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2024 Supreme(Online)(MAD) 27469
HIGH COURT OF MADRAS
Dr.Justice G.Jayachandran, J
MOHAMMED SAIFULLAH – Appellant
Versus
RESERVE BANK OF INDIA – Respondent
W.P.No.25631 of 2024
Mr.Kably Taiyab Khan, Mr.S.Udayakumar Government Advocate (Crl. Side), Mr.C.Mohan for M/s.King & Patridge
Freezing bank accounts without notifying account holders violates fundamental rights and must be justified by the investigating agency.
Headnote:(A) Code of Criminal Procedure, 1973 - Section 102 - Banking Regulation Act, 1949 - Section 106 - Freezing of bank accounts - The court addressed the issue of freezing accounts by police without proper notification to account holders, emphasizing that such actions must not violate fundamental rights and must be justified. (Paras 2, 4, 8)
(B) Fundamental Rights - The court highlighted that freezing an account without quantifying the amount or duration constitutes a violation of the fundamental rights of trade and business. (Paras 8)
Facts of the case:
The petitioner, suspected of dealing with cryptocurrency, had their bank account frozen by the Cyber Crime Bureau without notification or justification for over a year. (Paras 3, 4)
Findings of Court:
The court directed the bank to de-freeze the account while maintaining a lien on a specified amount, allowing the petitioner to operate the account. (Paras 8)
Issues: The main issues included whether the freezing of the account was justified and the lack of communication to the account holder regarding the freezing. (Paras 2, 4)
Ratio Decidendi: The court ruled that freezing an account without proper notification and justification violates fundamental rights and cannot be done arbitrarily. (Paras 8)
Result: Writ Petition disposed of with directions to de-freeze the account.
Certainly. Based on the provided legal document, here are the key points summarized:
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The court emphasized that freezing bank accounts without notifying the account holders infringes on fundamental rights and such actions must be properly justified by the investigating authorities (!) .
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While statutes empower investigation agencies to request account freezing during investigations, the exercise of this power must adhere to principles of fairness, including timely notification to the account holder about the freezing and its extent (!) .
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The case involved a petitioner suspected of dealing with cryptocurrency, whose account was frozen without prior notice or justification for over a year, causing significant disruption to their financial and business activities (!) (!) .
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The court underscored that freezing an account without quantifying the amount involved or specifying the duration violates the fundamental rights related to trade and livelihood (!) .
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The court directed the bank to de-freeze the account while maintaining a lien on a specified amount, allowing the petitioner to operate the account with a minimum balance condition (!) .
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It was highlighted that blanket freezing of entire accounts without proper justification and notification is unlawful and infringes on fundamental rights, and such actions should be limited to the extent necessary (!) .
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The court noted that guidelines issued to regulate account freezing are often not observed in practice, leading to arbitrary actions (!) .
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The decision emphasizes that any order to freeze an account must be specific, quantify the amount involved, and specify the duration, failing which it constitutes a violation of rights (!) .
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The court disposed of the petition with directions to de-freeze the account while imposing a lien on a minimal amount, ensuring the petitioner can operate the account under specified conditions (!) .
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There shall be no order as to costs (!) .
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ORDER
The issue by many of the citizens currently face is the freezing of the account on instruction from the local Police or from the National Cyber Crime Reporting Portal. Many a times, the account holders have been taken into surprise that by such order of freezing, before they could realize as to why and for what purpose the accounts are freezed, enough damages are caused to their day to day financial life, since the very life- line of the business gets severed by such unilateral orders of account freezing passed by the Police.
2. No doubt, the statutes empower the investigation agency to request the Bank to freeze the account pending investigation and intimate it forthwith to the jurisdiction Court, but whether the power is properly exercised or not is the moot question now looming large and in the several judgments of the Courts across the India, it had been categorically held that there cannot be freezing of account perpectually without intimating the account holders what for their account is freezed and what extent it has to be freezed. Even then, day in and day out, this Court receives applications to defreeze the account pointing out the failure of the investigating agency not only to the account holders, even to the jurisdictional Court not intimating about the freezing of the account as per Section 102 of Cr.P.C . equivalent to 106 of BNSS Act.
3. This is a case where the petitioner who is suspected to be dealing with cryptocurrency, the case is under investigation by the Cyber Crime Bureau of Cyberabad, Telangana, registered on 16.05.2023. The fifth respondent Bank has been instructed to freeze the account of the petitioner herein. The communication received by the Bank indicates that around Rs.2,48,835/- is the suspected money involved in the subject matter of the crime under investigation. Meticulously, in reference to the instructions received from National Cyber Crime Reporting Portal and the notice from the Telugana Cyber Crime Bureau, the fifth respondent has freezed the account.
4. In the said account of the petitioner a sum of Rs.9,69,580/- stands as balance. Even after lapse of more than a year neither the Investigating Agency nor the Bank had informed the petitioner as to why the account is freezed and how long the account will be kept under freeze. In the said circumstances, the petitioner is before this Court seeking for Mandamus to release the entire amount in his account by ordering de-freezing of the account.
5. When similar issues came up for consideration in Crl. OP No.10569 of 2021 vide order dated 18.06.2021, the learned Judge of his Court, directed the Commissioner of Police, Vepery, Greater Chennai, to give necessary instructions and directions to his personnel in conducting investigation in cases were freezing of account is required and ensure that there is no colourable exercise of power. Accordingly, the Commissioner of Police, Greater Chennai, Vepery, vide Circular Memorandum dated 24.06.2021, has issued a directional instructions to all the Deputy Commissioners of Police in District and CCB, CWC to ensure that there is no deviation of the instructions. It is appropriate to reproduce the circular.
6. Unfortunately, in most of the cases the guidelines issued in this Circular not observed. Later when an identical issue came up for consideration before this Court in WP No.13509 of 2024 considering the dictum laid down by the Hon’ble Supreme Court in M.T.Enrica Lexie and another –vs- Doramma and others reported in MANU/SC/0409/2012 , Teesta Atul Setalvad and others –vs- The State of Gujarat and others, reported in (2018) 2 SCC 372 and Shento Varghese –vs- Julfikar Husen and others , reported in 2024 SCC Online SC 895 , directed the petitioner/account holder to execute a bond undertaking to deposit the amount in case the money found in his account is a tainted money and liable to be forfeited.
7. As far as the present case in hand, though the intimation from the Cyber Crime Bureau, Telangana, in
