Rudra Pratap Singh vs. The Union Of INDIA

Held

The Court held that the principles laid down in the 'Malcolm Murayis' and 'Archana' judgments would apply mutatis mutandis to the present case. The Court directed that the disputed amount, as claimed by the petitioner, shall be kept in a Fixed Deposit (FD). The petitioner's bank account shall be unfrozen, and he shall be permitted to operate it. If any other complaint is received by the bank regarding other entries, the bank can take appropriate action in accordance with law, keeping in mind the SOP. The disputed amount in FD shall be liquidated only after orders are passed by the competent Judicial Magistrate within three months. If the police agency fails to proceed in accordance with law within this period, the amount in FD may be withdrawn by the petitioner under intimation to the police agency. The ratio decidendi is that bank accounts should not be frozen mechanically, and a clear procedure, including a grievance redressal mechanism and distinction between disputed and undisputed funds, must be followed, adhering to the SOP.

Facts

The petitioner, Rudra Pratap Singh, filed a writ petition seeking to de-freeze his savings bank account with Punjab & Sind Bank, Ratlam. The account was frozen based on an intimation from cyber cell police stations alleging involvement in cyber fraud. The petitioner argued that he was not notified and was lawfully conducting his business, suggesting a third party might have transacted through his account. He relied on previous High Court judgments, specifically 'Malcolm Murayis & Ors. Vs. State Bank of India and Others' and 'Archana Vs. The State of Madhya Pradesh and Others', which dealt with similar issues of frozen bank accounts due to cyber crime allegations and the subsequent framing of a Standard Operating Procedure (SOP) by the Government.

Key Issues

1. Whether the petitioner's bank account, frozen due to alleged involvement in cyber fraud, should be de-frozen or allowed to be operated, considering the lack of prior notice and the petitioner's claim of lawful business operations? (Question of law and mixed fact and law, concerning principles of natural justice and due process). Petitioner's arguments: The petitioner contended that his bank account was frozen without any notice to him, and he was engaged in lawful trading. He argued that the freezing was arbitrary and relied on the principles laid down in the 'Malcolm Murayis' and 'Archana' judgments, which emphasized a structured grievance redressal mechanism and the need to distinguish between disputed and undisputed funds. Revenue/State's arguments: The judgment does not explicitly record arguments from the revenue or state. However, the context implies that the freezing was done at the behest of cyber crime agencies, and the banks acted on their instructions. The judgment references the SOP framed by the Ministry of Home Affairs, indicating a procedural framework for such matters.