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'Why Freeze Entire Bank Account Of Traders Just Because Unknown Cyber Criminals Paid Them Through UPI?' Kerala High Court
Navya Benny
19 Oct 2023 4:00 PM IST
The Kerala High Court recently directed Banks to limit the freezing orders issued in respect of persons into whose accounts amounts had been transferred via UPI platform as part of a cyber financial crime, to the amount involved in the crime as mentioned in the order/requisition issued by the Police Authorities. The Single Judge Bench of Justice Devan Ramachandran could not fathom why the...
The Kerala High Court recently directed Banks to limit the freezing orders issued in respect of persons into whose accounts amounts had been transferred via UPI platform as part of a cyber financial crime, to the amount involved in the crime as mentioned in the order/requisition issued by the Police Authorities.
The Single Judge Bench of Justice Devan Ramachandran could not fathom why the entire bank accounts of the petitioners had to be frozen when the requisitions mention the exact amount suspected to have been credited to their accounts.
The Court in this case was considering 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.
It is noted that the accounts of the petitioners, who mostly comprised of retailers and small businessmen, were frozen pursuant to the advisory issued by the competent Investigating and Police Authorities.
"...when the requisitions in these cases – by various Police Authorities in several States of India – mention the exact amount suspected to have been credited to the accounts of the petitioners herein, one fails to fathom why their bank accounts in full, should remain frozen. This is more so because, even when the sums in question may have found credit in the accounts of the petitioners, unless the investigation eventually reveals that they were complicit in the Cyber Crime, or had received the same being aware of it, they could never be construed to be accused. In fact, should the criminal enquiry found otherwise, it will be doubtful if the amounts in question could be even recovered from the petitioners, if they have received it as part of bonafide or other valid transactions, unaware of it being proceeds of crime," the Bench observed.
The petitioners were aggrieved by the 'incalculable loss' and the 'unspeakable prejudice' that was being faced by them, due to their accounts being rendered unavailable for operation. They averred that transactions had allegedly been made by some unknown person(s) vide the UPI platform, as part of small trading or payment against services bonafide rendered, including in restaurants and retail shops.
The petitioners asserted that the trust of the business community in the 'UPI' system had been severely shaken due to the freezing of their accounts, and thereby sought the assistance of the Court for the issuance of adequate safeguards in this regard.
The Court was told by the Central Government Counsel Dayasindhu Sreehari that it is for the concerned Police Authorities to inform as to whether investigations were still ongoing in the matter.
Although the Court was of the view that it could not intervene at a juncture when investigation into the various Cyber Crimes in the case was still underway, it still considered it necessary to infuse certain safeguards in transactions through UPI platform.
"I am fully cognizant that this is not the stage for this Court to intervene in the manner, as has been pleaded by the petitioners because, the investigation into the various Cyber Crimes - which are the genesis of the orders impugned in these cases - are still underway. However, the petitioners, who, prima facie, are all ordinary law abiding citizens, have little capacity to track or follow the cases, which has lead them to the present situation; or even to obtain its present status because, the requisitions to the Various Banks have been made by the Police Stations in other States – some very far off. They assert that their entire accounts are frozen, thus incapacitating their businesses and affecting their daily lives, solely because a person or persons – with whom they had no previous acquaintance - happened to transfer money from his/their account to theirs, using the 'UPI' platform, as part of bona fide business transaction – often against payment of small bills qua retail sale, restaurant food sale etc. They assert that most of them are retailers and small businessmen, who trusted the 'UPI' regime of fiscal transactions for its convenience and safety; but has now been rudely shaken," the Court reasoned.
It also emphasized the importance to have certain specific safeguards in place for the Unified Payment Interface (UPI) platform, lest people loose their faith in the system, which has come to be recognized internationally as a 'vanguard initiative of India'.
It thereby directed the concerned Banks to confine the order of freeze against the accounts of the respective petitioners, only to the extent of the amounts mentioned in the order/requisition issued to them by the Police Authorities, so as to enable the petitioners to carry out transactions beyond that limit.
The police authorities were also directed to inform the respective Banks as to whether freezing of accounts of the petitioners would be required to be continued in the afore manner.
The Banks were directed to adhere to such instructions, as received from the Police authorities, and to either continue the freezing of the accounts or withdraw the same. The Court added that if no such information or intimation was forthcoming to the Banks by the police, the petitioners would be at liberty to approach the Court again in the matter.
The plea was thus disposed.
Citation: 2023 LiveLaw (Ker) 578
Case Title: Dr. Sajeer v. Reserve Bank of India & Anr. and other connected matters
Case Number: WP(C) NO. 12960 OF 2023
