One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.

Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.

Mr. X had booked movie tickets through Y.Entertainment platform and later canceled them due to unforeseen circumstances. The refund amount was processed to his XYZ Pay digital wallet, which he had used for the original transaction. However, days later, Mr. X discovered that XYZ Pay (operated by ABC Tech Pvt Ltd) had been barred by RBI from conducting settlement operations due to regulatory non-compliance. His refund amount of Rs. 2,500 became inaccessible, trapped in the suspended payment system. When Mr. X contacted Y.Entertainment for assistance, they refused to help, claiming the refund was successfully processed to his chosen payment method. The customer service representatives insisted it was not their responsibility once money left their system. Mr. X found himself caught between a suspended payment platform and an uncooperative merchant, with no clear path to recover his legitimately refunded money.

Advice in Such Cases

Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

• File complaint with Banking Ombudsman immediately for payment system failures
• Approach Consumer Forum under Consumer Protection Act for deficiency in service
• Send legal notice to both merchant and payment company demanding refund to alternative method
• Document all communications and transactions for legal proceedings

Applicable Sections of Law

Under Bharatiya Nyaya Sanhita (BNS), Section 318 deals with cheating and dishonestly inducing delivery of property. Section 319 covers cheating by personation, which may apply if companies misrepresent their operational status. Under Bharatiya Nagarik Suraksha Sanhita (BNSS), Section 173 provides procedures for investigation of economic offenses. Section 230 deals with complaint procedures in magistrate courts. The Consumer Protection Act, 2019, and RBI guidelines on digital payments also govern such disputes involving payment system failures and merchant responsibilities.

If You Are the Complainant

• File complaint with RBI’s Customer Education and Protection Cell regarding payment system failure
• Submit detailed grievance to Banking Ombudsman with transaction proofs and correspondence
• Approach Consumer Forum claiming deficiency in service from both merchant and payment company
• Send legal notice demanding refund through alternative payment method within 15 days
• File FIR if companies refuse cooperation and amounts are substantial, claiming cheating under BNS

If You Are the Victim

• Gather all transaction receipts, emails, and screenshots showing refund processing to suspended platform
• Contact merchant customer service in writing demanding alternative refund method immediately
• File complaint with Consumer Forum seeking compensation for mental agony and time loss
• Report to Cyber Crime portal if digital fraud elements are suspected in the transaction
• Engage with RBI-regulated entities separately to establish clear liability chain for stuck funds

How the Police Behave in Such Cases

Police typically treat these as civil disputes initially, requiring substantial proof of criminal intent. They may refer complainants to Banking Ombudsman or Consumer Forum first. If fraud elements are established, they register cases under BNS sections for cheating. Police often require detailed technical documentation and may seek expert opinions on payment system regulations. Cooperation improves when complaints involve multiple victims or substantial amounts.

FAQs People Normally Have

Q: Can merchant refuse responsibility for refunds to suspended payment systems?
A: No, merchants have duty to ensure refunds reach customers through viable channels.

Q: How long does Banking Ombudsman take to resolve such disputes?
A: Typically 30-60 days depending on complexity and response from parties involved.

Q: Can I claim compensation beyond stuck refund amount?
A: Yes, Consumer Forum can award compensation for mental agony, time loss, and legal expenses.

Q: Is this a criminal matter or civil dispute?
A: Primarily civil, but can become criminal if intentional cheating or fraud is established.

What Evidence Is Required?

• Original transaction receipt and payment confirmation from merchant platform
• Refund processing notification and reference number from merchant
• Screenshots showing funds credited to suspended payment platform account
• RBI notification or news reports confirming regulatory action against payment company
• Email correspondence with merchant customer service refusing alternative refund
• Payment platform’s terms of service and user agreement documents
• Bank statements showing original debit and absence of refund credit

How Long Will the Investigation Take?

Banking Ombudsman proceedings typically conclude within 60 days. Consumer Forum cases may take 6-12 months depending on jurisdiction and complexity. Police investigation, if FIR is filed, can extend 3-6 months. RBI complaints usually receive responses within 30 days, though resolution depends on cooperation from regulated entities and complexity of regulatory violations involved.

Advocate Sudhir Rao, Supreme Court of India