IVI/s. G20 Enterprises v. The Union of lndia

the affidavit filed in support of the petition, the High Court may be pleased to pass an order directing the respondents No.2 to 4 to defreeze the current account No.5608873312 of the petitioner with the respondent No.4 and permit him to operate the same, pending disposal of the writ petition, in the interest of justice. Counsel for the Petitioner: SRI SHYAM S AGRAWAL Counsel for the Respondent No.1 : SRI ANGOTHU NEHRU (sc FoR CENTRAL GOVT) Counsel for the Respondent Nos.2 to 4: SRI I.LAXMIKANTH RAO, SC FOR BANK Counsel forthe Respondent No.5: GP FOR HOME The Court made the following: ORDER IN THE HIGH COURT OF JUDICATURE FOR THE STATE Otr' TELANGANA HON'tsLE SRI JUSTICE NAGESH BHEEMAPAKA wRI"f PETITION No. 24467 O\- 2025 ou'&aaozo Betwee n: M/s (,i20 F)ulcrprisfs. Rep. b.y its Proprictor Sri Sha1,:r Asadullah Khan An tl The Union of lndia, Rep. b-r. its Sr:r:rctirn,, Ministry oI Firrarri c. Nc'.r' l)e ltri and four o ll.rers ORDER: .. Pctitioncr Respondents Pctitiorrer stat(:s th?rt lre has becn engagcd for a cor-rsiclerablc pcriod in thc business of sale of products on line, categorised ars cirr lint: AN4(l servir:cs. For the purpose of carrying on his btrsines:; I,ran s:rc t ioi1s, he opened a curfent account bearing No.5C;C)88733 l2 rvith Rcspondent No.4 bank. The said a)ccoLlnt u'as tr,-'irrg operirlc.i srrroolhly for business purposes. The incomr: clerived lrom ttre s:ii,-l business is the sole source of livelihood for pctitiont:r ur--,d hjs femily and he is the only eat rning mernber'of tl-rc larrrilv.

1. 1. [t is slatccl. on and |ron '26-09-2O24, Respondent No.4 bar-rl< abruptly stopfied pr:rmitting transactions in the said I l - currcnt accotrnt and bi(x--ked th(l :lcc()unt Whr:n pctitioner personally approachcd Rcspondent No.4 bank, it is stzrtcd, he was informed thzrt accolurL had bcen frozen pLlrsuant to the instructions received from Rcspondcnts 2 and 3, but no written order, reasons, or further details wcre fr.rrnished to [rim at that time.

1.2. Petitioner states that subsecluentlv he received communications through post from Rcspondents 2 to 4, r,r,hich contained the notice dated 02-O9-20)4 issuccl by thc lnspector of Police, One Town Policc Station, Sicldipct, under Sections 94 and 106 of the Bharatiya Nagarik Suraksha Sanhita, 2023, addressed to Respondents 2 to 4 and another noticc o[ the same date issued under Section 94 direclcd to be serv'ed on petitioner. Under the said noticcs, pctitioner u,as callcd upon to zrppear before the police along with d()cuments relzrting to his identit-y and documents pertaining to the bank account and transactions, in connectior-r with ar-r allcgecl c_\,ber crimc investigation. It is statcd firrther, the saicl notit:cs do not disclose registration of any F IR, nor do the.t' me rrtiorr any crime number. In the notice addrcssed to Respondent No.4 bank, it was stated, during the invcstigation, it was rcvcaled that fraudulently disputed moncy was deposited into petitioner's current account.

1.3. Pelitioner st.rte s, lre was unaware of and in fact, shocked to knolr, the cre{lit of Rs.5,000/- into his bank account uide UTR No.42656a642O74 dated 2l-O9-2O24; he was informed bv Rcspondcnt No.4 bank that they had already furnisheci tl-re required information to the police authorities. He was furthcr informcd, a lien u'ould bc helcl on the said amount of Rs.S,OOO/ - and that he lror.rld be pcrmitted to operate the account with respect to his own funds alter obtaining clearance from Respondents 2,3 ancl 5. Horvcvcr, despite repeated visits, petitioner was rlot permitted to operate the account. He thereforc, is said to have addressecl written representation dated O2-O4-2O25 to f?cspondent No.4 trank steking de freezing of his account. In response, Rcsponderrt No.4 sent an email dated l1-O4-2O25 staling that the arnount in pel.itioner's account was marked as 'frcezed" pursuanl to a notice received from Respondent No.5. Evcn l.hcrealtcr, no relief was granted, cornpelling pctilioncr to approacll this Court.

1.4. According to petitiorrer, Respondents 2 to 4 could have lawfuily restricted the spe cific amount of Rs.S,OOO/ - allegedly involvcd in thc case and permittcd him to operate the + - remaining funds in the account, insteacl, the entirc actiount \,r,as frozen. Petitioner asserts that Respondcnt No.5 has no authority to direct Respondent No.4 bank to freeze the cntirt' :lccount without furnishing case details, ',vithout referencr: to an.r. FIR or crime number, and without following due procedure. Petitioner' contends that notices issued under Sections 94 arrcl I O6 of BNSS do not direct Respondent No.4 to freezc his account; the notices only require service of notice on petiti()ner and furnishing of identity and bank-related documents. Therefcrre, the act of Respondcnts 2 to 4 in freezing the enlire bank account is illegal and the explarration givcn by Re spondcnt No.4 bank in its e mail dated 1 1-O4-2O25 is incorrect and unsustainable.

2. Respondent No.4 bzrnk filcd count<;r st.rting that petitioner approached this Court with uncleiln helncls and by suppressing material facts. It is conter.rcle<l that the allcgalion of arbitrary action and freez.ing of thc account without noti(--() is incorrect as notice dated O2-09-2O24 was sent on 05 lO-2O24 through speed post to the recorded address furnishccl by him at the time of opening the account with the Bank and Lhe said notice was returned as 'unclaimed'. It is also statecl, petitioner opened a deposit account bearing No.56O8873312 at Noorkhan .1 Bazaar Brarrch of Central Bank of India on 05-06-2024 by subrnitting I(YC documents along with the account opening forrn. It was stthseqrrcnlly nnliccrl by lhe Rank's IT Office at the backend that more tharr lO00 entries per day were being made in the said account, involving deposits ranging from Rs.7,OOO/- to Rs.20,000/- from various accounts. As per RBI norms, the bank suspected the said account to bc a mule account. Accordingly, notices r.l,ere issued to thc recorded address of the account hc'lder, r.l,hich n'ere returncd unclaimed.

2.I. It is stated, on O1-11.-2025, the Branch Manager along with one more officer of the branch visited the address provided by petitioner through e mail and also the address mentioned in the Writ Pctition, for the purpose of veril5ring the existence of the business unit and to asccrtain whether the account was KYC compliant. During the inspection, it was found that neither petitioner nor thc stated business unit was in existence at the rccordcd :rddress. Instead, another business unit by' name Global Entcrprises u'as li;und opcrating at the said location. Photographs u,ith gco tagging 1^'ere taken and an inspcction reprlrt was prepared as pcr the bank's prescribed lormat. 6 -

2.2. It is also stated, based on the inspection, it u'as concluded that account u'as nct KYC compliant and.r rcport to that elfect was submitted. As a Public Sector Undertaking b:rnk, this responclcnt asserts that it cannot permit operation ol- lhe account in violation of RBI guidelines; continuation of operations in a non-KYC compliant account is impermissible, as allowing such operation may expose the bank to liabilitv in the event the account is found to be involved in cyber r:rimes or money laundering. It is stated that investigating authorities and the Reserve Bank of India rvould holcl thc bank accoun[able for such lapses. Accordingly, it is prayed that Writ peliti()n u.ith costs.

2.3. It is also stated, on perusal of Udyam Rcgistration Certificate dated 29-O4-2024 bearing No. UDYAM-TS-Ol- 062704, it is revealed that petitioner is shown as carrr,'irr11 on cosmetics trading, wholesale toiletry and pertLmcrv business at House No. 16 2-689 I I , ho'a,cve r, il'r thc Writ Pe tit ion, busincss address q,as mentioned as a shop situated aL 16 l-261 A/ A, Main Road, Saidabad, Hyderabad-5OOO59. Thesc two iidclresses are not onc and the same, thcrcby raising doubts regarding the genuineness of petitioner's business and address particulars. It is also statcd, there is no mention of any specific disputecl a- - ,j 1 atnount in the notice dated 02 A9-2O24 reccived by the respondent bank from Siddipet Police Station Cyber Crime. Even the same notice, as filed along wilh Writ Petition, does not disclose zrn-y disputed amount of Rs.S,OOO/ , hence, it is contended, petitioner is misrepresenting the facts alleging that a disputed amount of Rs.5,00O/ is involved.

2.4. In the absence of proper representarion o[ factual posilion from Respondent No.S, pcrmitting operation of the account, at this stage, may result in perpetuation of cyber crirnes and rnay also arnount to violation of directions issued by the police authorities to the bank. Further, petitioner has not hlecl any docume ntary evidence to substantiale or prove the business allegedly carried on by him and he has also not disclosed subsequent developments, nor has hc obtained or procluced any No Objection Certificatc from the police station concerned for operation of the bank account.

2.5. 'I'his respondent further statcs th.rt an alert notificatior issued by the Indiarr Cyber Crime Ooordination Centre (l4C), Ministry of Home Affairs, is enclosed; the Ministry of Home AITairs is taking nationwide steps to crcate a Cyber Secure Bharat; nation-ra.ide raids conducted by Cujarat Police and Andhra Pradesh Police have revealed that transnational It - organized cyber criminals have createct illegal digital payment gatcurays using mule or rtnte<l bank accounts. Thrse illegal infrastructures are uscd for lacilitating monev latrndering as a scrvice, involving procceds of various cyber crimes. In vics' of the said alcrt notilication and subsequent bank guidelincs, strict personal verification of such accounts is mandatory. Only if the account is lound to be Elenuine and [u ll5r compliant rvith KYC norms, can the bank permit operation of the account, [r.r the present case, since the account of petitioner has been founcl to be rron-compliant and suspicious, this respondenl c:onlends that permitting operation of the account would be contrary to RBI guiclelines, policc diret:tions, and national c-yber ser:urity NlCASLITCS

3. Heard Sri Syarn S. Agarwal, learned counsel for petitioner, Sri Angothu Nehru, learned Standing Cou nsel for Central Government, Sri I. Laxmikanth Rao, learnccl Standing Counsel for respondent bank and learned Governrnent Plr:arder lbr [{ome on behalf of Respondent No.5.

4. Upon careful consideration of the pleadings of both the parties and the material placed on record, it is to be seen, petitioner's account was suspected by the bank as .Mule Account', based on abnormal transactions involving more than 1 00O en tries pe r day with multiple deposits from various accounts. Hence, the bank sent notices to the recorded address of petitioner rvhich werc returned unclaimed. During the inspection conducted on O1-1I-2025, the Branch Manager lound that petitioncr's business unit was not existing at the given add rcss and some other busir-ress unit namely Global Enterprises was being run in the said premises. These facts have not been effectively rebuttccl by petitioner. F'urther, the Branch Manager has in clear and categorical tcrms stated that account of petitioner is not KYC compliant, hence, as a public- sector undertaking, they cannot allow the operation of the account as per RBI guidelines. It is also their case that, without proper I{YC, if the account is aiiowed to be operated and subsequcntly, the account is found to be involved in cyber crimes/money laundering, the Investigating Authoritie s and RBI u,ill makc the bank liable for all the consequences. In view' of the sarnc, this Court is o[ the considered vielv that a bank, particularl!' a Public Sector Undertaking, is bound by RBI gr-ridelincs, statutory obligations, and directions of investigating agencies. In gases where an account is suspected to be a mule account and is found to be non-KYC compliant, the bank is justified in restricting operations to prevent possible misuse, cyber crime, or money laundering. The principles of natural \ l0 - justice cannol bc strctched to compel a bank to permit operation of an account u'hich is trrrirna facic tiruncl lo be suspiciotrs anrl non-compliant 11,ith mandatory rcgulator\' llornts

5. Further, petitioner has not placed any material to establish that he complied with the notice dated O2.O9.2O25; that after re<:eipt ol the said notice, he visited Siddipet Police Station and infonncd about the devclopments in this rcgarcl nor. could he obtained clearance or No Objection for operation of thc account. He also iailed to explain the discrepancies irr business address and atrsence of proof oI genuine business activitr,, \ rhich would weaken his case.

6. ln view of the aforesaid facts and circumstanccs, this Court holds that petitioner failed to establish an-v illegality, arbitrariness or violation of statutory provisions warranting interference under Article 226 of the Constitution. The relief sought by. petitioner, if granted, u,ould expose the rcspondent bank to regulatory and legal consequences and u,oulcl run contrary to RBI guidelines and national c:/ber securitv measures. This Court therefore, is of the opinion that the Writ Petition does not merit any consideration and the sarnc- is liablc to be dismissed. ?-- 7 costs.

8. The Writ Petition is accordingly, dismissed. No Consequentl_v. the miscellaneous Applications. if an1, shall stand closed. SD/- P.PONNA KRISHNA ASSISTANT REGISTRAR //TRUE COPY// SECTION OFFICER To, TJ \ @

1. One CC to Sri Shyam S Agrawal, Advocate [OPUC] 2. One CC to Sri Angothu Nehru (SC for CENTRAL GOVT) IOPUC] 3. One CC to Sri l. Laxmikanth Rao, SC for Bank[OPUC] 4. Two CCs to the GP for Home, High Court for the State of Telangana, at Hyderabad[OUT] 5. Two CD Copies HIGH COURT DATED:3011212025 ORDER WP.No.24867 of 2025 c 10 ftB 2m a * * DISMISSING THE WRIT PETITION WITHOUT COSTS oY +