Karnataka HC Refuses To Quash Bank’s Payment-Dishonour Case Over Woman’s ‘Digital Arrest’ Claim, Citing OTP-Approved Transfers and Disputed Facts

In brief

The question

1. Whether the High Court should quash the proceedings in C.C. No. 11728 of 2025 on the basis of the petitioner’s allegation that the loan transaction resulted from digital arrest and coercion.

The court held

The Court dismissed the writ petition, finding no merit in the request to quash C.C. No. 11728 of 2025 or to grant the consequential reliefs sought.

It also directed

Any interim order was dissolved, and pending applications were disposed of.

01Facts

The petitioner alleged that fraudsters subjected her to a “digital arrest” in September 2024 and induced or compelled her to obtain a ₹50 lakh personal loan from ICICI Bank, with the proceeds transferred to third parties.

pp. 6, 24–30

She reported the incident to the police, resulting in Crime No. 759 of 2024, and also approached the RBI Ombudsman.

pp. 6, 24–30

The Bank later initiated proceedings alleging dishonour of an auto-debit instruction and non-payment despite statutory notice.

pp. 6–7, 17

The Magistrate took cognizance and registered C.C. No. 11728 of 2025.

pp. 6–7, 17

The petitioner sought, among other relief, quashing of the criminal proceedings, restraint on recovery, and restoration and protection of her CIBIL score.

pp. 4–5

The RBI Ombudsman subsequently closed the complaint, finding no deficiency in service.

p. 33

02Issues

i.1. Whether the High Court should quash the proceedings in C.C. No. 11728 of 2025 on the basis of the petitioner’s allegation that the loan transaction resulted from digital arrest and coercion.

pp. 17–18, 32–34

ii.2. Whether the Court should grant the petitioner’s associated reliefs concerning recovery action and adverse credit reporting where the alleged coercion and transaction circumstances remained disputed.

pp. 4–5, 32–34

03Law Applied

The petition invoked Articles 226 and 227 of the Constitution and Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, seeking writ and inherent relief.

pp. 2–4

The Bank’s complaint invoked Section 138 of the Negotiable Instruments Act, 1881, and Section 25 of the Payment and Settlement Systems Act, 2007.

pp. 11–17

The Court applied the principle that writ or inherent jurisdiction is not ordinarily exercised to determine seriously disputed questions of fact requiring evidence; a claim of digital arrest, without factual adjudication, does not by itself justify quashing proceedings at the threshold.

pp. 17–18, 32–34

The judgment cited no precedent or separate substantive rule governing the merits of the alleged coercion.

Provisions in the judgment · 9 · Linked ones open on LawLens

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528 Section 223

Payment and Settlement Systems Act, 2007 Section 25

Bharatiya Nyaya Sanhita, 2023 Section 318

Negotiable Instruments Act, 1881 Section 138

Indian Contract Act, 1872 Section 14 Section 15 Section 19 Section 20

04Reasoning

The Court treated the petitioner’s account of digital arrest, the alleged lack of free consent, and the Bank’s conduct as disputed factual matters requiring evidence.

pp. 33–34

It noted that the transaction records, as reflected in the flow chart, showed one-time passwords being sent to the petitioner’s mobile and her approvals of transactions, including transfers to third parties.

pp. 33–34

In those circumstances, the Court declined to determine at the writ stage whether the loan was procured through coercion or whether the Bank was responsible for the transfers.

pp. 32–34

It therefore found no basis to interfere with the criminal proceedings or grant the connected reliefs.

pp. 32–34