Police Cannot Order Freezing Of Bank Account Without Quantifying Amount Involved In Financial Fraud, Violates Right To Trade: Madras HC

The Madras High Court has recently ruled that the investigating agency cannot order freezing the entire bank account of a person involved in a financial fraud without quantifying the amount involved in the fraud. Justice G Jayachandran ruled that such orders freezing the entire amount would be construed as a violation of the fundamental right of trade and business as well as a violation of livelihood. The court added that though the statute empowers investigation agencies to request banks to freeze accounts, it was a looming question whether this power was being exercised properly. “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 the India, it had been categorically held that there cannot be freezing of account perpectually without intimating the account holders what for their account is freezed and what extent it has to be freezed,” the court observed. The court added that the freezing of accounts was an issue faced by many citizens of the country and the citizens were often taken by surprise by orders of freezing their accounts. The court added that in many cases, by the time the account holders come to know of the purpose for which their accounts are frozen, enough damage would have been caused to their financial life since their business itself gets affected by the unilateral orders. “The issue by many of the citizens currently face is the freezing of the account on instruction from the local Police or from the National Cyber Crime Reporting Portal. Many a times, the account holders have been taken into surprise that by such order of freezing, before they could realize as to why and for what purpose the accounts are freezed, enough damages are caused to their day to day financial life, since the very life[1]line of the business gets severed by such unilateral orders of account freezing passed by the Police,” the court observed. The court was hearing a petition filed by Mohammed Saifulla seeking directions to the Branch Manager of HDFC Bank to de-freeze his account. Saifulla was suspected of dealing with cryptocurrency and the case was under investigation by the Cyber Crime Bureau of Cyberabad, Telangana. The court was informed that the bank was instructed to freeze Saifulla's account as around Rs. 2,48,835, which was suspected money involved in the subject matter of the crime was in the account. Thus, as per the instructions received from the National Cyber Crime Reporting Portal and the notice from the Telangana Cyber Crime Bureau, the bank had frozen the account. The court noted that Saifulla's account had Rs. 9,69,580 as balance and even after a lapse of more than a year neither the investigating agency nor the bank had informed Saifulla why his account was frozen and for how long it was to be kept frozen. The court noted that though only Rs. 2,48,835 was alleged to be involved in the crime, since the entire account was frozen, Saifulla was unable to operate his account and deal with the money lying in his account. Thus, the court thought it fit to direct the bank to de-freeze the account and keep a lien over a sum of Rs. 2,50,000. Counsel for the Petitioner: Mr.Kably Taiyab Khan Counsel for the Respondents: Mr.S.Udayakumar Government Advocate, Mr.C.Mohan for M/s.King & Patridge Citation: 2024 LiveLaw (Mad) 349 Case Title: Mohammed Saifullah v Reserve Bank of India and Others Case No: W.P.No.25631 of 2024Click here to read/download the judgment

Police Cannot Order Freezing Of Bank Account Without Quantifying Amount Involved In Financial Fraud, Violates Right To Trade: Madras HC

Upasana Sajeev

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