- Bank found to have made unauthorised transfer of funds held in special investment deposit accounts
By S. S. Selvanayagam
The Colombo District Court on Tuesday ordered Bank of Ceylon to pay a Canadian expatriate citizen $ 875,000, together with interest and legal costs, after the bank was found to have made unauthorised transfers of funds held in special investment deposit accounts.
The litigation, initiated by the plaintiff Manohar Randolph Alexander Savundranayagam of Canada, through his Power of Attorney holder Kurukulasuriya Bernadette Evangeline Savundranayagam, came up before District Judge Amale Ranaweera.
Plaintiff instituted this legal action against Bank of Ceylon, claiming a sum of $ 750,000 and $125,468.75 together with the legal interest and tax costs.
Plaintiff is a businessman currently residing in Canada. He opened Special Investment Deposit Accounts (SFIDA) at the Bank of Ceylon in 2012. The Defendant Bank provided him online banking facilities.
He prosecuted the Defendant Bank for its negligence, whereby the plaintiff’s vast sum of Special Foreign Investment Deposit had been swindled.
The District Court in its judgment ordered the Defendant Bank to pay the said sum of $ 875,468.75 to the Plaintiff, together with legal interest and taxed costs for inter alia several reasons.
The Court in its judgment said the Plaintiff lost the aforesaid sum of monies held in the fixed deposits due to the negligence of the Defendant Bank and its representatives, and therefore the Defendant Bank is liable and bound to make the said payment to the Plaintiff, as the said Bank paid the money to a fraudster, without the Plaintiff’s instructions and consent.
The Court also said the Plaintiff has taken all reasonable steps to lodge complaints with the Defendant Bank, the Governor of the Central Bank, the Inspector General of Police, the Criminal Investigation Department, the relevant local Government and non-Government department/s, and also to the relevant authorities in the United States of America and South Africa, and this is sufficient to show that the Plaintiff has acted responsibly and has not been negligent.
The interest component payable is what the Defendant would have paid, had the monies been in the said fixed deposits. The Defendant also has not disputed the computation of the interest component payable to the Plaintiff.
The Plaintiff had opened the three Special Foreign Investment Deposit Accounts [“SFIDA”] at the Bank of Ceylon.
Consequent to opening the aforesaid accounts at the Defendant Bank, the Defendant Bank provided the Plaintiff with online banking facilities, which enabled the Plaintiff to access and check his said accounts at the Defendant Bank.
During the latter period of October 2013, the Plaintiff was unable to access his online banking facilities with the Defendant Bank, and when the Plaintiff attempted to access his said online banking facilities, the Plaintiff was prevented from doing so with the notification “USER ID ALREADY LOCKED”.
The Plaintiff had e-mailed a representative of the Defendant Bank and sought assistance to access his online banking facilities with the Defendant Bank, after which the Plaintiff was invited to fill an application for a fresh password, and that once the Plaintiff re-sends the application back to the bank, he would be issued with a fresh password to access his online banking facilities.
In January 2014, after several reminders by the Plaintiff, the Defendant Bank, on or about 30 January 2014, he obtained his password, after which the Plaintiff utilised his new password and accessed his online banking facilities, and found out that the said two savings accounts had incorrect balances. The Plaintiff thereafter immediately noted that his said Fixed Deposits maintained with the Defendant Bank were not displayed online.
On 31 January 2014, the Plaintiff e-mailed a representative of the Defendant Bank and sought clarifications as to why the said two Fixed Deposits did not appear online. The representative of the Defendant e-mailed and responded to the Plaintiff and inter alia stated the following;
“On 01/01/2014 we have already transfer $750,000 to your account in America according to your request. You have requested to transfer the Rs. 34,467,825/- to your account in South Africa.
That mean both of your account has already closed and now you are having both SFIDA S/A Only. That is why that 2 accounts not indicate in E-banking system.”
The Plaintiff thereafter being shocked and devastated at the contents of the said e-mail sent by the Defendant Bank, immediately contacted the representative of the Defendant Bank by multiple telephone calls and subsequently, immediately by e-mail. By his said e-mail, the Plaintiff inter alia expressly stated the following;
“I have never ever instructed for a wire transfer at all, and the transaction was done without my authorisation and verification.”
The Plaintiff did not authorise and/or instruct the Defendant Bank to transfer any monies from his said LKR SFIDA Fixed Deposits.
The Defendant Bank has wrongfully and/or unlawfully been in breach of its duties and/or contractual commitments to the Plaintiff, and has been in breach of its duty to act diligently and professionally, and without any authorisation and/or instruction from the Plaintiff whatsoever, transferred the monies of the Plaintiff which were in the Plaintiff’s said USD SFIDA Fixed Deposits into fraudulent bank accounts in the United States of America and South Africa. The Defendant Bank has failed to follow the basic, elementary, and regular verification protocols that would have been followed by any bank prior to affecting a transfer of this magnitude.
The Plaintiff filed litigation at the District Court of Colombo, and when the case came up for trial, the evidence of the Plaintiff, namely Manohar Randolph Alexander Savundranayagam, and the Assistant Superintendent of Police of the Criminal Investigation Department Laksiri Geethal was led. The judgment was pronounced on 7 January.
S.A. Parathalingam PC with Nishkan Parathalingam instructed by G.G. Arulpragasam appeared for the Plaintiff.
Romesh de Silva PC with Chandimal Mendis instructed by Shantha Horadugoda appeared for Defendant, Bank of Ceylon.