Karnataka High Court ruled banks can't impose full account freeze when investigators ask only partial freeze for specific amount. This came after Bengaluru resident Madhu's account was completely frozen by IndusInd Bank,though authorities only targeted ₹25,000.
Two freeze orders involved: ₹15,000 from Gujarat's Cyber Crime Police and ₹10,000 from West Bengal's Barrackpore Police. IndusInd Bank froze entire account anyway,blocking access to all funds beyond specified amounts .
“The power to freeze exercised by the bank is not an independent power,”the court stated,stressing banks are just custodians,not free agents. They must follow lawful orders from authorities. Bank's authority? Limited to terms in those orders .
IndusInd Bank defended by saying more freeze orders might come from other agencies . Court wasn't buying it. “A possibility or apprehension of a future event cannot be equated with a lawful order,” it said. “Administrative convenience or anticipatory action cannot substitute a valid legal mandate.”
Court acknowledged banks must be cautious,but emphasized balancing investigation needs with account holder rights. Ruling directed IndusInd Bank to limit freeze on Madhu’s account to ₹25,000,granting access to rest unless new freeze requests arise. What next for banks…?
