Bengaluru: A bank has no power to expand the freezing of funds in an account beyond limits stipulated in official directions, the Karnataka high court has ruled.It said in its recent order that whenever a freezing direction specifies a particular amount, the bank must permit the operation of the remaining balance in the account, unless the direction itself requires complete freezing of the account.Justice Suraj Govindaraj made the observation while allowing a petition filed by Bengaluru resident Madhu.The private sector employee approached the court challenging the action of IndusInd Bank’s Kothanur branch in putting his bank account under freeze based on two communications — one issued by cybercrime police of Mehsana, Gujarat, for Rs 15,000 and another received from Barrackpore police station in West Bengal for Rs 10,000.According to him, the communications instructed the bank authorities to keep only Rs 25,000 amount under freeze.The bank, however, defended its action by stating that it proceeded to freeze the entire account of the petitioner apprehending the possibility of further such directions.Justice Suraj Govindaraj noted that the authority exercised by the bank in the case is not an independent power.The bank acts merely as a custodian of the account and is required to implement the directions lawfully issued by the competent investigating authorities. Its authority is therefore circumscribed by the terms of the directions received by it, the judge added.“A bank, while acting upon a communication issued by an investigating agency, performs a limited and ministerial function. The bank is neither the investigating authority nor the adjudicatory authority. Its obligation is confined to faithfully implementing the directions lawfully issued by the competent authority. In the process of implementing such directions, the bank cannot assume unto itself powers that have not been conferred upon it by law, nor can it enlarge the scope of the directions received on the basis of its own assumptions, apprehensions or administrative considerations,” the judge added.“Amounts lying in a customer’s account remain the property of the account holder, subject only to restrictions imposed by authorities. Any restriction on the operation of a bank account has serious civil consequences,” he said.Freezing of an account may affect the account holder’s ability to meet day-to-day expenses, honour contractual obligations, conduct business transactions, discharge statutory liabilities and otherwise access funds lawfully belonging to him. It is therefore incumbent upon banks to ensure that any freezing action undertaken by them is strictly in accordance with the directions received and does not travel beyond the scope thereof,” the judge noted.The apprehension expressed by the bank that additional freezing directions may be received in the future cannot furnish a legal basis for freezing funds beyond the amount covered by the existing directions, Justice Govindaraj observed while directing the bank to keep the freeze to Rs 25,000 in the petitioner’s account.However, liberty is reserved to the bank to further freeze the petitioner’s account if any communication is received from the competent authority requesting such an action.
