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2023 Supreme(Del) 961
IN THE HIGH COURT OF DELHI AT NEW DELHI
Purushaindra Kumar Kaurav, J.
Shri Raghuveer Jewellers Private Limited Through Its Ar Sh. Tanuj Soni Regd. Office: L-92, Lalji Shopping Complex, Shop No. 1, Munirka Market New Delhi-110067 – Appellant
Versus
Reserve Bank of India – Respondent
W.P.(C) 9476 of 2021
Decided On : 20-03-2023
Mr.Vijay Kumar, Mr.Ashiwini Gahlot and Mr.Himanshu Singh, Advocates, for the Petitioner.
Mr.Rajiv Kapur, Mr.Akshit Kapur and Mr.Harsh Narwal, Advocates, for the SBI.
Mr.Yugantar Singh Chauhan, Advocate, for the Respondent-3.
Mr.Anubhav Gupta, Panel Counsel (Civil), GNCTD and Mr.Varun Garg, Advocates, for the Respondent-4.
SI Amar Singh, P.S.Kishangarh.
The main legal point established in the judgment is that banks must exercise their powers in accordance with the legal framework provided by the Banking Regulation Act, 1949, and any decision to freeze customer accounts must be supported by valid legal grounds.
Headnote:
Freeze - Bank Account - [Section 3, Section 4, Section 5 of the Banking Regulation Act, 1949] - The court discussed the provisions of the Banking Regulation Act, 1949, particularly Sections 3, 4, and 5, which govern the powers and functions of banks and their dealings with customer accounts. The court emphasized that the bank's decision to freeze the account was found to be without jurisdiction and not supported by any legal basis, leading to the direction to release the frozen funds to the petitioner.
Fact of the Case:
The petitioner sought directions to release the funds frozen by HDFC Bank, which were transferred from State Bank of India to the petitioner's account for the purchase of gold ornaments, following a complaint from another party.
Finding of the Court:
The court found that the decision of HDFC Bank to freeze the account was illegal, improper, and without jurisdiction, as there was no legal basis for the freeze and no action taken by the complainant to seek reversal or recovery of the amount.
Issues: The issues revolved around the legality and jurisdiction of HDFC Bank's decision to freeze the account based on a complaint, the absence of any action by the complainant to address the grievance, and the lack of material or justification for the freeze.
Ratio Decidendi: The court held that the freeze was without jurisdiction and set it aside, directing HDFC Bank to allow access to the frozen amount to the petitioner.
Final Decision: The petition was disposed of, and HDFC Bank was directed to release the frozen funds to the petitioner.
JUDGMENT
Purushaindra Kumar Kaurav, J. (Oral)--This petition filed under Article 226 of the Constitution of India is directed against the respondents seeking directions to release/unfreeze the funds freezed/held by respondent No.3/HDFC Bank.
2. Learned counsel appearing on behalf of the petitioner states that in August, 2020 respondent No.5 had purchased gold ornaments vide invoices amounting to Rs.4,88,851.35 and Rs.4,37,000.16. The payment of the said ornaments was made by respondent No.5 from her account being maintained with State Bank of India (SBI) through IMPS and RTGS transactions.
3. Learned counsel appearing on behalf of the petitioner states that the petitioner received an email dated 19.12.2020 from the officials of respondent No.3/HDFC Bank, wherein, respondent No.3/HDFC Bank mentioned that they had received the email from officials of respondent No.2/SBI, informing them that respondent No.5 had lodged a complaint disputing the said transactions and therefore, respondent No.3/HDFC Bank decided to freeze funds of Rs.8,25,000/- in the petitioner's account.
4. Learned counsel appearing on behalf of the petitioner further states that the decision of the respondent No.3/HDFC Bank to freeze the account of the petitioner to the tune of Rs.8,25,000/- is without any jurisdiction and the same is not supported by any Rules or Regulations. According to him, there is neither any decision by any of the Competent Authority nor directions issued by the RBI to freeze the account of the petitioner to the aforesaid extent. He, therefore, states that once the transaction was already allowed to be operated, the same ought not to have been undone in a manner unknown to law.
5. Learned counsel appearing on behalf of the respondent No.2/SBI states that they had received a complaint from respondent No.5 and on the basis of the said complaint, the email was sent to respondent No.3/HDFC Bank i.e. the bank of the petitioner.
6. Learned counsel appearing on behalf of the respondent No.3/HDFC Bank while placing reliance on his affidavit states that the amount of Rs.8,25,000/- has been freezed/held by the said respondent based on the intimation given by respondent No.2/SBI vide email dated 16.11.2020. In paragraph Nos.3 to 6, following averments have been made by respondent No.3/HDFC Bank:
"3. That I state that the Petitioner has maintaining a bank account bearing No. 50200025033421 in the name of "Raghuveer Jewellers Private Limited" with Respondent N o.3 Bank. It is humbly submitted on behalf of the Respondent N o.3 that the amount of Rs.8,25,000/- (Rupees Eight Lakhs Twenty Five Thousand Only) has been freezed/hold by the Respondent N o.3 based upon the intimation given by Respondent No.2 vide email dated 16.11.2020 from SBI, Region-3, Delhi Admin Office-1 wherein the Respondent No.3 was informed that Respondent No.5 has lodged a criminal complaint dated 19.10.2020 at Shahdra Police Station, Delhi against the transactions/transfer of Rs.3,88,000/7 (Rupees Three Lakhs Eighty Eight Thousand Only) and Rs.4,37,000/- (Four Lakhs Thirty Seven Thousand Only) done on 20.08.2020 and 29.08.2020 respectively to the Bank Account of Petitioner maintained by the respondent No.3. A copy of the Email dated 16.11.2020 by Respondent No.2 - State Bank of India is annexed here and marked as ANNEXURE-R3/1 Copy of the Criminal Complaint dated 19.10.2020 at Shahdra Police Station, Delhi is annexed here and marked as ANNEXURE-R3/2
4. That vide Reply dated 16.06.2021, the Respondent No.3 Bank in response to Legal Notice dated 07.06.2021 issued by the Petitioner's counsel (already annexed with the Writ Petition filed by the Petitioner as Annexure P-8) apprised the Petitioner that on receipt of request from Respondent No.2, the Respondent No.3 Bank hold/freeze the funds of the account in question to safeguard the interest of the parties and will release the amount only after having appropriate directions from competent Court of Law/Statutory Authority. A copy of the
