Bank account frozen without granting an opportunity of hearing is deemed illegal
Madhya Pradesh High Court Rules Against Arbitrary Freezing of Bank Accounts. Court Orders Immediate Unfreezing of Wondar Salvage India’s Account, Mandates Fixed Deposits for Disputed Amounts
In a significant ruling, the Madhya Pradesh High Court has directed the unfreezing of the bank account belonging to Wondar Salvage India Private Limited, deeming the previous action taken by authorities without a hearing as illegal and arbitrary. The order, issued by Justice Pranay Verma, comes in response to a writ petition filed by the company under Article 226 of the Constitution of India.
The petitioner, represented by Advocate Jayesh Gurnani, challenged the freezing order dated August 16, 2024, issued by the State of Madhya Pradesh, arguing that it was executed without granting the company an opportunity for a hearing. The court recognized the parallels between this case and the precedent set in Malcolm Murayis v. State Bank of India, where similar reliefs were granted.
Justice Verma ordered the respondents to unfreeze the account immediately. He further instructed that any disputed amounts be placed in fixed deposits, to be liquidated only upon the orders of a competent Judicial Magistrate within three months. Should the authorities fail to comply within the stipulated timeframe, the petitioner is permitted to withdraw the amounts under intimation to the concerned police agency.
The judgment underscores the importance of due process in administrative actions affecting financial accounts, especially when linked to alleged cyber crimes. This decision aims to balance the enforcement of laws against cyber fraud with the protection of lawful business operations from arbitrary disruptions.
Advocate Raghav Shrivastava, representing the State, acknowledged the court's directives and emphasized compliance by the authorities involved.
Bottom Line:
Bank account frozen by authorities without granting an opportunity of hearing to the account holder is deemed illegal and arbitrary. Relief granted to unfreeze the account with provisions for disputed amounts to be kept in fixed deposits.
Statutory provision(s): Constitution of India, Article 226, Section 102 of Cr.P.C., Bharatiya Nagarik Suraksha Sanhita (BNSS)
