Ms Aurosis Enterprises vs. The Branch Manager, State Bank Of INDIA

Facts

The petitioner, Aurosis Enterprises, a proprietorship concern, filed a writ petition seeking to de-freeze its current account held with the respondent, State Bank of India. On December 19, 2024, the DGGI, Pune Zonal Unit, issued a communication provisionally attaching the petitioner's account due to six distinct hold entries aggregating to Rs. 30,77,859/-. These holds were recorded by the respondent Bank on different dates for various stated reasons. The petitioner contended that the entire account was frozen, causing extreme hardship. The disputed amount was stated to be Rs. 30,77,859/-.

Held

The Court held that the freezing of an account is an action with serious consequences, causing extreme hardship and inconvenience, especially when it is a business account. The Court found the impugned action of account freezing to be disproportionate and an arbitrary exercise of power, striking a blow at the fundamental rights of the petitioner. It was deemed to be without due application of mind, as an indiscriminate blanket freeze was imposed for an allegedly suspicious entry of a disputed amount. Consequently, the Court allowed the petition and directed the de-freezing of the petitioner's account, subject to a lien on the amount of Rs. 30,77,859/-. The petitioner's counsel stated they would initiate action under the Standard Operating Procedure for defreezing the amount, and thus did not press the petition further.

Key Issues

1. Whether the freezing of the petitioner's entire current account for an aggregated amount of Rs. 30,77,859/-, based on six distinct hold entries, was a disproportionate and arbitrary exercise of power by the respondent Bank, violating the petitioner's fundamental rights? The petitioner argued that the blanket freezing of the business account was an arbitrary and disproportionate action, causing extreme hardship and inconvenience, and was done without due application of mind. The petitioner sought an order directing the respondent to de-freeze the account, subject only to the identified holds/liens aggregating to Rs. 30,77,859/-. The respondent, represented by its counsel, accepted notice and stated that the disputed amount was Rs. 30,77,859/-, but the entire account had been frozen.