Skip to main content

‘Bank can’t freeze account without intimating customer’

Banks cannot invoke powers to create general lien to freeze a savings bank account and recover outstanding dues from an account holder without prior intimation to the customer, the Maharashtra state consumer commission held last week.

Invoking the provision for creating lien or freezing a savings bank account has to be with prior intimation to the complainant as opportunity of natural justice, the commission noted, reversing the Mumbai suburban district consumer forum’s ruling.

The district forum had rejected Chandivali resident Arti Krishnan’s complaint against HDFC Bank, stating that the bank was empowered to create lien on her savings bank account and was empowered to debit money from the account for settling purported credit card dues.

On April 25, 2006, Krishnan, who had lost her credit card, was issued a new card. There was a dispute about outstanding dues on the previous card and the bank agreed to settle it at Rs29,000, which Krishnan was supposed to pay in instalments.

Accordingly, she paid first instalment of Rs4,000. But even after adjustment of this amount, the bank showed an outstanding sum of Rs50,802. Later, the bank froze her savings account and withdrew a sum of Rs80,488.

HDFC Bank contested the complaint, contending it had the power to create lien in view of proviso to section 171 of the Indian Contracts Act, 1872, and there were terms in the credit card agreement empowering the bank to act without notice.

The bank, however, did not place the copy of the credit card agreement before the state commission.

“In the absence of documentary evidence on record, relying on the provisions will be of no use,” the commission said, and concluded that action such as creating lien, freezing an account and withdrawing money has to be taken with prior intimation to the customer.

It held the bank guilty of deficiency in service after finding that no notice had been issued to the Chandivali resident, and directed the bank to refund a sum of Rs78,640, with annual interest at 9% within two months.

Article referred: http://www.hindustantimes.com/India-news/Mumbai/Bank-can-t-freeze-account-without-intimating-customer/Article1-1090108.aspx

Comments

Most viewed this month

Partition proceedings are vitiated even if single co-sharer is not made party or is not served in accordance with law

Cause Title :  Bhagwant Singh vs  Financial Commissioner (Appeals) Punjab, Chandigarh,  CWP-2132-2018 (O&M), High Court Of Punjab & Haryana At Chandigarh Date of Judgment/Order : 31.08.2022 Corum : Hon’ble Mr. Justice Sudhir Mittal Background A large parcel of land was owned by the Nagar Panchayat. Thereafter, some of the co-sharers sold their shares to third parties including the petitioners herein. On 22.11.1995, respondents No.3 to 5 filed an application for partition of the land. The petitioners were not impleaded as parties.  On completion of proceedings, sanad was issued on 28.08.1996. Vide two separate sale deeds dated 28.05.2008 respondents No.3 and 5 sold some portion in favour of respondent No.6 and 7. These respondents sought implementation of the sanad resulting in issuance of warrants of possession dated 05.06.2008. Allegedly, it was then that the petitioners realized that joint land had been partitioned and that proceedings h...

Power of Attorney holder can also file cheque bounce cases: Supreme Court

The Supreme Court has held that a criminal complaint in a cheque bounce case can be filed and pursued by a person who holds a power of attorney (PoA) on behalf of the complainant. A three-judge bench headed by Chief Justice P Sathasivam gave the "authoritative" pronouncement on the issue, referred to it by a division bench in view of conflicting judgements of some high courts and the apex court. "We are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the Negotiable Instruments Act (which deals with cheque bounce cases)," the bench, also comprising justices Ranjana Prakash Desai and Ranjan Gogoi, said. The bench, in its judgement, said, "...we clarify the position and answer the questions in the following manner: "Filing of complaint petition under Section 138 of Negotiable Instruments Act through PoA holder is perfectly legal...

Christian who reconverts as Hindu SC will get quota benefits

Amid the controversy over “ghar wapsi”, the Supreme Court on Thursday ruled that a person who “reconverts” from Christianity to Hinduism shall be entitled to reservation benefits if his forefathers belonged to a Scheduled Caste and the community accepts him after “reconversion”. Citing articles by B R Ambedkar and James Massey, and reports by Mandal Commission and Chinappa Commission, the court said: “There has been detailed study to indicate the Scheduled Caste persons belonging to Hindu religion, who had embraced Christianity with some kind of hope or aspiration, have remained socially, educationally and economically backward.” The bench of Justices Dipak Misra and V Gopala Gowda held that a person shall not be deprived of reservation benefits if he decides to “reconvert” to Hinduism and adopts the caste that his forefathers originally belonged to just because he was born to Christian parents or has a Christian spouse. Expanding the scope of a previous Constitution benc...