Cyber police using unlawful means to get money back to complainants in online fraud cases: HC

There have been scores of cases where the account is frozen, de-frozen and the amount that the complainant is due from a suspect or an accused is transferred to them from the account of third parties

November 09, 2022 09:15 pm | Updated November 10, 2022 12:11 pm IST - Bengaluru

The court also directed the magistrate courts to be cautions while entertaining applications from complainants for transferring amounts from the bank accounts, frozen by the police, of the third party UPI intermediaries.

The court also directed the magistrate courts to be cautions while entertaining applications from complainants for transferring amounts from the bank accounts, frozen by the police, of the third party UPI intermediaries. | Photo Credit: SREENIVASA MURTHY V

The cyber police are adopting “unlawful” means to get lost money back to complainants, and are closing the issue in digital payment fraud cases without conducting an investigation to unearth the fraud, the High Court of Karnataka has said.

“This court is coming across scores and scores of cases where the account is frozen, de-frozen and the amount that the complainant is due from a suspect or an accused is transferred to the account of the complainant from the account of third parties,” the court observed, adding that this action is contrary to all cannons of law.

Justice M. Nagaprasanna issued the directions while allowing a petition filed by PhonePe Pvt. Ltd., a UPI-based digital payment intermediary, and company’s director Rahul Chari.

Cannot be cut short

“The investigation cannot be cut short without unearthing the fraud and closing the issue, by transfer of amount from a third party to the complainant,” court observed.

The court also directed the magistrate courts to be cautions while entertaining applications from complainants for transferring amounts from the bank accounts, frozen by the police, of the third party Unified Payment Interface (UPI) intermediaries.

The magistrates should hearing the person, from whose account the money is sought to be transferred to the account of the complainant, the Court made it clear.

In this case, the High Court noted that a complaint was lodged by a woman about online fraud in April 2021. She had named the accused as Amith Mishra and provided his phone number. She had paid ₹69,143 to him in 15 transactions made through PhonePe linked to her ICICI Bank account on the payment request made by the him.

On receipt of her complaint, North Cyber, Economic, and Narcotics police, Bengaluru registered a case had asked Yes Bank to freeze the account of PhonePe and sought details of account statement, linked ID and KYC data. The bank shared information, which included linked personal account details Mr. Chari.

Transfer of money

Interestingly, after bank shared information with the cyber police, the complainant filed an application before the magistrate seeking transfer of ₹69,143 to her account from the personal account of Mr. Chari. And the magistrate had allowed her plea after the investigation officer submitted his no objection for such transfer.

Mr. Chari, on noticing debit of the amount from his account, came to know about the case on enquiry with his bank as neither the police nor the magistrate had given him any intimation or the notice.

Stating that an intermediary cannot be held responsible under the Information Technology Act for the type of transaction done by the complainant, the High Court said magistrate should have heard Mr. Chari before passing order. Noticing that both PhonePe and Mr. Chari are not the accused in the case, the High Court directed the police to pursue the investigation to trace the alleged fraudster, and ordered refund of the amount to Mr. Chari.

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