CJI Surya Kant questions digital arrest victims as SC reviews bank liability

CJI Surya Kant questions judgment of digital arrest victims

Chief Justice of India Surya Kant expressed frustration during the hearing and questioned the judgment of those who succumb to digital arrest scams. He asked, "What is wrong with victims?" and questioned if they were "normal persons".

The Chief Justice expressed disbelief that people fall for these scams despite widespread information. He asked, "What kind of person you are in a democratic country if you think you are getting arrested on mobile?".

They can't understand this basic thing?".

The court advised that individuals should verify the existence of any arrest orders by checking official court websites. The Chief Justice also noted that people could turn off or destroy their mobile phones to end a digital arrest.

Economic toll reaches ₹800 crore as scams persist

The economic loss to the country from digital arrest and cyber fraud reached approximately ₹800 crore during this year.

Amicus curiae Senior Advocate NS Nappinai informed the Supreme Court that these scams persist despite previous efforts, including a status report submitted by the Centre on March 30.

Just last week, a woman was defrauded of ₹2.5 crore in a digital arrest scam.

Victims often comply with fraudsters due to an intense fear of arrest, with psychologists describing this pressure as a form of "hypnosis".

Court proposes strict liability for banks failing due diligence

The Supreme Court is considering a proposal to hold banks strictly liable for customer losses if they fail to exercise due diligence in preventing digital arrest or cyber fraud.

Chief Justice Surya Kant criticized banks for inadequate safeguards, questioning why they cannot intervene when transactions deviate from an account holder’s typical spending patterns.

The court proposed that financial institutions should act as a "protective umbrella" for customers by implementing preventive measures, such as temporarily suspending transactions that appear unusual.

The judiciary is considering a policy that would require banks to reimburse victims for at least the sum lost, provided an inquiry establishes that the institution did not exercise due diligence.

Banks would also face prosecution under this proposed framework if their staff or the institution were found negligent in performing their duties.

Financial institutions are required to automatically alert the relevant police station regarding unusual transactions and conduct physical verification to confirm the legitimacy of such transfers.

Attorney General reports 50 percent decline in digital arrest incidents

Attorney General R Venkataramani reported that digital arrest incidents have declined by 50 percent following the intervention of the Supreme Court. He stated that banks have improved their ability to flag suspicious transactions over the last six months. Banks have already begun flagging suspicious transactions, and the Indian Cyber Crime Coordination Centre is working continuously.

The Attorney General submitted a note on October 28 proposing specific directions on behalf of the Union government regarding the scam issue. He has conducted discussions with the Reserve Bank of India concerning the creation of regulations to address this fraud.

Attorney General R Venkataramani expressed reservations about the court's proposed directions for bank liability. He argued that the central bank should address the issue through a regulatory framework rather than judicial mandates.

CJI Surya Kant alleged that bank officials are involved in digital arrest frauds. He criticized the Reserve Bank of India for consulting with banks instead of taking immediate steps to prevent the crimes.

RBI to notify KYC Amendment Directions by November 30

It is anticipated that these directions will be notified by November 30 and implemented in December.

CJI Surya Kant proposed that banks be mandated to halt irregular transactions that do not align with an account holder's history until their legitimacy is confirmed in writing. To ensure the implementation of these directions and the proposed measures, the bench ordered the Reserve Bank of India to submit a list of all authorized financial institutions by the next hearing date.

Modus operandi of digital arrest and international crime syndicates

Digital arrest scams involve criminals who pose as law enforcement officers via video calls. These fraudsters often operate from locations that resemble government offices and demand money from victims for case closures.

In January 2025, Scroll reported that Chinese crime syndicates operate scam compounds in Cambodia, Myanmar, and Laos. These syndicates force individuals to conduct cyber fraud.