Banks cannot freeze accounts solely on suspicion without compliance with statutory guidelines and requisitions from law enforcement, as it infringes property rights under Article 300A.

JUDGMENT :

M.A. Abdul Hakhim, J.

1. Since common questions arise in these Writ Petitions, I dispose of these Writ Petitions by a common judgment. A crucial and important question arises in these Writ Petitions as to whether the Bank has the right or authority to freeze the account of its Account Holders on the basis of suspicion with respect to the transactions in the account by itself in the absence of any requisition to do so from a law enforcement agency. This question has emerged on account of the recent rampant increase in financial cyber fraud. The present situation has led to the filing of a large number of cases involving the account freezing of persons involved in the fraud and innocent persons in this Court. Every day this Court is dealing with nearly 200 cases. It is observed that a large number of transactions involving Crores of Rupees over a short period are present in several accounts belonging to young persons and persons from the lower strata of society. In such cases, it is clear that the accounts are used either for financial cyber fraud or for money mules. It is a challenging task for this Court to determine whether the Petitioner is an offender or a victim. This Court also considers the pattern of transactions to identify the offender and the victim while exercising its discretion under Article 226 of the Constitution of India to give relief to the Petitioners. Should the Bank remain a silent spectator when there are reasons to believe that its Account Holders have been using the accounts for illegal purposes is the question to be answered in these Writ Petitions.

2. The Petitioners in these Writ Petitions are Account Holders of two branches of the South Indian Bank Ltd.

3. The Petitioner in W.P.(C) No.32291/2024 was served with Ext.P1 Message dated nil, intimating that his account has been put under debit freeze on account of unusual transactions observed not matching with his declared profile and requesting to contact the Branch for further details. The account of this Petitioner is having a credit balance of Rs.20,00,380/-. The Petitioner claims that he is a non-resident Indian residing in the UAE and he has been conducting business therein for more than 20 years.

4. The Petitioner in W.P.(C) No.32516/2024 was served with Ext.P1 Intimation dated 16.08.2024 by the Bank informing him that the operation in his account is temporarily restricted since the transactions therein is not in line with the declared income as well as the profile of the customer and requesting him to justify the transactions in the account by submitting the source of income and to update the details in case the declared profile is wrong. The account of this Petitioner is having a credit balance of Rs.34,00,804/-. The Petitioner claims that he has been conducting business.

5. It is the case of the Petitioners that the transactions in the accounts of the Petitioners and the source of amounts therein were well explained to the Bank by submitting an Explanation, and in spite of that, the Bank did not lift the debit freeze. The Petitioners also represented to the General Manager, Reserve Bank of India (RBI) to interfere with the matter, but he did not respond.

6. These Writ Petitions are filed on 10.09.2024 and 11.09.2024. Even now, the Petitioners are unable to operate their accounts. Admittedly, no requisition has been received by the Bank from any of the law-enforcing agencies or Courts to freeze the operations of the accounts of the Petitioners to date.

7. The Bank has filed Counter Affidavits in b