A bank cannot freeze an entire account for suspicious transactions; it must only withhold the specific amount under suspicion and allow the account holder to operate the remaining balance to avoid financial hardship.

Order On Board

1. By way of this petition, the petitioner has challenged the action of respondent No. 2 – State Bank of India, Branch Kodatarai, District Raigarh (C.G.), whereby the savings/salary account of the petitioner bearing Account No. 37962266689 has been frozen without issuance of any prior notice and without assigning any reasons.

2. Facts of the case, in brief, are that the petitioner is presently serving as a trainee Forest Officer. The petitioner is maintaining a savings/salary account with respondent No. 2, in which his salary is credited. It is the case of the petitioner that suddenly his bank account was frozen without any prior intimation. Upon inquiry, it was orally informed that certain transactions related to online gaming were treated as suspicious/unlawful, leading to such action. The petitioner submits that no FIR or criminal proceedings have been initiated against him and despite repeated representations, no action has been taken by the bank authorities to defreeze the account. Due to freezing of the account, the petitioner is facing severe financial hardship as his salary is also being credited in the said account.

3. Following reliefs have been prayed by way of this petition:-

“10.1 That, this Hon'ble Court may kindly be pleased to call for the entire records in relates to the case of the petitioner from the possession of respondents for its kind perusal.

10.2 That, this Hon'ble Court may kindly be pleased to direct the respondent no.2 i.e. State Bank of India, Through its Branch Manager, State Bank of India Branch Kodatarai, District Raigarh (C.G.) to consider and take appropriate steps to unfreezing of the petitioner's account bearing account number 37962266689 (State Bank of India Branch Kodatarai, District Raigarh) within a period of 15 days.

10.3 That, this Hon'ble Court may kindly be pleased to grant any other relief/relief's in favour of the petitioners, which the Hon'ble Court deemed fit & just in the facts and circumstances of the case, including awarding of the costs to the petitioner.”

4. Learned counsel for the petitioner submits that the action of freezing the account without notice is arbitrary, violative of principles of natural justice, and without authority of law. It is further submitted that in absence of any criminal proceedings or cogent material, the entire account could not have been frozen.

5. Per contra, learned counsel for the respondents, while justifying the action, submits that the account was frozen due to suspicious transactions; however, fairly submits that the bank is concerned only with safeguarding the amount under suspicion.

6. During the course of hearing, learned counsel for the parties fairly agree to a workable arrangement that the amount which is under suspicion may be withheld by the respondent bank, and so far as the remaining amount in the account is concerned, the petitioner may be permitted to operate the same.

7. Considering the submissions advanced by learned counsel for the parties, and particularly in view of the consent arrived at between them, this Court finds it appropriate to dispose of the present petition with the following directions:

(i) The respondent No. 2 – State Bank of India is directed to identify and withhold only such amount which is under suspicion in connection with the alleged transactions.

(ii) The remaining amount in the petitioner’s account shall be released, and the petitioner shall be permitted to freely operate his bank account for all lawful purposes, including withdrawal of salary and day-to-day transactions.

(iii) The responden