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When bank accounts are freezed due to some transactions from third party, what are the rights of the account holder ?
There are certain instances in which the bank accounts of innocent persons are freezed for the reason that their account received money from other accounts and those accounts are listed for illegal money transactions or fraudulent money was transferred through that account. The bank authorities are some times reluctant to defreeze the account after keeping the disputed amount as lien. The High Court of Kerala had issued directives in this regard.
The basic principle of
Natural Justice i.e. “audi alteram partem” cannot be violated by freezing the account without any notice.
When the account holder express his willingness to provide lien for the suspected amount, the authorities
ought to have de-freeze the account on the basis of such lien. The continued freezing of the account is
against the principles of law and violation of Article 19(1)g of the
Constitution of India.
The High Court of Kerala issued certain directions in Dr Sajeer
V. Reserve Bank of India on similar issues.
Paragraph
No.12 of the directions issued in Dr.Sajeer v. Reserve Bank of India [ 2023 KHC
OnLine 661] is extracted hereunder;
“12. In fact, should the criminal enquiry
found otherwise, it will be doubtful if the amounts in question could be even
recovered from the petitioners, if they have received it as part of bonafide or
other valid transactions, unaware of it being proceeds of crime.
In the conspectus of the above, I order these
Writ Petitions with the following directions:
a. The respondent Banks arrayed in these cases,
are directed to confine the order of freeze against the accounts of the
respective petitioners, only to the extent of the amounts mentioned in the order/requisition
issued to them by the Police Authorities. This shall be done forthwith, so as
to enable the petitioners to deal with their accounts, and transact therein,
beyond that limit.
b. The respondent – Police Authorities concerned
are hereby directed to inform the respective Banks as to whether freezing of
accounts of the petitioners in these Writ Petitions will require to be
continued even in the afore manner; and if so, for what further time, within a
period of eight months from the date of receipt of a copy of this judgment.
c. On the Banks receiving the afore information/intimation
from the Police Authorities, they will adhere with it and complete necessary action
– either continuing the freeze for such period as mentioned therein; or
withdrawing it, as the case may be.
d. If, however, no information or intimation
is received by their Banks in terms of directions (b) above, the petitioners or
such among them, will be at full liberty to approach this Court again; for
which purpose, all their contentions in these Writ Petitions are left open and
reserved to them, to impel in future.”
The Honourable High Court again issued certain directions
in WPC No.21570/2024 on
10/07/2024 Nazeer K.T vs The Manager and Another , in addition to the
directions in Dr.Sajeer (supra).
(i)
The Police officer concerned shall inform the
banks whether the seizure of the bank account has been reported to the
jurisdictional Magistrate and if not, the time limit within which the seizure
will be reported. If no intimation as to the compliance or the proposal to
comply with the Section 102 is informed to bank within one month of receipt of
a copy of the judgment, the bank shall lift the debit freeze imposed on the petitioner's account.
(ii)
In order to enable the police to comply with
the above direction, the bank as well as the petitioner shall forthwith serve a
copy of this judgment to the officer concerned and retain proof of such
service.
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