HC Declines to De-Freeze Account Amid Fraud Allegations

The petitioner, Kayast Infotech Private Limited, approached the High Court seeking directions to de-freeze its bank account maintained with Canara Bank, Ludhiana. The company claimed it was a duly registered entity under the Registrar of Companies and GST authorities, receiving payments through digital platforms like Google Pay, and argued that there was no justification for freezing its account.

The respondent-bank opposed the petition, submitting that the petitioner’s account reflected numerous suspicious transactions. It was contended that investigations by police authorities in Gujarat and other States indicated that fraudulent funds were routed through the petitioner’s account as part of a multi-layered financial arrangement typically used by fraudsters to siphon money across accounts.

Issue Before Court: Whether the High Court should exercise writ jurisdiction to direct de-freezing of a bank account when serious allegations of fraudulent and suspicious transactions are under investigation.

HC Decided: The High Court declined to exercise its writ jurisdiction in favour of the petitioner, noting that the allegations against the company were serious and involved suspicious financial transactions across multiple jurisdictions. The Court observed that the petitioner had failed to provide a satisfactory explanation for the questionable entries in its account.

In view of the gravity of the allegations and ongoing investigations, the Court held that no interference was warranted at this stage. However, it granted liberty to the petitioner to approach the respondent-bank and furnish a proper explanation regarding the source and nature of the suspicious transactions. The bank was directed to consider such explanation and proceed in accordance with law. Therefore, the writ petitions were disposed of without granting relief for de-freezing the account.

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