INTRODUCTION:

In a case that highlights the evolving complexities of cybercrime and the legal challenges posed by emerging digital fraud techniques, the Punjab and Haryana High Court granted regular bail to Shaik Noushad Ahammed, a Relationship Manager of Canara Bank, who was implicated in a widely reported “digital arrest” scam involving a Mohali resident, Charanjit Kaur, who was allegedly coerced into parting with a staggering ₹1.03 crore through a meticulously planned operation conducted by fraudsters impersonating officials of the Mumbai Police and the Central Bureau of Investigation, leading to the invocation of numerous provisions of the Bharatiya Nagarik Suraksha Sanhita (BNS), 2023 and Section 66 of the Information Technology Act, 2000; the High Court, while acknowledging the seriousness of the allegations, meticulously examined the petitioner’s role, the duties attached to his designation, and the gaps in the prosecution’s case to arrive at its conclusion.

ARGUMENTS OF THE PETITIONER:

The petitioner asserted that he was working merely as a Relationship Manager posted at Canara Bank and had no role in the alleged cyber-fraud beyond facilitating the opening of a customer account based on documents furnished to the bank; he denied accusations of forging documents or bypassing verification, arguing that KYC vetting, physical authentication, and identity confirmation are not the legal responsibilities of a Relationship Manager but are functions delegated to specialized verification units designated by the bank’s internal compliance system. He maintained that he adhered to standard bank processes and never colluded with any entity engaged in cybercrime, further stressing that the prosecution failed to produce any document, internal protocol, circular, or legislative mandate proving that the petitioner bore statutory KYC liability, and therefore, the allegations rested on presumption rather than legal evidence. The petitioner further submitted that no incriminating material was recovered from him, no transaction traced to him personally, no monetary benefit accrued to him, and no communication linked him to the fraudsters, making custodial detention unjustifiable. He argued that the State sought to convert him into a scapegoat merely because the frauded amount was routed through an account facilitated at his branch, even though there was no evidence of mens rea, conspiracy, or wilful participation. He contended that the offences alleged under Sections 308(2), 318(4), 127(7), 61(2), 238, 316(5), 337, 338, 340 of the BNS and Section 66 of the IT Act were non-applicable to his professional conduct since no act of violence, inducement, hacking, impersonation, or extortion was attributed to him and thus, his continued incarceration would be a gross violation of personal liberty protected under Article 21 of the Constitution. The petitioner relied upon the affidavit filed by the SP (Cyber Crime), Mohali to show that jurisdictional police themselves admitted that the petitioner’s role was restricted to facilitating account opening, and therefore, the prosecution’s stance lacked both factual foundation and legal coherence.

ARGUMENTS OF THE STATE:

The State, opposing the bail, contended that although the petitioner may not have executed the fraud, he played a significant enabling role by assisting in the opening of a fake account under the identity of a fictitious person named Mohammad Pasha, without duly verifying the authenticity of the documents presented; such negligence, according to the State, directly allowed cybercriminals to misuse the financial system to siphon off funds, launder the proceeds of crime, and dupe unsuspecting victims. The State argued that the petitioner, being a Relationship Manager, was duty-bound to ensure procedural compliance and could not abdicate responsibility by claiming ignorance of fraudulent documents. It advanced the argument that cybercrime thrives in loopholes, and bank employees facilitating account creation without adequate scrutiny are catalysts for large-scale digital fraud operations. However, the State conceded in the courtroom that it could not produce any documentary evidence demonstrating that in Canara Bank’s internal hierarchy, the Relationship Manager bears the legal obligation of independently verifying KYC documents, thereby exposing a critical void in the prosecution’s claims. The State added that the gravity of cyber-fraud, its social repercussions, and the alarming rise in “digital arrest scams”—where victims are psychologically overpowered through impersonated authority and threats of prosecution—necessitated strict scrutiny by the judiciary, and thus custodial detention was crucial to prevent tampering of evidence and ensure cooperative investigation. Nonetheless, the absence of recovery from the petitioner and the inability to establish his conscious participation weakened the State’s position.

COURT’S JUDGMENT:

After examining the submissions and evidence, Justice Vinod S. Bhardwaj held that the petitioner’s continued incarceration was unwarranted and disproportionate in light of his clean antecedents, lack of evidence indicating personal benefit, absence of recovery connecting him to the siphoned funds, and the prosecution’s failure to produce banking protocols establishing his legal obligation to authenticate KYC documents; the Court remarked that no purpose would be served by keeping him behind bars when the investigative agency could proceed without custodial interrogation. The Court emphasized that the criminal law system cannot allow liberty to be curtailed solely on speculative assumptions or organizational convenience, particularly when the penal framework under BNS 2023 imposes rigorous consequences and requires strict adherence to procedural fairness. The Court also underscored that the petitioner’s role was limited and arguable, and whether negligence attributable to him could constitute criminality was a matter for trial, not pre-trial detention. Consequently, the High Court ordered the petitioner’s release on regular bail on furnishing requisite bonds to the satisfaction of the trial court/Duty Magistrate, while keeping open the State’s right to preserve, investigate, and prosecute evidentiary trails. The judgment simultaneously exposed the lacuna in banking compliance mechanisms and highlighted the need for clearer legislative and administrative guidelines for the digital era, where frontline bank personnel may be criminalized without clarity of responsibility. The Court’s balanced approach ensured prosecutorial freedom while upholding personal liberty, thereby fortifying jurisprudence on cybercrime liability, presumption of innocence, and custodial necessity.