Royal Air Conditioning Throug Proprietor Lakhan Singh vs. Axis Bank

Held

The Court held that the decisions in "Malcolm Murayis" and "Archana" were applicable mutatis mutandis to the present case. Following these precedents, the Court directed that the disputed amount of Rs. 10,000/- in the petitioner's account be kept in a Fixed Deposit (FD). The Court further stipulated that if any other complaints were received by the bank regarding other entries, the bank could take appropriate action in accordance with law, keeping in mind the SOP issued by the Government as discussed in "Archana". The disputed amount in FD would be allowed to be liquidated only after orders were passed by the competent Judicial Magistrate within three months. If no such orders were passed within this period, the amount in FD could be withdrawn by the petitioner under intimation to the police agency. Crucially, the Court directed that the petitioner's bank account shall be unfrozen, and the petitioner be permitted to operate the account.

Facts

The petitioner, Royal Air Conditioning, through its proprietor Lakhan Singh, filed a writ petition under Article 226 of the Constitution of India seeking the removal of an alleged illegal and arbitrary freeze imposed on its Axis Bank account (Account No. 922020036561668). The petitioner contended that the freeze was imposed without lawful authority or order. The petitioner argued that its case was covered by previous High Court decisions in "Malcolm Murayis & Ors. Vs. State Bank of India and Others" and "Archana Vs. The State of Madhya Pradesh and Others". These prior judgments dealt with similar issues of bank accounts being frozen based on cyber crime allegations, often without proper notice to the account holder and without adhering to established procedures.

Key Issues

1. Whether the freeze imposed on the petitioner's bank account by the respondent bank is illegal and arbitrary, warranting intervention under Article 226 of the Constitution of India? The petitioner argued that the freeze was imposed without lawful authority or order, and that their case is squarely covered by the High Court's previous decisions in "Malcolm Murayis" and "Archana". These precedents established that bank accounts should not be frozen mechanically, and that proper procedures, including adherence to the Standard Operating Procedure (SOP) for grievance redressal in cyber crime cases, must be followed. The petitioner relied on these judgments to assert their right to operate their bank account. The respondents (Axis Bank and others) did not explicitly present arguments in the provided text. However, the judgment notes that in "Malcolm Murayis", the respondent banks submitted that they had frozen accounts only upon instructions from cyber cell police stations and were bound by such directives. The "Archana" judgment discusses the SOP framed by the Government for banks and the roles of various agencies in the grievance redressal mechanism.