Supreme Court Directs Centre to Curb ‘Digital Arrest’ Scams: Legal Framework, Gaps, and the Way Forward

Introduction: A New Age Threat to Personal Liberty

The Supreme Court of India has taken serious note of the alarming rise of “digital arrest” scams, a sophisticated form of cyber fraud that exploits fear, authority, and technological vulnerabilities. In a strong intervention, the Court directed the Union Government to immediately consider systemic measures to prevent such scams, flag suspicious financial transactions, and protect citizens—especially senior citizens—from digital extortion.

The observations were made by a Bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi, highlighting the constitutional and institutional duty of the State to safeguard citizens from cyber-enabled crimes.

What Are ‘Digital Arrest’ Scams?

Digital arrest scams involve criminal impersonation of law enforcement agencies, intelligence officials, or even judges, wherein victims are coerced into believing that they are under arrest or investigation. Fraudsters often:

  • Use forged court orders

  • Conduct fake “virtual hearings”

  • Threaten immediate arrest or prosecution

  • Extract money through panic-induced compliance

These scams rely on psychological manipulation, misuse of official insignia, and exploitation of digital platforms.

Supreme Court’s Observations: A “Staggering” Financial Drain

Expressing deep concern, the Supreme Court observed that an enormous amount of money has been siphoned off from India through such scams.

“We wish we were wrong, but a staggering amount has been taken away from India,” the Bench noted.

The Court emphasized that the problem is systemic, cutting across banking, telecom, social media, and law enforcement failures, and requires coordinated institutional responses, not fragmented solutions.

Role of the Amicus Curiae: Actionable Policy Suggestions

Senior Advocate N.S. Nappinai, appointed as amicus curiae, placed several practical recommendations before the Court, many of which the Bench found capable of immediate implementation.

Key Suggestions Examined by the Court:

  • AI and machine learning tools by social media platforms to identify and remove fraudulent accounts

  • Takedown of services offering “mule accounts” or “crime-as-a-service”

  • Capping prolonged video calls on platforms such as WhatsApp and Telegram to prevent coercive extortion

  • Deployment of transaction-alert systems to flag unusual withdrawals

  • Real-time SIM ownership alerts for consumers

Banking System Under Judicial Scrutiny

The Supreme Court made a critical observation regarding the role of banks, stating:

“The lapse on part of the bankers that results in loss by fraud would amount to a deficiency of service.”

This brings cyber fraud squarely within the ambit of consumer protection jurisprudence, placing an obligation on banks to:

  • Detect suspicious withdrawals

  • Trigger alerts at the first sign of abnormal transactions

  • Act swiftly to freeze proceeds of crime

CBI Entrusted with Pan-India Investigation

On December 1, the Supreme Court entrusted the Central Bureau of Investigation (CBI) with:

  • Investigating all digital arrest scam cases across India

  • Examining the role of banks and financial intermediaries

  • Seeking appropriate directions from the Court to ensure effective and timely investigation

The Court reiterated that early detection by banks is crucial, particularly when the first suspicious transaction occurs.

Role of RBI and Telecom Service Providers

The amicus curiae also suggested:

  • Development of RBI-led fraud detection tools to flag rapid or excessive withdrawals

  • Holding Telecom Service Providers (TSPs) accountable for negligence

  • Imposition of penalties for violation of telecom regulations, with collected funds used for victim compensation

The Court acknowledged that telecom negligence contributes significantly to cyber fraud ecosystems.

Victim Compensation and Reporting Mechanisms

Currently, cyber fraud complaints are routed through the National Cyber Reporting Platform (NCRP). The Court considered suggestions to:

  • Create a separate reporting channel for digital arrest scams

  • Enable instant freezing of bank accounts upon complaint

  • Introduce a victim compensation scheme using penalties collected from erring entities

Centre’s Response: Acknowledging Systemic Gaps

Attorney General R. Venkataramani, appearing for the Union Government, admitted that gaps exist across departments and assured the Court that:

  • An inter-departmental meeting would be convened

  • Proposals are under active consideration

  • The issue would be addressed holistically rather than in a piecemeal manner

Relevant Statutes Involved

  • Information Technology Act, 2000

    • Section 66D (Cheating by personation using computer resources)

  • Indian Penal Code / Bharatiya Nyaya Sanhita

    • Cheating, criminal intimidation, impersonation

  • Consumer Protection Act, 2019

    • Deficiency of service by banks

  • Telecom Regulatory Framework

    • Compliance obligations of service providers

Constitutional Provisions Engaged

  • Article 21 – Right to life and personal liberty (includes digital safety and financial security)

  • Article 14 – State’s duty to prevent arbitrary harm

  • Article 39A – Access to justice

  • Article 226 & 32 – Judicial oversight over systemic failures

Judicial Context and Precedents

The Court’s intervention aligns with prior jurisprudence where:

  • State inaction in preventing fraud was treated as a constitutional failure

  • Banks were held accountable for negligence in financial fraud cases

  • Cyber safety was recognised as part of the right to life

Conclusion: A Judicial Push for Digital Governance Reform

The Supreme Court’s directions mark a turning point in India’s fight against cyber fraud. By bringing banks, telecom companies, social media intermediaries, and regulators under judicial scrutiny, the Court has reinforced that digital governance is a constitutional obligation.

As digital transactions become ubiquitous, institutional vigilance, real-time alerts, and inter-agency coordination will be key to ensuring that technology empowers citizens—rather than becoming a tool for exploitation.

Location: Pune, Maharashtra, India

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