The Madras High Court has directed the RBI to order Paytm to compensate a doctor for the loss of Rs 3 lakh in fraudulent transactions through the digital payments platform.

The High Court rejected the contention raised by Paytm that it could not be held liable as it is a mere facilitator and an online conduit provider for payments, having no technical or otherwise controlling control over the secured transactions. Paytm had also argued that since it is not a bank or other authority under Article 12, hence it is not amenable to any writ jurisdiction.

The court directed the RBI to order Paytm to settle the loss suffered by the doctor within two weeks.

Though the court agreed with the argument that Paytm could not be issued a direction under writ jurisdiction, since it is a private body, it held that directions can be issued to the RBI to take action against Paytm for violating its own guidelines.

“A complaint had been made by the customer to her banker, and the banker had kept in touch with Paytm, therefore, Paytm cannot disown its liability, the court ruled.

The petitioner, who was a resident doctor at the SRM Medical College at Trichy at the time of the incident, had an account with City Union Bank. There was around Rs 3,20,000 in her savings account. She had got SMS alerts of hacking into her bank account on various occasions and had each time alerted her bank to block her account.