Court rules freezing of account without due process as a violation of natural justice.
In a significant ruling, the Andhra Pradesh High Court has ordered the defreezing of the bank account belonging to Sri Sai Wines, a licensed wine trader. The order came after the account was frozen by the State Bank of India at the behest of the Cyber Cell without prior notice or due process, which the court deemed contrary to the principles of natural justice.
The case, presided over by Justice Ravi Cheemalapati, involved Sri Sai Wines, which operates under the registered name M/s Sri Sai Wines in Guntur District. The petitioner's bank account was suddenly frozen on August 19, 2025, following an instruction from the Cyber Cell in Patna District, Bihar, due to a cheating case against an individual who had made a UPI payment to the petitioner.
Counsel for the petitioner, Chetan Ponnuru, argued that the account was frozen without any notice or speaking order, leaving the petitioner unable to access Rs. 8,26,633/- needed for business operations. The counsel emphasized that the transaction in question was a routine UPI payment for a liquor purchase, and that the petitioner was not involved in any criminal activity associated with the freezing order.
The court noted that in today's digital economy, transactions through UPI are commonplace and that vendors cannot be expected to verify each buyer's credentials before accepting payments. Justice Cheemalapati highlighted the unsustainable and unlawful nature of freezing accounts without evidence of the account holder's involvement in criminal activities.
In his judgment, Justice Cheemalapati directed the respondent bank to immediately defreeze the account, allowing the petitioner to resume normal business operations. The writ petition was dismissed against the Station House Officer of Bariarpur Police Station due to lack of pursuit.
This ruling underscores the importance of following due process and respecting the rights of individuals and businesses in the digital age, particularly in matters involving financial transactions and banking operations.
Bottom line:-
Freezing of a bank account without notice or following due process of law is unsustainable and contrary to principles of natural justice, especially in cases where the account holder is not involved in the criminal activity leading to the freezing.
Statutory provision(s): Principles of natural justice, Banking Law, Due process of law.
Sri Sai Wines v. Union of India, (Andhra Pradesh) : Law Finder Doc id # 2935752
