Bank Can't Freeze Entire Account Over Small Suspicious Transaction Without Applying Mind: Delhi High Court
The Delhi High Court has held that a bank cannot impose a blanket freeze on a person's entire bank account over an allegedly suspicious transaction involving a meagre amount without complying with the principles of natural justice and applying its mind to the matter.Justice Jasmeet Singh made the observation while allowing a petition filed by a woman, Rukmani Singh, seeking the unfreezing of...
The Delhi High Court has held that a bank cannot impose a blanket freeze on a person's entire bank account over an allegedly suspicious transaction involving a meagre amount without complying with the principles of natural justice and applying its mind to the matter.
Justice Jasmeet Singh made the observation while allowing a petition filed by a woman, Rukmani Singh, seeking the unfreezing of her savings bank account maintained with Punjab National Bank.
The Court directed the bank to permit Singh to operate her account, subject to maintaining a lien on the disputed amount of Rs. 2,650.
The account was frozen pursuant to restrictions arising from complaints registered on the cybercrime portal and requisitions from police jurisdictions in Maharashtra, Telangana and Karnataka. The account was frozen without issuing any prior notice to her.
Noting that the disputed amount was Rs. 2,650, the Court observed that a lien had been placed on the petitioner's entire bank account.
“I am of the view that the freezing of the account is an action entailing serious consequences creating hardships for the petitioner and the same will result in inconvenience to the petitioner,” the Court said.
It further observed that the bank could not be permitted to take such harsh measures without complying with the principles of natural justice and applying its mind.
It added that a blanket freeze over the account for an allegedly suspicious entry involving a meagre amount could lead to irreparable loss and injury to the petitioner, which could not be compensated in monetary terms.
Finding that the prima facie case and balance of convenience favoured Singh, the Court directed that she be allowed to operate her bank account while the bank retained a lien on Ra. 2,650.
The Court also clarified that she could avail herself of the remedies available under the applicable Standard Operating Procedure (SOP) to seek unfreezing of the disputed amount.