Court directs immediate defreezing of Sanjiv Kumar Dalmia’s account, emphasizing need for due diligence, evidence, and procedural fairness before restricting bank accounts.
In a significant judgment dated September 10, 2026, the Calcutta High Court, presided over by Justice Krishna Rao, delivered a strong verdict against the State Bank of India (SBI) for partially freezing the bank account of petitioner Sanjiv Kumar Dalmia without adequate evidence or due process. The case arose when SBI froze a portion of Dalmia’s current account at the Chetla Central Board Branch, Kolkata, alleging the account’s involvement as a suspected “money mule” account—a term used for accounts exploited by criminals to launder proceeds of fraud.
The petitioner, who operates a sole proprietorship named "Sanjeev Vyapaar," was shocked when his account was partially blocked on March 19, 2026, without any prior notice or explanation. Despite repeated requests and legal notices, the bank failed to provide reasons for the freeze or allow normal operations. The bank later disclosed the freeze was due to suspicions raised by its Proactive Risk Management Cell in Patna, citing discrepancies between Dalmia’s declared business activities and actual transactions.
During bank investigations, officials conducted physical verification of the petitioner’s office and godown, finding that the nature of his business did not align with the trade licenses and GST registrations submitted. The bank also claimed that an amount of Rs. 10,00,000 credited to the account was disputed, having allegedly been transferred erroneously by a third party, Ninja Ferro Tec Private Limited.
However, the court highlighted critical procedural lapses on the bank’s part. It noted that SBI had not filed a Suspicious Transaction Report (STR) with the Financial Intelligence Unit (FIU-IND) before freezing the account, as mandated by the Reserve Bank of India’s (RBI) Master Direction DBR.AML.BC. No.81/14.01.001/2015-16 (dated February 25, 2016), which governs operation of bank accounts and identification of money mule accounts. Moreover, the bank failed to serve any notice or conduct a meaningful inquiry prior to freezing the account, violating principles of natural justice.
Justice Krishna Rao observed that the bank had not collected any concrete evidence to prove the account was used for laundering illicit funds. The discrepancy in business activity alone was insufficient to justify the freeze. Furthermore, the court reprimanded the bank for not verifying the disputed Rs. 10 lakh transfer with the petitioner before taking coercive action.
Consequently, the court directed SBI to immediately defreeze the account, restoring the petitioner’s ability to operate it. However, the disputed sum of Rs. 10,00,000 would be kept in lien pending a fair hearing involving both the petitioner and Ninja Ferro Tec Private Limited. The bank was instructed to resolve the issue within six weeks, ensuring procedural fairness and adherence to statutory norms.
This judgment reinforces the legal principle that banks cannot impose restrictions on accounts arbitrarily or without due process, even in the face of suspected fraudulent activity. It underscores the requirement for banks to follow RBI guidelines strictly, file necessary reports, and provide affected account holders with notice and opportunity to respond. The ruling is expected to have wide implications for banking operations and customer rights in India.
Bottom Line:
Bank accounts cannot be frozen without due diligence, evidence, or providing notice to the account holder. Banks must justify their actions and follow prescribed procedures before restricting operations of an account.
Statutory provision(s):
Reserve Bank of India Master Direction DBR.AML.BC. No.81/14.01.001/2015-16 (dated 25.02.2016), principles of natural justice
Sanjiv Kumar. Dalmia v. State Bank of India, (Calcutta) : Law Finder Doc Id # 2975732
