The Punjab and Haryana High Court has delivered an important order on freezing bank accounts. The Court has said that freezing an entire bank account only because of a small suspicious transaction is not legal.
The incident took place in HDFC Bank. The bank account was freezed due to some suspicious transactions.
The court said that the bank account can’t be freezed without the order from magistrate. It has also directed HDFC Bank to reactivate the account of the account holder.
The case was heard by Justice Jagmohan Bansal on a petition filed by Tripat Jeet Singh. The Court observed that freezing a full bank account just because of a suspicious transaction of ₹5,000 is not justified. The Court said that such action cannot be taken without an FIR or a Magistrate’s order.
The petitioner told the Court that his bank account was frozen without any prior notice. The bank took action after a single suspicious transaction of ₹5,000. However, no criminal case was registered against him, and he was not accused of any fraud.
During the hearing, the bank said that it acted based on instructions from law enforcement agencies. However, it also admitted that it did not have any Magistrate’s order to freeze the account. It also had no proof of the petitioner’s involvement in any crime.
The High Court said that under Section 106 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), a bank account cannot be frozen directly. The Court clearly stated that permission from a Magistrate is required before freezing any account.
The Court said that freezing the entire account of an innocent person without proper reason is unfair. It can seriously affect a person’s daily life and livelihood.
The Court ordered the bank to immediately restore the petitioner’s account. However, the disputed amount of ₹5,000 will remain frozen for now.
The Court also said that if any wrongdoing is found later, legal action can still be taken. It emphasized that the rights of citizens must be protected and due legal process must always be followed.
The incidents of bank account freezing are increasing day by day. There are no clear guidelines from the RBI. Banks freeze accounts based on orders received from the cybercrime police. On the other hand, customers take banks to court. It has become a dilemma for banks to decide what to do in such cases.
