The Karnataka High Court has refused to quash criminal proceedings against a woman who claimed that a ₹50 lakh bank loan was taken while she was under “digital arrest”, holding that the circumstances surrounding the borrowing and subsequent transfers involved disputed questions of fact that must be examined through evidence.
Justice M. Nagaprasanna, in an order dated October 16, dismissed the woman’s petition challenging proceedings initiated by ICICI Bank over non-repayment of the loan.
The Court observed that accepting such a plea at the threshold could allow borrowers to attribute disputed transactions to digital arrest and avoid liability for loans they had availed.
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Woman Said Fraudsters Forced Her to Take ₹50 Lakh Loan
According to the case, the 32-year-old woman received a call on September 17, 2024, from a person claiming to be a FedEx employee. She was told that her Aadhaar number had been used in connection with the purchase of drugs.
The call was then transferred to another person who claimed to be associated with Mumbai Police. She was allegedly told that her Aadhaar card had been used in several cases and that her bank accounts were linked to fraud.
The call was later transferred to a person claiming to be a Deputy Commissioner of Police, who allegedly told her that funds from her account had been used to purchase an AK-47.
The woman was subsequently connected to another person claiming to represent the Reserve Bank of India. She was allegedly told that she would have to transfer money if she wanted to clear her name.
According to her account, the fraudsters accessed her Skype account and directed her to take an instant online loan.
ICICI Bank credited ₹50 lakh to her account within about 15 minutes. She then added three beneficiaries and transferred the entire amount to them after being assured that she would receive a no-objection certificate stating that she had been cleared in the cases.
The woman approached police on September 21, 2024, following which the East CEN Crime Police Station registered a cheating case against unknown persons under relevant provisions of law. She also lodged a complaint with the Bank Ombudsman.
ICICI Bank Later Initiated Criminal Proceedings
In May 2025, nearly eight months after the alleged fraud, ICICI Bank filed a private complaint against the woman.
The complaint was registered under Section 25 of the Payments and Settlement Systems Act, which deals with dishonour of electronic funds transfer due to insufficiency of funds and related circumstances.
A magistrate court directed registration of a case and issued summons to the woman. She then approached the Karnataka High Court seeking to have the proceedings quashed.
Advocate Suraj Sampath, appearing for the petitioner, argued that the loan had been availed under coercion and at what he described as “digital gunpoint”.
He contended that the bank had failed to exercise due diligence in monitoring the transactions, including restrictions relating to newly added beneficiaries and transfer limits.
The petitioner also argued that ICICI Bank was aware of her digital-arrest allegations but still proceeded with loan recovery and criminal action.
Senior Advocate D.R. Ravishankar, appearing for ICICI Bank, argued that the woman had voluntarily completed the digital loan process.
The bank submitted that it had no knowledge of the alleged coercion or digital arrest because those communications had taken place through third parties.
Court Says Disputed Facts Require Evidence
The High Court declined to interfere with the proceedings at this stage.
The bench referred to the complaints made by both the bank and the woman and said the arguments raised by the petitioner involved seriously disputed questions of fact.
The Court noted that one-time passwords were sent to the petitioner’s registered mobile number for transactions and that she had herself approved both the loan process and subsequent transfers.
Justice Nagaprasanna observed that if every disputed transaction were later attributed to digital arrest, a borrower could potentially escape liability for a loan that had been availed.
The Court held that the circumstances required evidence and therefore did not justify quashing the proceedings at the preliminary stage.
The ruling leaves the woman free to raise her claims of coercion, fraud and inadequate banking safeguards during the proceedings, but makes clear that a digital-arrest claim by itself is not enough to end the case before evidence is examined.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
