SlBench of CJI Surya Kant and Justice Joymalya Bagchi seeks government, RBI, CBI responses as petitioner urges national preventive framework and restitution measures.
Facts of Case
The Supreme Court of India on Friday took first procedural steps in a writ petition filed by an 82-year-old man who claims to have been defrauded of ₹22.92 crore in a “digital arrest” scam, possibly the largest sum lost by an individual in such frauds to date. The Bench of Chief Justice of India Surya Kant and Justice Joymalya Bagchi has issued notices to the Union of India, Reserve Bank of India (RBI), Central Bureau of Investigation (CBI), and multiple private banks named as respondents.
Background of Petitioner’s Loss
According to the petition, the senior citizen, who lives alone and was recovering from health treatment while his children were abroad, was targeted by fraudsters impersonating law enforcement and judicial authorities. The scam involved forged orders purportedly from this Court, communicated via WhatsApp and video calls, which coerced him into believing he faced imminent arrest and seizure of property unless he complied with the fraudsters’ instructions to transfer funds. Over multiple transactions, he allegedly transferred his life savings amounting to ₹22.92 crore to accounts controlled by the perpetrators.
The petitioner characterises the conduct of the banks that processed these transactions, including Kotak Mahindra Bank, HDFC Bank, Axis Bank, ICICI Bank, IndusInd Bank, City Union Bank, and Yes Bank, as “gross negligence”, arguing that the institutions failed to detect or prevent suspicious high-value transfers involving an elderly account holder.
Legal Issues Raised
The petition, filed as Naresh Malhotra v. Union of India & Ors. (W.P. (Crl.) No. 15/2026), raises several issues that the petitioner and his counsel characterise as requiring systemic intervention:
- Whether banks have a duty of care to detect and prevent high-risk transactions, particularly involving vulnerable customers such as senior citizens.
- Whether the Union Government, RBI, and cybercrime agencies should be directed to frame a uniform national policy to prevent and respond to “digital arrest” scams and ensure coordinated action among regulatory and enforcement bodies.
- Whether the Court should mandate real-time fraud detection systems, mule account identification protocols, and mechanisms to freeze suspicious transactions and ensure restitution of stolen funds.
The petition also includes a specific prayer urging the RBI to direct collecting banks to identify the holders or operators of “mule accounts” used to receive and transfer defrauded funds, and ensure these funds are returned to the petitioner.
Court’s Interim Action
The Supreme Court has issued notices to all respondents except for certain prayer points (Prayers B, C, and D), which the petitioner was told he may pursue before a consumer forum such as the National Consumer Disputes Redressal Commission.
The Bench did not immediately grant any of the substantive reliefs sought but has signalled willingness to engage with the broader questions raised in the petition. The matter is expected to return for further hearing after responses are filed.
What Is A Digital Arrest
“Digital arrest” scams involve impersonation of police, investigative agencies like the CBI or Enforcement Directorate, or even judicial authorities, using forged documents and technology platforms to intimidate victims, typically demanding large transfers of money. In recent months, the Supreme Court has been addressing the wider problem of digital arrest frauds, having taken suo motu cognisance of multiple similar complaints where victims particularly senior citizens, have been coerced into transferring funds on receiving threats backed by fake court orders.
Previous Supreme Court directions include directing the CBI to take over probes, seeking coordination among states and the Centre, pushing for freeze and tracking of fraudulent accounts, and involving telecom and IT intermediaries in curbing the scams.
Practical Implications
- The case foregrounds the inadequacies perceived in current safeguards against technology-enabled fraud targeting elderly and vulnerable citizens.
- If the Supreme Court ultimately issues guidelines or policies, it could result in binding directives for banks, regulators, and enforcement agencies on fraud detection, transaction monitoring, and restitution.
- The petition may also influence how courts balance commercial banking practices with consumer protection obligations, especially concerning high-value transactions flagged as suspicious.
- Ongoing digital arrest scam litigation reflects judicial recognition of the national scale and sophistication of such cyber frauds, underlining the need for coordinated responses across governmental and financial institutions.
The judgment adds clarity on the legal responsibilities of banks, regulatory bodies, and enforcement agencies in preventing and responding to “digital arrest” scams, and the scope for judicially-mandated preventive frameworks and restitution mechanisms to protect citizens from sophisticated cyber fraud.
