Police Can't Freeze a Bank Account without Quantifying Amount Involved in Financial Fraud: Madras HC

Moneylife Digital Team 25 October 2024

Consumer Interest

In a significant relief to bank customers who face account freeze on instruction from the local police or the National Cyber Crime Reporting Portal (NCRP), the Madras High Court (HC) recently ruled that it cannot pass an order freezing the entire account without quantifying the amount involved in financial fraud.

In an order last month, justice G Jayachandran said, "Under the guise of investigation, an order freezing the entire account without quantifying the amount and period cannot be passed. Such an order will be construed as a violation of the fundamental rights of trade and business as well as a violation of livelihood. Therefore, it is appropriate to direct HDFC Bank Ltd to de-freeze the account and kept a lien over a sum of Rs2.50 lakh. The petitioner herein is permitted to operate his account, subject to the condition that he shall ensure the account shall always have a minimum of Rs2.50 lakh."

"Many a times, the account holders have been taken into surprise that by such order of freezing, before they could realise as to why and for what purpose the accounts are frozen, enough damages are caused to their day to day financial life, since the very lifeline of the business gets severed by such unilateral orders of account freezing passed by the police," the bench observed.

Mohammed Saifullah, who is suspected of dealing with cryptocurrency, had filed a writ petition under Article 226 of the Constitution of India to de-freeze his HDFC Bank account and release the entire amount of Rs9.69 lakh in the account.

Though the intimation from the cybercrime bureau of Telangana indicated that the suspected money in the account of Mr Saifullah is only Rs2,48,835, due to the blanket order to freeze the account, HDFC Bank froze the account in its entirety. Therefore, Mr Saifullah could not operate his account or deal with the money in it.

The HC observed that even after a lapse of more than a year, neither the investigating agency nor the Bank informed Mr Saifullah why the account is frozen and how long the account would be kept under freeze.

"No doubt, the statutes empower the investigation agency to request the bank to freeze the account pending investigation and intimate it forthwith to the jurisdiction court, but whether the power is properly exercised or not is the moot question now looming large and in the several judgments of the courts across India, it had been categorically held that there cannot be freezing of account perpetually without intimating the account holders what for their account is froze and what extent it has to be frozen," the bench noted.

(Writ Petition No25631 of 2024 Date: 10 September 2024)

Comments

User

care.kanara

3 months ago

Police will not issue NOC even for innocent people even after submission of proofs, unless their personal motives are fulfilled.
They are using these to block the accounts and make innocent people to come to them for NOC and make good benefit out of it.
This has become a big source in recent times for such officers
As per this decision, some duration should be fixed for investigation for the police. It can't be indefinite.
Govt should do something to stop this harassment from police, and implement some duration for the officers for investigation and make them accountable

alexliu.lovesu

Replied to care.kanara comment 4 weeks ago

Totally agree with this. Police and cyber cell people are using this power for their own benefit. They will not listen to you until you pay a handful to them. They don't care about you even if you are ready to provide all the evidence. This has happened to me twice.
Even the advocates are involved with the officers to scam innocent people asking for huge sum of money to solve their cases.