Freezing of bank account - Must be limited to the extent of the amount mentioned in the requisition by Police

Kerala High Court Protects Bank Account Rights Amid Police Seizure Requisition. Landmark Judgment Ensures Account Freeze Limited to Police Requisition Amounts, Upholds Bharatiya Nagarik Suraksha Sanhita, 2023

In a significant ruling, the Kerala High Court, presided by Justice M.A. Abdul Hakhim, addressed the legality surrounding debit freezing and lien of bank accounts initiated by police requisitions. The case involved petitioner Muhammed Musthafa Cheruvai against Esaf Small Finance Bank, where the petitioner challenged the freezing of his bank account, asserting that he was not accused in the related police investigation and the freeze violated statutory provisions.

The court examined the requisition made by police authorities for freezing Cheruvai's account, despite him not being implicated in the crime. The court held that such actions were in violation of Sections 106 and 107 of the Bharatiya Nagarik Suraksha Sanhita, 2023, alongside Article 300A of the Indian Constitution, which guarantees protection against deprivation of property except by authority of law.

Justice Hakhim directed banks to confine account freezes to the amount specified in police requisitions. This decision mandates that banks must act based on compliance information from police authorities within a defined timeframe, failing which the freeze must be lifted. The judgment emphasizes the importance of reporting seizures to jurisdictional magistrates, ensuring accountability and adherence to legal protocols.

Furthermore, the court clarified that its directions would not hinder banks from responding to future police requisitions, while preserving the petitioner's right to contest such actions. The judgment aligns with previous rulings in similar cases, reinforcing a consistent legal approach to bank account seizure issues.

This ruling underscores the judiciary's role in balancing law enforcement needs with individual property rights, setting a precedent for handling bank account seizures across India.

Bottom Line:

Banking Law - Debit freezing/lien of bank account - Directions issued to confine the freeze/lien to the extent of the amount mentioned in the requisition by Police Authorities. Banks directed to act based on compliance information from Police Authorities within stipulated time, failing which freeze/lien to be lifted.

Statutory provision(s): Bharatiya Nagarik Suraksha Sanhita, 2023 Sections 106 & 107, Article 300A of the Constitution of India

Muhammed Musthafa Cheruvai v. Esaf Small Finance Bank, (Kerala) : Law Finder Doc Id # 2811869