Published on: October 19, 2023 at 17:41 IST
The Kerala High Court recently issued a directive to banks regarding the freezing of bank accounts in cases involving the transfer of money via the UPI platform as part of cyber financial crimes. The directive is aimed at limiting the freezing orders to the exact amount mentioned in the requisitions issued by the police authorities.
Background of the Case
The court considered a series of pleas by individuals whose bank accounts were frozen due to funds being transferred to their accounts through UPI by unknown individuals, as part of cyber financial crimes. Most of the affected individuals were retailers and small business owners.
Court’s Observations and Ruling
The court questioned why entire bank accounts were frozen when the requisitions clearly stated the suspected amount to be credited to the accounts. The court noted that unless the investigation establishes the account holders’ complicity in the cybercrime, they should not be considered as accused.
The affected petitioners highlighted the severe economic and personal impact of having their accounts frozen and sought safeguards to restore trust in the UPI system.
While acknowledging that the court couldn’t intervene during ongoing investigations, it recognized the need for safeguards for transactions through the UPI platform.
The court directed banks to freeze accounts only up to the mentioned amount in requisitions and requested the police authorities to inform banks whether the freezing needed to be continued. Banks were instructed to adhere to police instructions, and if no information was provided, the affected individuals could approach the court again.
This ruling aims to strike a balance between preventing cyber financial crimes and ensuring that innocent account holders are not unduly affected by freezing their entire accounts.
Case Title: Dr. Sajeer v. Reserve Bank of India & Anr. and other connected matters