Failure To Inform Jurisdictional Magistrate About Direction To Freeze/Seize Bank Account Can Invalidate It's Freezing: Kerala High Court

The court further referred to the Supreme Court's decision Shento Varghese v Julfikar Husen and Others (2024), where the apex court had held that the seizure would not be vitiated due to delay in reporting to the Magistrate.

Referring to the Supreme Court's discussion on the expression "forthwith", the High Court said that it was not open for any person to contend that the delay in complying with Section 102 Cr.P.C would vitiate the seizure as such; however it gives rise to the ancillary question on the impact of non compliance of Section 102(3) by the failure on the part of the police officer concerned to report the seizure of bank account to the jurisdictional Magistrate. 

"In my opinion, this question has to be addressed in the light of Article 300A of the Constitution of India, which stipulates that no person shall be deprived of his property except by authority of law. The authority of law in the cases under consideration is conferred by Section 102 Cr.P.C. Therefore, abject violation of the procedure prescribed therein will definitely effect the validity of the seizure," the court underscored. 

The petitioner had approached the High Court aggrieved by the sudden freezing of his bank account based on the intimation received from police. The police gave this direction based on certain Cyber Crime Incident Reports were filed by persons who were allegedly subjected to online financial fraud.

Court's earlier directions on freezing of bank account

The high court also took note of the court's decision in Dr. Sajeer v Reserve Bank of India (2023), wherein the high court had considered a batch of pleas by persons who were aggrieved of having their bank accounts frozen due to a person/persons with whom they had no acquaintance, transferring certain amounts to the formers' accounts using the UPI platform, as part of a cyber financial crime.

The accounts of the petitioners therein, who mostly comprised of retailers and small businessmen, were frozen pursuant to the advisory issued by the competent Investigating and Police Authorities.

The High Court had while deciding the matter directed that the freezing shall be restricted to the extent of the amount mentioned in the order issued to them by the police and only to the petitioners therein. The high court also asked the police to inform the banks whether continued freezing of the account is required, and if required for what further time. The high court further said that the Bank shall adhere with the intimation received and if no such intimation is received by the Bank within 8 months, the parties can approach the high court again.

Police to inform bank whether seizure/freezing of bank account was reported to Magistrate

Taking note of these directions, Justice Arun said that it shall apply in the present matter. The High Court further directed the police to inform the bank whether the seizure of the bank account has been reported to the jurisdictional Magistrate and if not, the time limit within which the seizure will be reported. 

"If no intimation as to the compliance or the proposal to comply with the Section 102 is informed to bank within one month of receipt of a copy of the judgment, the bank shall lift the debit freeze imposed on the petitioner's account. In order to enable the police to comply with the above direction, the bank as well as the petitioner shall forthwith serve a copy of this judgment to the officer concerned and retain proof of such service," Justice Arun directed. 

Counsel for the Petitioner: Advocates Abdul Hadi M. P., Shakeeb C.

Counsel for the Respondent: Adv. Mohan Jacob George

Case No: WP(C) 21570/ 2024

Case Title: Nazeer K. T. v The Manager Federal Bank and Another

Citation: 2024 LiveLaw (Ker) 544