Now Reading: Allahabad HC fines bank Rs 50,000 for freezing businessman’s account
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Allahabad HC fines bank Rs 50,000 for freezing businessman’s account
The Allahabad High Court has ordered a bank to pay Rs 50,000 in compensation for freezing a businessman's account after he received Rs 23 lakh via RTGS on January 16, 2026. The…
The Allahabad High Court has ordered a bank to pay Rs 50,000 in compensation for freezing a businessman's account after he received Rs 23 lakh via RTGS on January 16, 2026. The bank had frozen the account citing a mismatch between the deposit amount and the customer's declared annual income of Rs 5.76 lakh at the time of account opening.
The court's Lucknow bench ruled that the bank acted arbitrarily and cannot assume the role of investigative agencies. It noted the freeze was not based on any cybercrime alert or direction from authorities like the police, ED, or CBI, but solely on the bank's own assessment. The court warned that such practices are becoming common and can disrupt business activities and economic stability.
The bank had claimed it acted under the Prevention of Money Laundering Act, but the court rejected this justification. It directed the bank to pay the compensation within four weeks.
Indian Opinion Analysis
The ruling reinforces that banks cannot independently freeze accounts under PMLA without a directive from a competent authority. This matters because thousands of account holders face similar freezes annually, often without recourse. The next step is for the bank to comply with the four-week deadline or face contempt proceedings.
Source: livemint.com
This story was synthesised by AI from the source linked above.
