Delhi High Court Criticizes Indiscriminate Account Freezing, Urges Policy Formation

Key Takeaways

Need for policy on account freezing.
Emphasis on compassion in enforcement actions.
Judicial caution against blanket measures.
Alternative measures like liens suggested.
Impact on small vendors highlighted.

New Delhi, Feb 27 (NationPress) Emphasizing the necessity of balancing the rights of a complainant against those of an innocent bank account holder, the Delhi High Court has warned enforcement agencies regarding the indiscriminate freezing of accounts and urged the Central government to formulate a policy addressing such issues.

Justice Manoj Jain urged enforcement agencies to proceed with caution, care, and empathy in instances necessitating the freezing of bank accounts, highlighting the potential hardships it may inflict on innocent account holders.

The court requested the Union Ministry of Home Affairs to develop a consistent policy, standard operating procedures, and guidelines to ensure that these cases are managed with sensitivity.

This ruling was made during a case where enforcement agencies froze a company's bank account over a questionable transaction of Rs 200.

Justice Jain remarked, "Such indiscriminate actions, taken without justification, can severely disrupt the financial stability of account holders."

He emphasized, "It is imperative that investigating and law enforcement agencies exercise necessary caution, care, and compassion when dealing with the freezing of bank accounts."

Instead of outright freezing, the court suggested that authorities consider placing a lien on the contested amount to alleviate the undue burden on account holders while safeguarding the disputed funds.

The court pointed out, "In cases of cyber-crime, if a fraudster deceives a complainant and uses the stolen funds to make purchases, the police often respond by freezing the accounts of all involved, unfairly impacting many innocent individuals."

While acknowledging that enforcement agencies have the authority to recommend account freezes, the court specified that they must provide justifiable reasons for such actions.

The court warned that blanket measures like this can create significant challenges for small vendors, threaten their livelihoods, lead to the dishonoring of numerous cheques issued by the business, and disrupt overall operations.