By Ananthakrishnan G
Describing the menace of ‘digital arrest’ as “the biggest financial fraud… on the economy of the country… running into thousands of crores of rupees,” the Supreme Court said Thursday it proposed to issue a direction making banks compensate victims and face prosecution if it’s established that failure of due diligence on their part resulted in such a fraud.
A three-judge bench, comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice V Mohana, pulled up the Reserve Bank of India (RBI) over the spate of digital arrest cases, saying it was “soft pedalling” the issue.
“The problem is bank officials are involved in it… There is soft pedalling by the RBI. Unfortunate. Because RBI is consulting the banks when we are asking for action against the banks,” the CJI said.
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The bench posed a range of questions to Attorney General R Venkataramani on the preventive measures that the RBI proposed to undertake.
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“There should be a direction that wherever digital arrest takes place, the bank will be deemed to be… and will be liable to compensate the victim besides being prosecuted further… If banks can give up and waive off thousands of crores worth of loans by entering into a so-called one-time settlement of Rs 5 crore or Rs 10 crore… why should they not be accountable for these victims (of digital arrest)?” the CJI said as the bench heard a suo motu case registered by the court over the ‘digital arrest’ cases across the country.
Venkataramani said that such a direction may not be necessary as it would have several implications. He pointed out that after the court’s intervention, the number of registered complaints of digital arrest had come down and that banks were now flagging suspicious transactions in a far more progressive manner than six months ago.
“Thanks to the court’s intervention, a lot of steps have been taken now. I have been trying to push the RBI to expedite the rule-making process and complete them,” he said.
The RBI, he said, was in advanced stages of operationalising its “guidelines” to prevent digital arrest frauds and that these guidelines will take effect by December. “All I am saying is the guidelines are being finalised. They only need a little more time to make them operational,” Venkataramani said.
The CJI took exception to the usage of the expression “guideline”. He told the AG, “When you use the word guideline, that itself loses the script… Very poor word, very weak word… Unless you have a sting in those guidelines …. There will be zero debit from the account of the victim. The amount will remain intact. The bank will have to pay. That is the only (solution).”
“We want you as regulator to formulate a mandatory provision that in case of an unusual transaction in the account of an individual person, the banks will suspend the transaction unless a complete protocol of verification is followed,” the CJI said.
The bench said it was “shocked” by the fact that even educated people continued to fall prey to the fraud despite warnings on television and social media and news reports about court cases over the scam.
Senior Advocate N S Nappinai, who is assisting the court as amicus curiae, told the bench that such frauds were still occurring. “I keep getting repeated inputs that while a lot has been done, the issue of digital arrest scams continues unabated. That seems to be a reality which even the police acknowledged through various inputs. Therefore, let state police also submit inputs on what is happening with digital arrest cases and give suggestions for prevention and prosecution,” she said.
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Nappinai pointed to a case which happened last week where a person lost Rs 2.5 crore. To this, the CJI said, “What we are shocked about… why are people not realising? What is wrong with the victims? Are they not normal persons? How are they being trapped like this?… Now it’s there on social media, newspapers, court proceedings.”
Nappinai said it’s happening despite the awareness campaigns.
Justice Mohana said educated people are also getting trapped.
Nappinai said, “That probably is what works against them. The fear of arrest is much higher amongst them.”
CJI Kant said, “What’s the fear of arrest on mobile? Can’t they understand this basic thing? Hit the mobile on the wall and the arrest goes… Something is wrong on their side, we can’t understand.”
Nappinai said that according to some psychologists, the victims get hypnotised.
The CJI said that in a country where there are police or security personnel at every corner, how can people become victims of digital arrest.
Nappinai said she had received a mail about an arrest being perpetrated by a person posing as a CBI officer, and that he used a forged order of the Supreme Court.
The CJI said the fraudsters using forged orders is an old story. “In every case, they have been doing it, using forged orders of this court,” he said, adding “why are people not going to the Internet” to “cross check” whether the order is genuine. “We feel frustrated. All educated people are getting (duped). What will you pass on to the next generation if you get digitally arrested at this age?” he said.
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To the court’s query on what were banks doing about stopping suspicious transactions in individual accounts, the Attorney General said there is considerable progress in this matter. “Prevention is happening at three levels – by awareness, second by banks at an appropriate stage, and if it goes beyond that, RBI and MeitY rules are addressing this problem. We want to put everything in operation by December or so,” he said.
“Every aspect of banking liability, the banking official’s liability, everything is being addressed, one after another,” he said.
He said it was taking time because the RBI was holding consultations with the banks. “A lot of work is being done… A lot of application of mind is happening.” He said it is not that every bank employee is in collusion with those committing the fraud and that there have been instances where employees acted proactively to avert digital arrests.
The CJI said, “The biggest financial fraud… on the economy of the country is digital arrest, running into thousands of crores of rupees. And still we are not able to take very strong measures.”
“We are proposing to direct that wherever such fraud takes place, the bank will compensate the victim and suffer prosecution. It has to be done,” he said.
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This article was first uploaded on October thirty, twenty twenty-six, at ten minutes past ten in the morning.
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