BSNL Ordered to Pay Rs 55 Lakh After Duplicate SIM Helped Fraudsters Steal Rs 87.7 Lakh From Bank

In a major ruling, the Karnataka High Court has ordered the state-run telecom company to pay more than Rs 55 lakh in compensation after a duplicate SIM card was issued without proper checks, allowing fraudsters to steal Rs 87.7 lakh from a co-operative bank.

The court said BSNL’s negligence played a key role in the cyber fraud because the duplicate SIM gave criminals access to one-time passwords (OTPs) needed to approve online banking transactions.

How the Fraud Happened

The case involves Sri Basaveshwara Pattana Sahakara Bank Niyamitha, which had a current account with Canara Bank. The account was linked to a BSNL mobile number used to receive OTPs for internet banking.

Between February 6 and 7, 2019, fraudsters carried out seven unauthorised online transactions and transferred a total of Rs 87.7 lakh from the bank’s account.

An investigation later revealed that an unknown person had obtained a duplicate SIM card linked to the bank’s registered mobile number from a BSNL office in Bengaluru.

The bank said it had never requested a replacement SIM card and had not authorised anyone to obtain one. Once the fraudsters gained control of the mobile number, they were able to receive OTPs and complete the transactions.

Why the Court Held BSNL Responsible

The High Court found that the duplicate SIM card was issued without proper verification. According to the court, this was not a minor mistake but the main reason the fraud became possible.

Justice Suraj Govindaraj observed that issuing SIM cards is a core responsibility of telecom companies and they must carefully verify the identity of anyone seeking a replacement SIM.

The court said telecom operators hold an important position in today’s digital world because banking systems depend heavily on mobile numbers and OTPs for security.

It noted that if a duplicate SIM falls into the wrong hands, the protection provided by OTPs can quickly break down.

BSNL Cannot Shift the Blame

BSNL argued that if any wrongdoing had taken place, it was the act of an individual employee and not the company.

The court rejected this argument. It said companies are responsible for the actions of employees when they are performing official duties. Since issuing SIM cards is part of BSNL’s regular work, the company must bear responsibility for any negligence in that process.

The court also pointed out that BSNL had already started disciplinary action against the employee involved.

Canara Bank Cleared

The co-operative bank had also sought action against Canara Bank. However, the High Court agreed with an earlier finding that Canara Bank was not responsible for the loss.

No relief was granted against the bank.

Important Message for Telecom Companies

The judgment sends a strong message to telecom operators across the country. As more banking services depend on mobile phones and OTPs, companies must follow strict checks before issuing duplicate SIM cards.

The court said telecom providers act as gatekeepers of digital security, and any lapse in verification can lead to huge financial losses for customers.

By holding BSNL liable, the High Court has underlined that telecom companies cannot ignore their responsibility in protecting the digital banking system.

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