Gujarat High Court
M/S. Shreenath Traders Through Its ... vs Reserve Bank Of India on 7 October, 2023
Author: Nirzar S. Desai
Bench: Nirzar S. Desai
NEUTRAL CITATION
C/SCA/6928/2023 ORDER DATED: 07/10/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO.6928 of 2023
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M/S. SHREENATH TRADERS THROUGH ITS PROP. TUSHAR POPATAO PATIL
Versus
RESERVE BANK OF INDIA
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Appearance :
MR SHAAN M MUNSHAW for the Petitioner.
for the Respondent No.2.
MR AMAR N BHATT for the Respondent No.1.
MR PRIMIT S PURANI for the Respondent No.3.
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CORAM:HONOURABLE MR. JUSTICE NIRZAR S. DESAI
Date : 07/10/2023
ORAL ORDER
1. By way of the present petition under Articles 226 and 227 of the Constitution of India, the petitioner has prayed for the following reliefs :-
"A. This Hon'ble Court may be pleased to admit and allow this petition.
AA. This Hon'ble Court be pleased to issue a writ of
Mandamus and/or any other appropriate
writ/order/direction to direct Respondent No.3 to close the Bank A/c. No.921020030761814 and to further issue a demand draft in favour of the petitioners for the credit amount lying in the said Bank account amounting to Rs.36,08,958/- on an immediate basis.
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NEUTRAL CITATION C/SCA/6928/2023 ORDER DATED: 07/10/2023 undefined B. This Hon'ble Court may be pleased to issue a writ of Mandamus and/or any other appropriate writ/order/direction to the respondent authorities directing them to consider the representations dated 09.02.2022 and 03.08.2-22; Ann. 'A'.
BB. This Hon'ble Court be pleased to issue a writ of
Mandamus and/or any other appropriate
writ/order/direction to quash and set aside the
communication dated 01.01.2022 and issued by
Respondent No.3 to the petitioners, annexed at page No.136 of the reply tendered by respondent No.3; C. Pending admission and final disposal of the present petition, this Hon'ble Court may be pleased to direct the respondent authorities to direct Axis Bank Limited to defreeze the current account of the petitioner bearing No.921020030761814 wherein the amount of Rs.36,08,958/- is credited Ann. A;"
2. Heard learned advocate Mr. Shaan M. Munshaw for the petitioner, Mr. Amar Bhatt, learned advocate for respondent Nos.1 & 2 and Mr. Primit Purani, learned advocate for respondent No.3 - Axis Bank.
3. The case of the petitioner is that the petitioner is a sole proprietorship concern registered in the name of M/s. Shreenath Traders and involved in the business of textile, having registered office at Surat and on the basis of the address of the petitioner, the petitioner obtained Import - Export Code and GST Registration.
Page 2 of 5 Downloaded on : Sat Oct 07 20:52:11 IST 2023NEUTRAL CITATION C/SCA/6928/2023 ORDER DATED: 07/10/2023 undefined The petitioner's case is that when the petitioner opened a Bank account with the respondent No.3 - Axis Bank, all the banking formalities were adhered to by the petitioner and all the documents which were asked for were provided and thereafter Bank account was opened at Uttran Branch, Axis Bank, Surat.
4. Thereafter, when the petitioner realized that they could not carry out transaction from their bank account wherein approximately Rs.36 Lacs were lying, the petitioner approached the respondent No.3 Bank and the Bank by communication informed the petitioner that its account is freezed since no such Firm existed at the address registered with the Bank, upon site visit by the Bank. However, according to learned advocate for the petitioner, though the rent agreement in respect of the same premises was in existence since February 2022, the petitioner Firm existed at the same address till 2022. Thereafter, various communications between the petitioner and the respondent Bank took place and pursuant to that, the petitioner made some representation and as the representation remain undecided, this petition is preferred.
However, during the pendency of the petition, it was brought to the notice of the petitioner that the representations of the petitioner were already rejected and thereafter, petition was amended and prayers (AA) and (BB) were incorporated, referred herein above in the foregoing paragraph.
5. Mr. Shaan Munshaw, learned advocate appearing for the petitioner submitted that in view of the affidavit filed by Axis Bank dated 13.9.2023 (at page 119 of the petition) wherein it is stated that in view of Guidelines of RBI (produced at page 126 of Page 3 of 5 Downloaded on : Sat Oct 07 20:52:11 IST 2023 NEUTRAL CITATION C/SCA/6928/2023 ORDER DATED: 07/10/2023 undefined the petition), it is provided that though bank requires to complete KYC for all customers, including low risk customers, in case if the customers are unable to comply with the said guidelines within some reasonable time, only 'partial freezing' may be introduced in respect of KYC non-compliant customers meaning thereby customers may not be permitted to withdraw the amount, but credits in the account of the customers would be permitted. The aforesaid guidelines further provides that in case if the customer wants to close the account and take back the money, such option be given to the petitioner.
6. By pointing out the aforesaid guidelines, Mr. Munshaw submitted that the petitioner may be permitted to close its account for which the petitioner has already made an application since January 2023 and, therefore, the respondent No.3 - Axis Bank may be directed to act in accordance with the guidelines of the RBI and account of the petitioner which is freezed by the respondent No.3 Bank be closed and money of the petitioner lying in the said account be returned to the petitioner.
7. Learned advocate Mr. Amar Bhatt appearing for respondent Nos.1 & 2 - RBI and learned advocate Mr. Primit S. Purani appearing for respondent No.3 - Axis Bank could not dispute the aforesaid guidelines of RBI produced by Bank along with its reply.
8. Relevant part of the guidelines of RBI is reproduced as under :-
Page 4 of 5 Downloaded on : Sat Oct 07 20:52:11 IST 2023NEUTRAL CITATION C/SCA/6928/2023 ORDER DATED: 07/10/2023 undefined "32. There is a need for banks to complete KYC for all customers including long standing 'low risk' customers. Banks should complete documentation, while minimising the effort on the part of the customer to what is strictly needed. In the event that customers are unable to comply within a reasonable time period, 'partial freezing' may be introduced in respect of KYC non-compliant customers i.e. credits would be allowed in such accounts while debits would not be allowed, with an option to the account holder to close the account and take back the money in the account."
9. The aforesaid extract from the guidelines makes it absolutely clear that in case of non-compliance of KYC norms, option should be given to the petitioner to close the account and take back the money. In view of the above, prayer (AA) made by the petitioner is required to be granted.
10. Accordingly, the respondent No.3 - Axis Bank is directed to consider the request made by the petitioner in the month of January for closure of Bank A/c. No.921020030761814 and to return back the amount lying in the said account, keeping in mind the aforesaid guidelines issued by the Reserve Bank of India, and take a final decision on the application of the petitioner within a period of four weeks from today.
11. With the aforesaid observation and direction, present petition stands disposed of.
(NIRZAR S. DESAI,J) SAVARIYA Page 5 of 5 Downloaded on : Sat Oct 07 20:52:11 IST 2023