Confusion Over Account-Freezing Rulings

Banks are in a fix over the recent ruling of the Bombay High Court which, for the first time, granted two petitions seeking to debar the police from freezing bank accounts of accused persons. The banks dilemma has been further confounded as various courts in the country have been coming out with different rulings regarding the issue of whether or not the police have the power to freeze accounts.

The problem has arisen because the decision taken by the police to freeze accounts of petitioners had been challenged in the Bombay High Court. The bank accounts were frozen under section 102 of the Code for Criminal Procedure. As per Section 102(1) Cr. P. C., Any police officer may seize any property which may be alleged or suspected to have been stolen or which may be found under circumstances which create suspicion of the commission of any offence.

 

However, there is no consensus as to the meaning of the word property in the section. Not all courts rule that the word property includes bank accounts.

This leaves banks in an awkward position. If the bank does not freeze accounts of an accused in a criminal case, the police may proceed against the bank. At the same time, if the bank does freeze the account, then they will be liable for damage by the party, particularly, if the decision to freeze is challenged in a court of law. This has led to confusion among banks, particularly nationalised banks, which will be unable to follow a uniform policy for branches spread across several states. We will be unable to issue a circular to the various branches if the rulings in different states differ, said a bank official. Since the judgement varies in different states, the bank will be in a fix as to which ruling to follow for an accused in one state having an account in another state. As of now, most banks will continue to interpret the word `property as inclusive of bank accounts.

As per the Bombay High Court ruling passed last week, an officer investigating a criminal case does not have the right to freeze the bank account of an accused.

However, another judgement by the Andhra Pradesh High Court issued a few months ago held that Once it is suspected by the police that property is involved or suspected to be involved, they have the power to

seize it. There is little doubt that money in the bank account of an account holder is his property. He has control over it in the sense that he can withdraw the same at any time.

The High Courts of Allahabad, Karnataka, Guwahati and Delhi, in similar cases, have ruled that the accounts of the accused cannot be frozen. However, the High Court of Madras held that bank account is property capable of being seized under Section 102 Cr.P.C.