S R Trading vs. Dcb Bank

Held

The Court held that the decisions in Malcolm Murayis (supra) and Archana (supra) were applicable to the present case. The Court directed that the disputed amount of Rs. 4,01,934.14/- be kept in Fixed Deposit (FD). The petitioner's bank account was to be unfrozen, allowing them to operate it. If further 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. The disputed amount in FD would be liquidated only after orders from the competent Judicial Magistrate within three months. If the police agency failed to proceed in accordance with law within this period, the amount in FD could be withdrawn by the petitioner, with intimation to the police agency. The ratio decidendi is that bank accounts frozen on mere intimation from cyber cells without following due process and providing an opportunity to the account holder should be unfrozen, with disputed amounts secured pending investigation, and adherence to the SOP is paramount.

Facts

The petitioner, S R Trading, filed a writ petition seeking to unfreeze its current bank account held with DCB Bank. The account was frozen based on an intimation from cyber cell police stations alleging involvement in cyber fraud. The petitioner contended that they were unaware of any such involvement and were lawfully conducting their business. They relied on previous High Court judgments in similar cases, specifically Malcolm Murayis & Ors. Vs. State Bank of India and Others, which dealt with the freezing of bank accounts on the intimation of cyber cells without proper notice to the account holders. The judgment also referenced a Standard Operating Procedure (SOP) for grievance redressal in cyber crime cases involving frozen bank accounts.

Key Issues

1. Whether the freezing of the petitioner's bank account by the respondent authorities, based solely on intimation from cyber cells without providing the petitioner with notice or an opportunity to be heard, is legally sustainable? (Question of law, turning on principles of natural justice and potentially Section 102 of Cr.P.C.). Petitioner's arguments: The petitioner argued that their bank account was frozen without any prior notice or opportunity to respond, violating principles of natural justice. They contended that their business was lawful and that any fraudulent transaction might have occurred through their account by a third party. They relied on the judgment in Malcolm Murayis & Ors. Vs. State Bank of India and Others, which directed the unfreezing of accounts under similar circumstances. Revenue/State's arguments: The judgment records that the respondent banks stated they froze the accounts only upon instructions from various cyber cell police stations and were bound by those instructions. No specific arguments were recorded for the police authorities.