Bank Account Cannot Be Frozen Merely Upon Communication From Another Bank: Uttarakhand High Court
The Uttarakhand High Court has held that a bank account cannot be frozen merely on the basis of a communication received from another bank alleging an erroneous transfer of funds. The Court observed that, in the absence of an order passed by a competent Magistrate or any competent investigating authority, a bank has no authority in law to freeze a customer's account, and such action...
The Uttarakhand High Court has held that a bank account cannot be frozen merely on the basis of a communication received from another bank alleging an erroneous transfer of funds. The Court observed that, in the absence of an order passed by a competent Magistrate or any competent investigating authority, a bank has no authority in law to freeze a customer's account, and such action is unsustainable.
Justice Alok Mahra was hearing a criminal writ petition seeking de-freezing of the petitioner's account maintained with Kotak Mahindra Bank, Haridwar. The petitioner contended that his account had been frozen after Kotak Mahindra Bank received a communication from Yes Bank stating that ₹44 lakh had been erroneously transferred to his account. It was argued that the freezing of the account was illegal since there was no order of a competent Magistrate.
During the hearing, counsel appearing for Kotak Mahindra Bank fairly admitted that the petitioner's account had been frozen solely on the basis of a communication received from Yes Bank informing it that ₹44 lakh had been wrongly transferred to the petitioner's account.
The Court found that no criminal case had been registered against the petitioner and that the bank itself did not claim the existence of any order passed by a competent Magistrate or investigating authority directing freezing of the account. Holding that a bank could not unilaterally freeze an account merely on another bank's communication, the Court concluded that such action could not be sustained in law.
“… no criminal case has been registered against the petitioner. It is also not the case of the respondent no. 4/Bank that any order passed by the competent Magistrate or any competent investigating authority directing freezing of the petitioner's account exists. In the absence of any such order, the action of respondent no. 4/Bank in freezing the petitioner's account cannot be sustained in the eyes of law,” the Court observed.
Accordingly, the Court directed Kotak Mahindra Bank, Shivalik Nagar Branch, Haridwar, to forthwith de-freeze the petitioner's account and permit its normal operation, provided there was no other legal impediment.
Case Title: Munnavar v. State of Uttarakhand [Criminal Writ Petition No. 1192 of 2026]