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People Depositing Money In Banks Are 'Honest'; Banks Have To Take Responsibility For Cyber Crimes: Allahabad HC

Sparsh Upadhyay
12 Jan 2022 12:43 PM GMT
People Depositing Money In Banks Are Honest; Banks Have To Take Responsibility For Cyber Crimes: Allahabad HC
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While denying bail to 4 persons accused of fraudulently withdrawing money from the bank account of a retired High Court Judge, the Allahabad High Court today observed that those who deposit money in banks are honest and it is the responsibility of the banks to keep their money safe 'at any cost'.The Bench of Justice Shekhar Yadav also observed that those people who do not deposit crores of...

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While denying bail to 4 persons accused of fraudulently withdrawing money from the bank account of a retired High Court Judge, the Allahabad High Court today observed that those who deposit money in banks are honest and it is the responsibility of the banks to keep their money safe 'at any cost'.

The Bench of Justice Shekhar Yadav also observed that those people who do not deposit crores of rupees in the bank and rather hide the same in the basements of their houses, are responsible for hollowing out the economic prosperity of the country.

Opining that the bank has to take responsibility for such cases wherein the money of their customers is withdrawn by cybercriminals as such customers are more honest towards the country since they put their white money in banks.

"Bank account holders' money should be safe. Not only because the customer deposits money in the bank so that he/she can withdraw it when needed, but also because the money deposited by the customers in the bank is white and due to which, the economic condition of the country also improves. On the other hand, there are people in the country who do not deposit crores of rupees in the bank and keep it hidden in the basements of their houses. The banks do not get any benefit from it, and they also hollow out the economic condition of the country. In such a situation, that customer of the bank is more honest towards the country and his money should be kept safe by the bank at all costs and if in any way the money is withdrawn by cybercriminals, then for this, the bank has to take responsibility for it," the Court opined.

The case in brief 

The Court was dealing with the bail plea of 4 accused in connection with a case, wherein money was fraudulently withdrawn from the bank account of a Judge (retired), High Court.

Essentially, 5 lacs rupees was withdrawn from the account of retired HC Judge Justice Poonam Srivastava. the matter was probed and 3 accused were arrested from Jamtara in Jharkhand. Thereafter, they moved the court by way of filing bail pleas and opposed the charges against them.

In June 2021, during the course of the hearing of this matter, the Allahabad High Court had observed that the police authorities are not making serious efforts in controlling these types of fraudulent activities.

Again in August 2021, expressing concerns over the spreading nationwide network of cyber thugs, the Allahabad High Court had observed that cyber thugs are eating up the entire country like termites and are responsible for the weakening of the economic condition in the country.

The Bench of Justice Shekhar Kumar Yadav had further observed that it was necessary to fix the accountability in such matters so that the money of the people, who have been victims of cyber fraud, is not lost.

The Court had also sought the response of the Union, State & Reserve Bank of India on the question as to how to make Banks & Police accountable in online/cyber fraud cases.

Submission made by the concerned parties

During the subsequent case hearings, RBI argued before the Court that it warns bank customers to be aware of such frauds and not fall in the trap of cyber thugs.

The Centre submitted before the Court that the entire case of fraudulent withdrawal of bank customers is related to the Reserve Bank and only they are responsible for it.

It was further suggested by him that the banks can keep an eye on the account of all the customers through the Aadhar card-bank linking, however, however, he added that Supreme Court has abolished the mandatory linking of the Aadhar cards with bank accounts.

Significantly, the Court expressed its agreement with the argument made by the Union of India to file a review petition against the Supreme Court's 2018 Adhaar Verdict wherein the Court had held that the move of mandatory linking of Aadhaar with bank account does not satisfy the test of proportionality.

"The court agrees with the contention of Shri S.P.Sing that he should file a review petition in the Supreme Court regarding the mandatory linking of the Aadhar card so that the Aadhar card could be linked with the bank account holders and online bank fraud can be prevented," the Court said.

Further, it was suggested by the advocate appearing on behalf of BSNL that since mobile sims are being sold for free or for very little money and without any strict rules, there has been an increase in online crimes, hence mobile sim Selling companies should first deposit the security money while selling the SIM cars.

Secondly, he added, the SIM cards should be issued only after getting the address given in the original identity card verified and contended that when the strict rules would be made, then only cybercrime can be curbed.

Lastly, the State Government argued before the Court that there has been an increase in cybercrime in recent times and that online crime is happening all over the country, and the Counsels representing the UP Govt also expressed concerns and said that there is hardly any person left who has not been a victim of cyber fraud.

Agaisnt this backdrop, it was contended by them that the Government of India and the State Government should devise such a system that such crimes could be stopped. It was also suggested by him that the security of the customers' money should be guaranteed.

It was their submission that since the money is deposited in the bank, therefore, it is the responsibility of the bank to devise such a system that the money of the customers in its bank does not go into the hands of cyber-criminals under any circumstances and the banks should make every effort to stop it.

"The bank should open the account in its bank only after performing a complete verification of mobile number and address...at the time of online money transfer, the concerned banks should verify the transaction by calling their customers personally and then only transfer the money," the state counsels concluded by arguing thus.
Case title - Neeraj Mandal @ Rakesh v. State of U.P and connected matters  Case Citation: 2022 LiveLaw (AB) 11

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