Equivalent value attachment under money laundering law upheld where received funds were treated as proceeds of crime and prior-acquired property could...
A bank cannot freeze a customer's account on its own initiative merely because transactions appear inconsistent with declared income. The Court held that, absent a complaint, criminal proceeding, recovery action, competent authority order, or lawful lien, the bank had no legal foundation to assume an investigative role or deny operation of the current account. It further held that the Prevention of Money Laundering Act and RBI suspicious transaction reporting instructions do not authorise freezing the entire account; at most, the statute contemplates action by the competent authority under the statutory scheme. The freezing was therefore arbitrary, violated natural justice and the right to carry on business and livelihood, and the account was directed to be de-frozen forthwith.
A bank cannot freeze a customer's account on its own initiative merely because transactions appear inconsistent with declared income. The Court held that, absent a complaint, criminal proceeding, recovery action, competent authority order, or lawful lien, the bank had no legal foundation to assume an investigative role or deny operation of the current account. It further held that the Prevention of Money Laundering Act and RBI suspicious transaction reporting instructions do not authorise freezing the entire account; at most, the statute contemplates action by the competent authority under the statutory scheme. The freezing was therefore arbitrary, violated natural justice and the right to carry on business and livelihood, and the account was directed to be de-frozen forthwith.
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
of 4792
Join Channel
TaxTMI 
