Karnataka HC grants interim relief to lawyers whose bank accounts were frozen on former client's complaint

The Karnataka High Court recently granted an interim relief to two practising advocates whose bank accounts were frozen on the basis of an allegedly vague cyber complaint filed by a disgruntled former client [Channekeshava DR v State of Karnataka & Ors].

In a common order passed on two connected petitions filed by the two lawyers, who are husband and wife, Justice Sachin Shankar Magadum noted that their accounts were frozen without any crime being registered.

"The said action is taken despite the fact that no crime is registered against the petitioner, who is a practicing advocate and has received the said amounts towards professional fees for services rendered as counsel on record," the judge observed.

The Court proceeded to order the unfreezing of the accounts, provided that the amounts alleged by the client to have been mistakenly transferred would remain under lien.

The Court passed the interim order after observing the account freeze may affect the petitioners' professional activities.

"Bearing in mind that the petitioner is a practicing advocate whose bank accounts have been marked with lien, which may adversely affect her professional activities, this Court, in exercise of its jurisdiction, deems it appropriate to permit the petitioner to operate the accounts to the extent of the balance amount in excess of the lien marked in the respective Banks," the March 5 order stated.

The petitioners had told the Court that they had earlier been engaged to represent a client from Indore in connection with a case before the Securities Appellate Tribunal (SAT) at Mumbai.

The legal fee mutually discussed and agreed upon between the lawyers and the client was then transferred to the lawyers' bank accounts.

However, after this case did not conclude in the client's favour, the client is said to have called the cyber police and claimed that he had transferred money by mistake to the lawyers. The lawyers have contended that these were professional fees sent in connection with their legal representation in the SAT case.

The client's cyber complaint prompted the cyber-crime police at Indore to instruct the banks concerned to freeze the lawyers' accounts.

A lien was placed on the lawyers' bank accounts, rendering the account frozen. The lawyers have argued that the accounts were frozen without any notice to them, and even though no case was registered against them.

Aggrieved, they approached the High Court for relief.

Since the Court was yet to hear the response of the Indore cyber-crime police in the matter, it has granted limited interim relief by allowing the lawyers to continue operating the accounts with a caveat that the amounts in dispute would remain under lien.

Notice has been issued to the Indore cybercrime police for their response.

The case will be heard next on March 25.

Advocates V Shivashankar and Ranganath MA represented the petitioners.