Karnataka High Court Urges Centre to Create National Framework for Interstate Bank Account Freezes
The problem of Bank account freeze is increasing day by day. Bank customers are feeling helpless and criticizing banks and government.
Police are issuing freeze notice to Banks and Banks are freezing accounts of customers. The matter has now reached Karnataka High Court.
A Bengaluru resident Santhosh Kumar H. V. requested the Karnataka High Court to cancel a debit freeze notice issued by the Maharashtra Police to Axis Bank’s Bengaluru branch.
During the hearing, the court noted that this was another case in which a debit freeze order had been issued by a police officer from outside Karnataka.
The court observed that the petitioner lives and runs his business in Bengaluru, and his bank account is also maintained at a Bengaluru branch of Axis Bank. However, the debit freeze order was issued by the Maharashtra Police.
Before granting any relief, the court said it would be necessary to hear the police officer who issued the order. The court further noted that in many such cases, notices are served, but no representative appears on behalf of the concerned police authority.
The bench also noted that the Karnataka Government Advocate had clearly stated that he could only represent the Government of Karnataka and could not appear on behalf of any other state government.
The court requested ASG Aravind Kamath to consult different departments and help find a solution to the difficulties being faced in such cases.
Justice Govindaraj suggested several issues that the Central Government may consider:
- If a debit freeze order is issued by a police authority located outside the court’s jurisdiction, how should notice be served on that police authority?
- When police instruct a bank to freeze an account, should they also be required to inform the account holder?
- Should banks be required to immediately inform customers when they receive an order from police to freeze their accounts?
- Where should an account holder file a case—at the place where the bank account is maintained or where the police order was issued? The court noted that both options can create practical difficulties for the parties involved.
- Whether notices to police officers outside the court’s jurisdiction can be served through systems such as the Crime and Criminal Tracking Network System (CCTNS), the National Crime Records Bureau (NCRB), or similar mechanisms.
- Whether a bank account should be frozen completely, or only to the extent of the amount allegedly linked to the fraud.
The court has scheduled the next hearing in the matter for July 1. More details will be released soon.
