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2025 Supreme(Online)(KAR) 5117
HIGH COURT OF KARNATAKA
MR JUSTICE M.NAGAPRASANNA, J
AXIS BANK LTD – Appellant
Versus
THE STATE OF KARNATAKA – Respondent
CRL.P 1070 of 2025
The court emphasized the necessity of providing a financial institution an opportunity to be heard before orders to defreeze accounts and transfer funds are issued, ensuring adherence to due process.
Headnote:(A) Code of Criminal Procedure, 1973 - Sections 451 and 457 - Financial institution challenges orders directing defreezing of accounts and transfer of funds to complainants - Court emphasizes the necessity of hearing the petitioner before passing such orders. (Paras 3, 4, 7, 8)
(B) Judicial procedure - The court reiterates that multiple orders affecting the same accounts necessitate a consolidated hearing to avoid contempt and ensure fair process. (Paras 3, 7)
Facts of the case:
The petitioner, a financial institution, contested orders from various magistrates directing the defreezing of accounts belonging to accused individuals, arguing that these orders were issued without providing an opportunity for the bank to be heard.
Findings of Court:
The court set aside the impugned orders and remanded the matters back to the magistrates for reconsideration, ensuring the petitioner is heard.
Issues: The main issues included whether the bank should have been given an opportunity to present its objections before the orders to defreeze accounts were made.
Ratio Decidendi: The court held that due process requires that the bank be afforded a hearing before any orders affecting its interests are made, particularly in light of multiple conflicting orders.
Result: Criminal Petition is allowed.
ORAL ORDER
The petitioner in this case is again Axis Bank.
2. Heard Sri Unnikrishnan M., learned counsel for the petitioner and Sri. B.N. Jagadeesha, learned Additional State Public Prosecutor appearing for respondent No.1.
3. Learned counsel appearing for the petitioner submits that in all identical cases coordinate benches have allowed the petitions and remitted the matter back to the office of the learned Magistrate to permit the petitioner to file his objections with liberty to appear and then consider applications filed under Sections 451 and 457 of Code of Criminal Procedure , 1973.
4. I deem it appropriate to quote the orders so passed in Crl.P.No.1787/2023 dated 14.12.2023:
"ORDER
The Petitioner which is a Financial Institution is before this Court challenging the order passed by 1st Additional Chief Metropolitan Magistrate on an application filed under Sections 451 and 457 of Cr.P.C. by the complainant/respondent No.2 directing the petitioner-Bank to defreeze the amount belonging to the accused and transfer the said amount to the bank account of the complainants/respondent No.2.
2. The petitioner’s concern is that the order passed by the Jurisdictional Magistrate cannot be executed because it surpasses the specified release amount, and numerous courts across the Country have issued directives to the investigating agencies to unfreeze the bank accounts of the accused therein.
3. Learned Special Public Prosecutor on instructions would suggest that the matter may be remanded to the Jurisdictional Courts to consider the application filed under Sections 451 and 457 of Cr.P.C. afresh, by affording an opportunity of hearing to the petitioner.
4. Admittedly, multiple cases are registered against the accused herein within the State and across the country and there are multiple orders passed by the Jurisdictional Magistrates directing the petitioner to unfreeze the account of the accused and transfer the amount to the bank account of the complainants. The passing of multiple orders has caused difficulty to the petitioner/bank in executing the said order, since the amount ordered to be released in some accounts exceeds the amount available in the subject accounts of the accused. Therefore, the learned Magistrate before passing an order directing the petitioner to unfreeze and transfer the amount to the accounts of the complainants, is required to hear the petitioner. Accordingly, I pass the following:
ORDER
i. Criminal Petition is allowed.
ii. The order dated 26.11.2021 passed by the 1st Additional Chief Metropolitan Magistrate, Bengaluru in Cr.No.452/2021 is hereby set aside.
iii. Matter is remanded to 1st Additional Chief Metropolitan Magistrate, Bengaluru to reconsider the application filed under Sections 451 and 457 of Cr.P.C. afresh, after giving the opportunity of hearing to the petitioner.
iv. Till the application is disposed of, the petitioner/bank is restrained from releasing the money in favour of any person from the subject account."
In Crl.P.No.13487/2023 c/w. Crl.P.Nos. 10201/2023, 12091/2023, 13483/2023, 13489/2023, 13611/2023, 13627/2023, 13940/2023, 13955/2023, 98/2024, 128/2024, 356/2024, 357/2024 dated 12.02.2024:
"7. Having heard the arguments of both side, perused the records. The Trial Courts have passed the impugned orders in these cases for de-freezing the accounts of the customers and releasing the amounts, without giving opportunity of hearing to the petitioner - Bank.
If the orders of the Magistrate are not complied with, it amounts to violation of court order and they face contempt. Therefore, before de- freezing the accounts, it is necessary for the Trial Court to give opportunity to the petitioner of being heard in the matter and then pass appropriate orders since some of the customers do not have any amounts in their accounts and some of the customers are having lesser amount or zero balance. Hence, it is necessary for this Court to set aside the impugned orders with liberty to the petitioner to approach the
