Supreme Court notice to Centre, CBI on plea of senior citizen ex-banker duped of Rs 23 crore in 'digital arrest'

Supreme Court

• Supreme Court seeks responses on Rs 23 crore digital arrest scam petition
• Victim claims fraudsters posed as law officials, coerced him to transfer savings
• Petition urges stronger action against digital scams and mule bank accounts

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The Supreme Court on Friday issued notices to the Union government, the Central Bureau of Investigation (CBI), the Reserve Bank of India (RBI) and several private banks on a petition filed by a senior citizen who claims he was cheated of nearly Rs 23 crore through what has come to be described as a “digital arrest” scam.

A bench comprising Chief Justice of India (CJI) Surya Kant and Justice Joymalya Bagchi took up the writ petition filed by Naresh Malhotra, a retired banker from south Delhi, and sought responses from the authorities and institutions named as respondents.

The petitioner, who is 78 years old according to police records and about 82 years old as stated before the court, has alleged that cyber fraudsters impersonating law enforcement agencies confined him to his home for almost a month and coerced him into transferring his life savings.

Allegations of prolonged coercion and impersonation

According to the case placed before the court, Malhotra was targeted by fraudsters who posed as officials from the Mumbai Police, the Enforcement Directorate (ED) and the CBI.

The sequence allegedly began on August 4 last year, when he received a phone call from a man claiming to be a police officer and accusing him of links to a drug-trafficking racket.

Over time, others contacted him, presenting themselves as ED and CBI officers and warning him of serious charges, including narcotics trafficking, terror funding and even the Pulwama terror attack.

Police have stated that the fraudsters instructed the elderly man not to step out of his flat in Delhi’s Gulmohar Park area and threatened him with arrest and severe consequences if he disclosed the matter to anyone.

“The scammers directed him not to step out of his house and coerced him into transferring his savings to various bank accounts over a span of a month,” police said.

The petition claims that forged documents, purportedly issued by the Supreme Court, were shared with the victim through WhatsApp messages and video calls to add credibility to the threats.

Acting under fear, Malhotra transferred funds from his accounts to multiple bank accounts allegedly controlled by the fraudsters. By the time he realised he had been cheated, a total of Rs 22.92 crore had been siphoned off.

After discovering the fraud, Malhotra lodged a complaint on the National Cybercrime Reporting Portal on September 19 last year.

The case was subsequently taken up by the Intelligence Fusion and Strategic Operations unit, which registered an FIR. Police later informed that Rs 12.11 crore of the cheated amount had been frozen in different bank accounts.

Reliefs sought and court’s response

In his plea before the apex court, Malhotra has sought multiple directions, including the restitution of the defrauded amount and broader preventive measures against digital arrest scams.

He has arrayed several banks as parties, including Kotak Mahindra Bank, HDFC Bank, Axis Bank, ICICI Bank, IndusInd Bank, City Union Bank and Yes Bank.

Appearing for the petitioner, senior advocate K Parameshwar told the court that the incident took place when the petitioner’s children were abroad and described the case as one of “gross negligence” by the banks.

Emphasising the vulnerability of the victim, he submitted, “There is some duty that these banks also owe, he comes on a wheelchair, he is almost 82 years old.” He argued that banks ought to have been alert when such large and repeated transactions were being processed.

The plea also seeks directions to identify and act against mule accounts allegedly used by the fraudsters.

One of the prayers states: “Issue writ / order / direction in the nature of mandamus to the Reserve Bank of India to direct the collecting banks to identify the account holders/operators of mule accounts used in conducting the fraudulent transactions and ensure refund of the amounts fraudulent transferred from the Applicants accounts;”

The bench issued notice on the petition but excluded certain prayers relating to direct monetary relief, allowing the petitioner liberty to approach the appropriate consumer forum for those aspects.

The court has sought responses from the Union of India, RBI, CBI and other respondents on the remaining issues raised.

The petition also urges the court to direct the Centre to frame a uniform national policy to deal with digital arrest scams and to ensure coordinated action among regulatory and investigative agencies.

It recalls that the Supreme Court had last year taken suo motu cognisance of recurring instances of such scams, asked the CBI to investigate them, and noted the formation of a committee under the Union government to explore preventive measures and victim compensation.