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Case Overview

Case Name: In Re: Victims of Digital Arrest Related to Forged Documents, SMW (Crl.) No. 3 of 2020

The Supreme Court of India was hearing a suo motu criminal writ concerning rising incidents of “digital arrest scams” across the country. The Bench comprising CJI Surya Kant, Justice Joymalya Bagchi & Justice NV Anjaria examined the role of banks & regulatory authorities in preventing cyber-enabled financial frauds. The Attorney General informed the Court about a Standard Operating Procedure (SOP) drafted by the Reserve Bank of India (RBI) while concerns were raised over weak compliance & delayed preventive action by banks.

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Key Aspects

The case shows systemic gaps permitting massive financial frauds through banking channels. The Court assessed whether banks were fulfilling their duty towards customers who fall victim to sophisticated cyber scams.

• Sudden large withdrawals by unsuspecting customers after being duped through digital arrest scams .
• Absence of effective alert mechanisms for abnormal transaction patterns .
• Role of AI-based tools in detecting suspicious transactions .
• Alleged failure of banks to act as trustees of public money .

Legal Insights

The Supreme Court analysed statutory & regulatory obligations governing banks & cyber fraud prevention. Emphasis was placed on accountability & proactive safeguards.

• Article 21 of Constitution of India: Protection of life & personal security includes financial security.
• Banking Regulation Act, 1949: Imposes duty of care & prudence on banking institutions.
• RBI Guidelines & SOP: Permit temporary debit holds & AI-driven fraud detection.
• Information Technology Act, 2000: Addresses cyber-enabled fraud & misuse of electronic systems.

Court’s Verdict

The Supreme Court of India observed that banks must proactively alert customers about suspicious transactions especially abrupt high-value withdrawals. CJI Surya Kant stressed that banks cannot function merely in business mode & must act as trustees of public funds. The Court directed the Ministry of Home Affairs to formally adopt the RBI SOP nationwide warning that continued negligence may invite strict judicial directions.

Source – Supreme Court of India

Read also – Constitution of India

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