UPI transformed India but not immune to cybercrime; requires safeguards: Kerala High Court

The Kerala High Court recently flagged certain security concerns associated with India's Unified Payment Interface (UPI) system. [Dr. Sajeer v Reserve Bank of India & Anr.].Justice Devan Ramachandran acknowledged the positive impact that UPI has had on money transactions."The 'Unified Payment Interface (UPI), has transformed the financial spectrum in India; and in particular, the manner in which people transact money. Its easy-to-use interface and ingrained security features, has made “UPI” the preferred mode of payment for millions of Indians, making it the fastest growing payments systems in the world" the Court said in its judgemntHowever, noting that there are security issues with the system, the Court called for the implementation of safeguards so that people continue to keep faith in the system."Like in many good initiatives, there are chinks in the armour – in a manner of speaking; Charlatans commit Cyber Crimes and create byzantine maze of accounts, through which ill-gotten wealth is moved and parked. I am, therefore, of the firm view that, certain specific safeguards will have to be now infused into process, lest the people loose their faith in the 'UPI' system itself, especially when it is spearheaded and recognised internationally as a vanguard initiative of India," the Court observed..The Court made these observations while considering a batch of petitions moved by persons whose bank accounts were frozen. The accounts were frozen by investigating and police authorities who found that a cyber criminal had allegedly transferred money to their accounts through UPI.The petitioners said that they are facing incalculable loss to their businesses since their bank accounts are now inoperable.They argued that the trust of the business community in the UPI system has been severely shaken and asked the Court to issue appropriate orders and safeguards..The counsel for the Central government submitted that when complaints are registered on the National Cyber Crimes Portal (NCCP), it immediately generates an appropriate response from the police. He said that it was the State police that had issued the orders and that such orders are necessary to track the sums involved in cyber crimes, routed by the accused through different accounts. The Court, however, questioned why the entire bank account needs to be frozen, especially when the requisitions in these cases – by various police authorities in several States – mention the exact amount suspected to have been credited to the accounts."One fails to fathom why their bank accounts in full, should remain frozen. This is more so because, even when the sums in question may have found credit in the accounts of the petitioners, unless the investigation eventually reveals that they were complicit in the Cyber Crime, or had received the same being aware of it, they could never be construed to be accused", the Court observed.Therefore, the Court ordered the respective banks of the petitioners to freeze the accounts only to the extent of the amounts mentioned in the orders issued by the police. It also directed the police to inform the banks as to whether the accounts of the petitioners need to remain frozen, and if so, for how long. If the same is not done, the petitioners are free to approach the Court again, the judgment stated..The various petitioners were represented by Senior Advocate S Sreekumar and advocates Saju NA, G Lekha, Uma G Krishnan, PJ Flony, Abdul Shukoor Mundambra, PC Muhammed Noushiq, K Rakesh, Rajesh Babu Chelat, P Mohamed Sabah, Libin Stanlety, Saipooja, Faizel K, Sadik Ismayil, R Gayathru, M Mahin Hamza, Alwin Joseph, K Rakesh, Ameen Hasan K, Sadchith P Kurup, Vinod Jabar, CP Anil Raj, Siva Suresh, Reshma Raj, KV Sabu, Nikhil K Sabu, Minu Siby Roy, MA Mohammed Siraj, Anand Kalyanakrishnan, C Dheeraj Rajan, Saji Sankaran Nair, R Ranjith, AP Nidhin Kumar, SK Adhithyan, Althaf Nabeel and Ashiq Muhammad S.Deputy Solicitor General of India S Manu and Central Government Counsel Dayasindhu Sreehari appeared for the Central government. .[Read Judgment]