(Per : HONOURABLE MR.JUSTICE JAYANT PATEL) Amendment granted.
The present application is for review of the order dated 14.3.2012 passed by this Court in Criminal Misc. Application No.1136 of 2012.
As such, after giving opportunity to the applicant - bank for filing affidavit, the matter was heard and thereafter the order came to be passed. If the application is considered in light of the provisions of Code of Criminal Procedure, the review application is not maintainable.
Even if the contention raised in the application for recalling or reviewing of the order, read with the submissions made by Mr.Kamal Trivedi, learned Sr. Counsel appearing with Mr.Desai, learned Counsel, is to be considered, it was declared during the course of hearing that the applicant has no objection for the directions issued vide Paragraphs No.12(1), 12(2), 12(4) and 12(5), but the only ground raised was for review or recalling of the direction issued at paragraph No.12(3), whereby this Court observed that such account cannot be freezed nor the facility available of the cheque book or ATM can be stopped by the Bank.
It was submitted that freezing of the bank account is less prejudicial to the Account Holder in comparison to the closure of the account and, therefore, it was submitted that when the closure of the account is made permissible by Reserve Bank of India (RBI), the power should be read of the Bank to freeze the account and the facility available of the cheque book or ATM. It was also submitted by the learned Counsel for the applicant Bank that the other Banks, who are implementing KYC are issuing such circulars of freezing of the accounts and the facility of cheque book and ATM and, therefore, if other banks are adopting the practice and the applicant bank is not permitted to adopt such practice, it would adversely affect the competitive business of banking and, therefore, it was submitted that the notice be issued to RBI and thereafter appropriate directions may be issued by this Court and, therefore, it was submitted that on such ground, the order be recalled and reviewed for such purpose.
In order to have the ready reference, we may state that as per the order dated 14.3.2012, passed in Criminal Misc. Application No.1136 of 2012, vide paragraph 12, following directions were issued:-
"12. In view of the aforesaid observations and discussions, we find that following aspects are required for the implementation of the KYC scheme by the State Bank of India
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For production of the documents required for KYC, personal presence of the account holder is not a must. If such documents are submitted by duly authorised representative of the account holder, the Bank is required to accept the same.
The documents to be supplied for compliance of KYC can be certified true copy either by a notary public or a gazetted officer or any competent authority who has power to certify any document as true copy. It is only in the exceptional cases where the Bank has a doubt about the genuineness of the true copy supplied, the insistence for the original document shall be made and at that stage also, it may not be required for the account holder to remain personally present but such original document for the purpose of verification can also be produced by the authorised representative of the account holder.
If the documents of KYC are not supplied by the account holder, such account cannot be freezed nor the facility available of the cheque book or ATM can be stopped by the Bank.
However, if the requisite documents of KYC are not supplied as per the RBI instructions/guidelines or the circular issued by SBI to all its branches, the account can be closed, but such closure of the account shall be by the competent authority of a higher level as per the RBI instructions and that too after due notice to the account holder that in spite of intimation and repeated efforts the documents are not supplied.
In the case of the convict or under trial prisoner who are in jail and having bank account, they shall be at the liberty to submit the documents in the manner as provided hereinabove. However, in a given case, if the Bank by way of exception is desirous to get the documents certified as true copy by the jail authorities and if such intimation is given by the Bank to the convict, or under trial prisoner, the jail authority shall cooperate the production of the requisite document by way of certification of the document or otherwise so as to enable the convict or under trial prisoner, to continue to operate the account through cheque book facility or ATM facility in accordance with law."
Since the prayer made for recalling of the other directions are not pressed, except 12(3), it may not be necessary for this Court to further consider the said aspects. However, so far as the directions at paragraph 12(3) are concerned, we may record that the learned Counsel for the applicant has not been able to show any instructions issued by the RBI authorizing the Bank to freeze the account or to freeze the cheque book or ATM facility or to stop the cheque book and ATM facility, until the documents of KYC are not supplied.
The attempt was made by the learned Counsel to rely upon the instructions/guidelines of RBI circulated to all the Banks vide letter dated July 1, 2011 vide paragraph 2.8(ii) that it has been so stated that no further transactions will be permitted until the full KYC procedure is completed. In order to appreciate the contention, the guidelines under the heads of Accounts with Introduction is reproduced as under:-
"2.8 Accounts with introduction
(i) Although flexibility in the requirements of documents of identity and proof of address has been provided in the above mentioned KYC guidelines, it has been observed that a large number of persons, especially, those belonging to low income group both in urban and rural areas are not able to produce such documents to satisfy the bank about their identity and address. This would lead to their inability to access the banking services and result in their financial exclusion. Accordingly, the KYC procedure also provides for opening accounts for those persons who intend to keep balances not exceeding Rupees Fifty Thousand (Rs.50,000/-) in all their accounts taken together is not expected to exceed Rupees One Lakh (Rs.1,00,000/-) in a year. In such cases, if a person who wants to open an account and is not able to produce documents mentioned in Annex I of this mater circular, banks should open an account for him, subject to:
Introduction from another account holder who has been subjected to full KYC procedure. The introducer's account with the bank should be at least six months old and should show satisfactory transactions. Photograph of the customer who proposes to open the account and also his address need to be certified by the introducer, Or any other evidence as to the identity and address of the customer to the satisfaction of the bank.
ii) While opening accounts as described above, the customer should be made aware that if at any point of time, the balances in all his/her accounts with the bank (taken together) exceeds Rupees Fifty Thousand (Rs.50,000/-) or total credit in the account exceeds Rupees One Lakh (Rs.1,00,000/-) in a year, no further transactions will be permitted until the full KYC procedure is completed. In order not to inconvenience the customer, the bank must notify the customer when the balance reaches Rupees Forty Thousand (Rs.40,000/-) or the total credit in a year reaches Rupees Eighty thousand (Rs.80,000/-) that appropriate documents for conducting the KYC must be submitted otherwise operations in the account will be stopped."
The aforesaid is applicable to a case where a new account is opened of any person, who is unable to produce any documents of KYC and secondly there also a specific intimation is to be made to the Account Holder concerned. The learned Counsel was not in a position to show that the communication addressed to the convict was pertaining to such account, since it was neither a case of opening new account, nor a case where the account came to be opened without furnishing the necessary documents for KYC, but it was rather an admitted position that the account of the convict concerned, was already opened long back.
Under these circumstances, the attempt to contend that there is power of freezing the account or freezing the facility of cheque book and ATM with the Bank cannot be countenanced.
The contention that freezing of the account would be less prejudicial to the customer in comparison to the closure of the account also cannot be countenanced for two reasons; one is that at the time of closure of the account, the bank is supposed to refund the money lying in the bank account of the customer, whereas in case of freezing of the account, in spite of the balance available in the bank account of the customer, the bank is depriving the customer of utilizing or withdrawing the amount, which actually belongs to him. It is hardly required to be stated that the power of freezing the bank account is like prohibiting any person from enjoying the property, may be monetary property like bank balance. Such power has to be expressly authorized under the law by any statute or otherwise. The learned Counsel has not been able to show any provisions of the statute, including RBI Guidelines authorizing the bank to freeze the bank account or to freeze cheque book or ATM facility until the documents are supplied.
On the contrary, RBI Guidelines provide for the closure of the accounts and for which the directions has been so given at para 12.4, for which even the learned Counsel for the applicant bank has not objected. Therefore, in absence of any express power to freeze the bank account of any account holder, such power cannot be read as sought to be canvassed. For example, if a person is having a particular amount in his bank account and in a given case, he did not receive the intimation for KYC or otherwise or that he could not supply the document due to unavoidable reasons, but as there is all India bank clearance, a cheque has been issued, but the bank has frozen the account on account of the non-availability of KYC documents, the consequence may arise for facing of the proceedings under the Negotiable Instruments Act or any other law for dishonouring the cheque as well as for other consequence in law. Therefore, it cannot be said that freezing of bank account is less prejudicial. On the contrary, if there are no express powers of freezing or depriving of any person from enjoying his money or property, such cannot be exercised by the Bank. If any other bank without there being RBI Guidelines or express authority under law adopts the practice of freezing the operation of account or cheque book or ATM, the same can not be a valid ground to issue notice to RBI and/or to recall the order, more particularly when no order is passed for making departure of RBI Guidelines but rather in confirmity with RBI Guidelines.
We may state that it was put to the Bank that if the bank continues to insist for exercise of power of freezing in a case where KYC documents could not be supplied by any account holder for one reason or another, it may be a case for exercise of power by the Bank without there being any authority under the law and the Court may consider the question of referring the matter to RBI for appropriate action against the Bank and also the Banking Ombudsman for examining the case and for suitable further directions, which may include appropriate measures to be ordered by the Banking Ombudsman to the bank in order to have better functioning of the banking business in accordance with law by safeguarding the interest of all account holders.
We may also state that so far as the accounts of the convicts, who are in jail are concerned, if they are in the judicial custody, it would be for the concerned Court to consider their welfare and their rights, if any, available in law, in any case, non-deprivation of the rights on account of their helpless condition during the period of custody. Therefore, we find it proper that in order to see that all convicts, who are in jail having bank accounts may not be saddled with such unauthorized action on the part of the bank of freezing of the bank account, it may be appropriate to refer the matter to the Banking Ombudsman and also to RBI for appropriate action in this regard. However, as observed by us earlier, if the matter is considered in light of the provisions of Code of Criminal Procedure, it cannot be said that the present application is maintainable for review, we leave the matter at that stage with the liberty to the concerned account holder to pursue the matter, may be before RBI or before Banking Ombudsman, in accordance with law and, if required, through the concerned jail authority.
Under these circumstances, the present application cannot be granted. Hence, dismissed.
(Jayant Patel, J.) (Paresh Upadhyay, J.) vinod Top