'What Kind Of People Believe They Can Get Arrested On Mobile?' CJI Expresses Shock At Digital Arrest Scams

The Supreme Court on Thursday expressed strong frustration over the continued prevalance of “digital arrest” scams, with Chief Justice of India Surya Kant questioning how educated citizens continue to fall prey to such frauds.

Hearing a suo motu case on the issue of digital arrest scam, a bench comprising CJI Surya Kant, Justice Joymalya Bagchi and Justice V Mohana heard submissions from the amicus curiae, Senior Advocate NS Nappinai, who informed the court that the scams persist despite ongoing efforts. She cited a recent incident in which a woman lost ₹2.5 crore.

She pointed out that even after the last status report given by the Centre on March 30, digital arrest cases are flourishing.

The Chief Justice expressed shock that despite all the public awareness campaigns, news reports and Court orders, people are falling prey. “What we are shocked about - why are people not realizing? What is wrong with victims? Are they not normal persons? This is everywhere in the media,” CJI Kant observed. He further remarked: “What kind of person you are in a democratic country if you think you are getting arrested on mobile? Hit the mobile on the wall and the arrest goes.”

The amicus submitted that fear of arrest drives victims and that some psychologists describe the phenomenon as a form of hypnosis, with people continuing to fall prey despite awareness campaigns.

CJI Kant expressed frustration that even educated individuals are being duped and questioned what values such victims would pass on to the next generation. He pointed out that people can easily verify the authenticity of purported court orders on official court websites.   

"We have strong neighborhood. We feel frustrated- all educated people getting [duped]. What will you pass on to next generation if you get digitally arrested at this age? [On abuse of fake orders] People can go on website of courts to find if there's order."

Supreme Court proposes to hold banks liable

The Chief Justice also criticised banks and other agencies for inadequate safeguards, asking why protective mechanisms are not triggered the moment suspicious transactions or messages seeking money appear.

Attorney General R Venkataramani informed the court that progress has been made. He said banks are now better at flagging suspicious transactions compared to six months ago, and that he has held meetings with the Reserve Bank of India to push rule-making. He added that the Indian Cyber Crime Coordination Centre (I4C) is working round the clock.

The Chief Justice, however, stressed the need for prevention rather than post-facto reports. “Report will only be post-mortem. What about prevention? Moment a transaction comes, why can't it be withheld?” he asked.

The Attorney General further submitted that the liability of banking officers was being addressed and that a portal would be operationalised at the earliest. However, he expressed reservations about implementing the directions proposed by the amicus curiae.

The CJI responded that the problem was compounded by the alleged involvement of bank officials in such frauds. “The problem is, bank officials are involved. Even when we are asking to take steps, RBI is consulting the banks!”  

The Attorney General clarified that action had been taken wherever officials were found to be involved, adding that it would be incorrect to suggest that every bank employee was in collusion with fraudsters. He said the RBI was expediting the process.

The CJI questioned why banks could not classify accounts into appropriate categories to identify suspicious transactions, given that they possessed the complete transaction history of individual account holders.

The CJI asked whether existing regulations permitted banks to temporarily withhold unusual transactions that were inconsistent with an account holder's past activity, notify the local police station and the nearest police officer, and verify the genuineness of the transaction before allowing it to proceed.

Court considers making banks compensate victims  

The Chief Justice indicated that the court was considering directions requiring banks to compensate victims and face prosecution where digital arrest fraud occurred due to their failure to exercise due diligence.

“We are proposing to direct that wherever such fraud takes place, bank will compensate victim and suffer prosecution. It has to be done,” CJI Kant said.

The Attorney General opposed imposing such liability through the court's directions, submitting that the question of banks' liability needed to be addressed by the RBI. He reiterated that the proposed regulatory measures would soon become operational.

Justice Bagchi observed that the court could impose strict liability on financial institutions, noting that it could not require every bank to appear before it individually. The RBI, as the regulator, would have to frame appropriate guidelines.

CJI Kant questioned why banks should not be held accountable for the losses suffered by victims, particularly when financial institutions were able to negotiate one-time settlement arrangements worth crores of rupees in loan recovery matters.

The CJI stressed that unusual transactions should be suspended until their genuineness was verified in writing.

Supreme Court asks RBI to examine compensation framework 

In its order, the Supreme Court noted that the Attorney General had submitted a note dated October 28 proposing certain directions on behalf of the Union government.

The bench stated that while it was inclined to issue directions proposed by both the amicus curiae and the Union, it would first examine the proposed Reserve Bank of India (KYC) Amendment Directions, 2026, which are expected to be notified by November 30 and operationalised in December.

The Court reiterated that the regulatory measures proposed by the RBI must mandate financial institutions to indemnify victims of digital arrest and other cyber frauds through compensation of not less than the amount lost, where the fraud was found to have occurred due to the institution's failure to exercise due diligence.

The order also emphasised the need for preventive measures, including the temporary suspension of unusual transactions that are inconsistent with an account holder's past transaction history.

The bench said financial institutions must be required to automatically notify the relevant police station about such transactions, followed by physical verification to establish their genuineness.

To ensure that the RBI's proposed regulatory measures and the court's directions were implemented without delay, the bench directed the RBI to submit a list of all authorised financial institutions on the next date of hearing.

During the hearing, CJI Kant also observed that the net loss suffered by the Indian economy from such frauds this year was approximately ₹800 crore.