeks to set aside the Lok Adalat order and dismiss the claim; Co-operative Bank seeks to quash the order and direct fresh enquiry and fresh order.
Filing Reason
BSNL aggrieved by direction to pay compensation; Co-operative Bank aggrieved by inadequacy of compensation awarded.
Previous Decisions
Permanent Lok Adalat partly allowed the claim, directing BSNL to pay Rs.5,00,000 with 6% interest and dismissing the claim against Canara Bank.
Issues
Whether the Permanent Lok Adalat has jurisdiction to decide a dispute where the substance of the matter relates to fraud and criminal offences rather than deficiency in public utility service.
Whether the compensation of Rs.5,00,000 awarded by the Permanent Lok Adalat is adequate given the total loss of Rs.50,50,762.
Submissions/Arguments
BSNL contends that the Permanent Lok Adalat lacked jurisdiction because the dispute did not relate to a public utility service as defined under Section 22A(b); the substance involved fraud and criminal misconduct, not mere deficiency in telecom service; and the adjudication was impermissible under Section 22C.
BSNL argues that the alleged fraudulent issuance of a duplicate SIM and the resulting criminal offences require detailed evidence and are outside the limited jurisdiction of the Lok Adalat, which is meant only for conciliation and settlement.
BSNL submits that criminal proceedings are already pending and the claim is premature.
BSNL denies any negligence or liability, asserting that the fraud was due to internal lapses and lack of confidentiality by the Co-operative Bank and Canara Bank.
The Co-operative Bank contends that the award of only Rs.5,00,000 is arbitrary and unsustainable, given the total unauthorised withdrawal of Rs.87,70,000 and the unrecovered loss of Rs.50,50,762.
Judgment Excerpts
The Permanent Lok Adalat partly allowed the claim petition and directed BSNL to pay compensation of Rs.5,00,000/- together with interest at 6% per annum from 01.03.2021 until realisation.
BSNL contended that the alleged fraud was attributable to internal lapses within the Co-operative Bank and that there existed a nexus between the persons who perpetrated the fraud and the officials of the Co-operative Bank and/or Canara Bank.
The Permanent Lok Adalat lacked jurisdiction to adjudicate the dispute referred to it under Section 22C of the Legal Services Authorities Act, 1987. The Permanent Lok Adalat could only conduct conciliation proceedings and assist the parties in arriving at an amicable settlement in an independent and impartial manner and could not assume adjudicatory powers in respect of the dispute.
Procedural History
On 06.02.2019 and 07.02.2019, seven unauthorised transactions totalling Rs.87,70,000 took place from the Co-operative Bank's current account with Canara Bank, allegedly enabled by a duplicate SIM issued by BSNL without consent. The Co-operative Bank complained to the Cyber Crime Police on 08.02.2019. Rs.30,00,000 was reverse-credited; Rs.7,12,238 was recovered by police. A legal notice was sent to BSNL and Canara Bank on 28.01.2021. The Co-operative Bank filed PLD No.64/2021 before the Permanent Lok Adalat under Section 22C of the Legal Services Authorities Act, 1987. Conciliation failed. On 09.08.2024, the Permanent Lok Adalat partly allowed the claim, ordering BSNL to pay Rs.5,00,000 with 6% interest and dismissing the claim against Canara Bank. Aggrieved, BSNL filed WP No.4674/2025 and the Co-operative Bank filed WP No.16104/2025. The High Court reserved both writ petitions on 25.02.2026.
Acts & Sections
- Legal Services Authorities Act, 1987: 22A(b), 22C
- Constitution of India: 226, 227
